However, this report is the final outcome of a year-long process to
recommend how to reform the CDM design and process, and to envision a
way forward to prevent the global carbon market from disintegrating.
“The report is singularly geared towards saving the ailing CDM and
carbon markets, with not enough focus on how the social and
environmental integrity of the mechanism should be addressed,” said CSE
Director General Sunita Narain.
‘Cheap’ development mechanism
CDM was crafted following the Kyoto Protocol to primarily serve two
purposes - help developed countries to meet their commitments under the
Protocol in a cost-effective manner, and support sustainable development
activities in developing countries.
But it rapidly degenerated into being just a market tool used by the
Kyoto parties to write off their targets with cheap offsets and grossly
failed to deliver the real reduction in emissions that were needed to
effectively address climate change and promote sustainable development
in developing countries.
As per CSE researchers, CDM has not just been ineffective but it is also
a case of carbon accountancy fraud - a ‘cheap development mechanism’
promoting cheap offsets. Its flawed design has failed to deliver on what
was really needed - transformational leapfrogging to clean technology in
The CDM Policy Dialogue Report has 51 recommendations focusing to save
the carbon market by increasing the demand and price of carbon credits.
For this, the panel wants every country,
developed as well as developing, to increase their mitigation ambition
and use carbon credits to meet their targets. These recommendations are
akin to rewriting the international climate convention and removing the
distinction between developed and developing countries.
Under the convention, only those developed countries that are
signatories to the Kyoto Protocol have legally binding mitigation
targets, and they can use the benefits of carbon credits to meet their
targets. The panel’s recommendation of allowing all developed countries
to have access to carbon offsets is actually rewarding the defaulters of
On one hand, it is going to reward countries like the US which have not
signed on to the Protocol; and, on the other, it is rewarding countries
like Canada which have not met their first commitment and have now
walked off from the second commitment as well.
By asking all countries to increase their mitigation ambition, the panel
has disregarded all reports that indicate that currently, developing
countries are doing much more than developed countries to reduce carbon
emissions. By asking developing countries to use carbon credits to meet
their voluntary pledges, the report has removed the distinction between
the developed and the developing countries – a recommendation which CSE
says is “dangerous and disturbing.”
“This seeks to rewrite the international convention on climate change by
destroying the very concept of equity and CBDR embedded in it,” said CSE
Deputy Director General Chandra Bhushan who heads its climate change
unit adding that “a more effective way to approach this would be to ask
developed countries to increase their current mitigation targets and
step up their efforts to match those required by climate science”.
While the report recommends increasing/stabilising the price of carbon
credits on one hand, it supports carbon credits resulting from forestry
projects (such as REDD) and carbon capture and storage (CCS) which
typically tend to oversupply the market.
As the report suggests linking of carbon markets and increasing the
scope of CDM by including forestry projects (REDD) in it without
ensuring the right rules and safeguards in place, this could endanger
the livelihoods of indigenous communities and forest dwellers by making
our forests a carbon dump yard for developed countries, warns CSE adding
that “REDD should be addressed through non-market mechanisms by
involving the local communities instead.”
Alleging that Sustainable development, a key mandate of CDM, has been
superficially addressed to placate the civil society, CSE cites that the
Report has failed to internalise the experiences of environmentally
destructive projects that have been awarded carbon credits in the past.
The report recommends that the CDM Executive Board could designate an
appropriate and mutually acceptable independent authority to do the
assessment in case the host government doesn’t have the capacity to do
so. CSE expresses its concern if the “independent authority” is going to
be the same private international consultants that have compromised the
integrity of the entire CDM mechanism.
While supporting the idea of greater representation of least developing
countries that have not accessed the benefits of CDM projects so far,
CSE, however, warns that if cheap credits remain the focus of the CDM
market, these countries will not be able to access the benefits as their
projects are likely to be small and will not be able to compete with
large projects that can supply carbon credits at much lower prices.
CSE advocates for adapting a ‘gold standard’ and a benchmark price for
small projects from developing countries. The standard would be a
mechanism to rate, value and price projects in terms of additional
social and economic benefits instead of just reductions in GHG
While the report recommends the need for
professional experts in the CDM Executive Board, “it is, also, more important
to ensure regional balance within the professional and experienced
members of the Board”, said CSE.