Upsetting the Offset - Transnational Institute

Afterwords
would also benefit from CDM projects. Moreover, the UN Adaptation Fund
has hitherto primarily been financed by a 2 percent share of proceeds from the
Certified Emission Reductions (CERs) issued for projects of the CDM. Not a
lot of money at the moment, but the share of proceeds could be increased to,
for example, 5 or 15 percent. For all its faults it remains one of the only
financing sources for the developing countries already agreed upon and one they
are not going to want to remove or reform until another credible financing
mechanism has been launched.
This, however, is probably one of the best things to be said of the CDMs.
Many critical voices – including that of my party – have been raised against the
existing project-based CDM system. And the harsh and well documented
critiques presented in this book cannot be ignored and should not be taken
lightly. If the use of CDM projects by the wealthy countries is not to harm the
climate, it must be 100 percent additional. This book illustrates that many
projects are patently not; they would have been carried out anyway. Tragically,
the CDM may even have caused severe harm to the global climate by directing
attention away from domestic CO2 cuts in rich countries without providing
additional cuts in the global South. This hinders innovation in turn making
‘business as usual’ more, not less, likely. As many cases in this book show, even
the CDM’s social and economic impact could be negative, as there is no
guarantee that new jobs are created for local people. And then there are the
claims of ‘sustainable development’. If the CDM props up big polluters in the
developing world that have all sorts of negative impacts on the environment,
then is it worth trading this in for often spurious claims of ‘additional’
greenhouse gas cuts? As this book shows, the problems with the current CDM
are manifold. The question is whether reforming it will be possible or not.
As a politician I have to be practical. So, we need to realize that, despite all
the flaws of project-based CDM, it’s still very much on the table in the
negotiations. This means we need to make the best of a bad deal and reform
rather than abolish it. Several solutions have been floated. Firstly, the CMD
rules could be supplemented by a project /technology based discount factor in
order to reduce or eliminate the problem of additionality.
Secondly, the CDM could also be divided into geographic sectors to give e.g.
Africa a fair share of projects. This can be done in the negotiations, even if it
seems very complicated. It could also be done simply by setting rules for the use
of CDM in the rich countries. The EU could do that using its Emission Trading
System rules – thus getting much more climate for the same money – and
respecting the need for deviation from business as usual in developing
countries.
Thirdly, the CDM system could be supplemented with a sector-based CDM
where targets could be set for large sectors such as the steel and cement
industries. Such a system has to respect the principles of common but
differentiated responsibilities and capabilities and could be initiated by using the
so-called no-loose targets. This implies setting a business as usual emissions
baseline for plants in developing countries, rewarding those plants that go under
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