Carbon Market Watch

For fair and effective climate protection.

Suppressed demand in the CDM

The very poor have such small carbon footprints that it is difficult to implement CDM projects that target them, since there are practically no emissions to reduce. The concept of ‘suppressed demand’ tries to take into account the fact that their per-capita emissions would be much higher if the poor had better access to energy and goods.

Normally a CDM project calculates its emissions reductions (and the credits it receives) by calculating the ‘before the project’ emissions (baseline emissions) and then subtracting ‘after the project’ emissions (project emissions). Yet if the ‘before the project’ emissions are almost zero, such a project does not earn carbon credits under the current CDM rules.

If suppressed demand is factored in, the baseline takes into account how much the emissions would be or will be once the village gets wealthier or gets access to other technologies or energy sources. Projects that take into account suppressed demand therefore do not reduce existing emissions but ideally avoid future emissions by providing an incentive for a cleaner development pathway.

On the other hand, suppressed demand baselines that assume emissions that are substantially higher than actual historical emissions risk substantially undermining the mitigation goals of the CDM. Suppressed demand approaches have to adequately address both of the CDM’s mandates of delivering mitigation and development benefits. Not every good development project can be a good CDM project. Project types that neither reduce nor clearly avoid emissions reductions do not belong in the CDM. At the same time they must not replace or inhibit other ongoing development efforts. This is a tall order and requires careful consideration and research.

In Durban at COP17 in 2011, Parties asked the CDM Executive Board to elaborate and revise the guidelines on how to systematically incorporate suppressed demand in the CDM.

Link to CDM Watch Power Point presentation given at the UNFCCC Practitioners Workshop on CDM Standards. Bonn, Germany. 8 – 10 June 2011 

Useful External Links:

Guidelines on the consideration of suppressed demand in CDM methodologies

* Most Recent Carbon Market Watch Publications on Suppressed demand in the CDM *