Double accounting and suchlike evasions

December 09, 2011

Durban, December 8: The latest version of the draft text on the Clean Development Mechanism (CDM) is out.

The tenor of negotiations is visible in the preamble itself. The operative paragraph in the preamble recalls that the use of the mechanism is "supplemental" to the domestic mitigation efforts of developed countries, so that domestic actions must be a "significant element" in their effort.

Thus, developed countries are being asked to do more domestically rather than depend on CDM to meet their mitigation tragets. 

But the entire paragraph is in brackets. It means the language is still not final: in other words, developed countries are not at all happy with this progressive text.  

CDM is still open house.

First problem: double accounting

The worst form of open house is double accounting. Consider only para 28 of the draft text. It is bracketed, meaning that its language is yet to be finalised (and we have just 2 days to go). In it, the Executive Board is asked to consider how "emission reductions undertaken as a voluntary mitigation action can be reflected in proposals for methodologies and baselines" under the CDM.

Now that the developing countries are taking on voluntary emission targets, they will take mitigation actions. If that action takes the CDM route, on whose mitigation budget or balance sheet will that action be reflected? The voluntary actions of developing countries can be thus double-counted as CDM. The CoP has asked the board to merely "consider" this possibility. Is this enough?

The second troublesome issue

It emerges in para 30, where the draft text touches upon the question of how to ensure CDM projects go to the poorer and lesser developed counpries among developing nations, and not only to countries such as India and China. This is a crucial flaw in the way this mechanism has panned out, since its inception in 1997.

But the draft text displays no serious intention to provide a corrective. The operative part of para 30 is bracketed, meaning it is still not final. The decision has still not been taken. 

Let's look at the language. Note where the brackets appear.

In para 30, the CoP "requests the Executive Board  to accelerate implementation of guidelines on suppressed demand in baselines and monitoring methodologies [prioritizing those that are applicable to least developed countries, small island developing states and Africa [and countries underrepresented in the clean development mechanism] [and countries with fewer than 10 registered project activities]]" 

There is a lag in the work done so far in creating a process whereby the poorer and lesser developed among the developing countries can also attract CDM projects. The process has to be speeded up. But "prioritizing" is in brackets: this action remains unresolved. Most tellingly, the sentence "Countries underrepresented under the clean development mechanism" is under double brackets.

The third blip in the CDM horizon

Appears in para 19. This para creates the possibility that small-scale renewable technology will be automatically treated as additional. (Only those mitigation efforts qualify under the CDM where the emission reduction scenario is beyond business-as-usual mitigation). But again, the operative language is so heavily bracketed that the possibility looks extremely remote.

The major flaw 

The major flaw in the draft text on CDM relates to how the proceeds from the issuance of CERs (certified emission reductions) ought to be shared so that countries can undertake adaptation activities. Who should get how much of this money that enables adaptation activity?

Para 45 explores the decision that in the subsequent committment periods periods of the Kyoto Protocol, 50 per cent of such proceeds should go to "developing country Parties that are particularly vulnerable to the adverse effects of climate change" so that they can "meet the cost of adaptation".

The entire paragraph is in brackets, so don't think the negotiators are getting progressive.  

Currently 2 per cent of the proceeds from the sale of CERs go to the Adaptation Fund. Increasing it to 50 per cent may lead to CDM activities becoming too unattractive; in effect, a large number of transformational high-cost projects, in which the price of reducing carbon emissions will be high, will not be viable through the CDM process. Only low end fossile fuel projects -- mostly fossile fuel and efficiency projects that reduce carbon at a very low price -- will go for CDM. 

This means CDM will not be transformed into a mechanism for transition to a low carbon economy. It will remain a mechanism to provide cheap carbon credits to the developed countries.