Training Manual on Energy Efficiency - APO Asian Productivity ...

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12. CLEAN DEVELOPMENT MECHANISM 12.1 INTRODUCTION The Clean Development Mechanism (CDM) was instituted in 2001, under the Kyoto Protocol, to enable developed countries to meet their greenhouse gas (GHG) reduction targets at lower cost through projects in developing countries. A CDM project is a development project, driven by market forces, that reduces GHGs. In a CDM project, an investor from an industrialized country supplies capital or technology, based on the future values of certified emission reduction units (CERs), also known as carbon credits, which measure the reduction of GHGs in the developing country. The procedure starts with the industrialized country keeping a regularly updated inventory of its emissions. The country may choose to allocate its national target (set by the Kyoto Protocol) across a number of domestic emitters, in much the same way that resources such as fishing rights or logging rights are allocated. A domestic emitter can meet its allocated target through mitigation activities within the country, or it can make use of the two Kyoto Protocol project-based flexibility mechanisms. The CDM allows the emitter to invest in a project in a developing country or buy CERs from someone who has invested in a project. Under the CDM, all parties benefit: the host country is assisted in achieving sustainable development; the owner of the project receives financial and technological assistance; and the emitter in the industrialized country receives carbon credits. 12.2 OBJECTIVES OF CDM The CDM has three stated objectives: • To assist parties not included in Annex I (i.e., developing countries) in achieving sustainable development. • To contribute to the ultimate objective of the convention (i.e., stabilize GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system). • To assist parties included in Annex I (developed countries) in achieving compliance with their quantified emission limitation and reduction commitments under article 3 of the Kyoto Protocol. 12.3 CDM AS A SUSTAINABLE DEVELOPMENT STRATEGY The Clean Development Mechanism is designed as an element of the sustainable development strategy allowing industrialized countries investing in “clean” projects in developing countries also to gain emission credits. These - 120 -
credits are given in the form of Certified Emission Reductions (CERs), which, like all the other Kyoto accounting units, are expressed in tons of carbon dioxide equivalent. The financing country can use these units to offset its own emission of greenhouse gases during a given period, or sell them to a country. It can also bank them for use during a subsequent period. Since these investments are viewed in a positive light, they also add to the reputation of project developers and investors. At the same time, the recipient country gains from an increase in investment (which may be from private or public sources) in sustainable development. 12.4 METHODOLOGIES The Marrakech Accords stipulate that an emission reduction project activity under the CDM must, among other things: • use an approved methodology to define the baseline emissions (i.e., the emission that would have occurred in the absence of the project), from which reductions are calculated; • use an approved monitoring methodology to monitor actual emissions and collect other information needed to calculate the emission reductions achieved; and • be reviewed by an accredited “designated operational entity” which confirms that the proposed baseline and monitoring methodologies are appropriate and that other eligibility requirements are met. 12.5 STAKEHOLDERS AND ROLES The implementation of CDM projects involves a number of stakeholder participants and organizations: • Host Government DNA • Annex I DNA • Local Stakeholders • Project Participants • Designated Operating Entity • Executive Board (and Panels) • Meeting of parties to the Kyoto Protocol • Accredited NGOs Conference of parties serving as meeting of parties (CoP/MoP): The Conference of Parties Serving as Meeting of Parties (CoP/MoP) to the Kyoto Protocol is the authority and provides guidance to CDM. The CoP/MoP takes decision on recommendations by the Executive Board (EB) and designates Operating Entities (OE). The CoP/MoP also reviews the EB reports as well as the distribution of Operating Entities and CDM project activities. - 121 - Clean Development Mechanism
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