Carbon Market Watch

For fair and effective climate protection.

Fostering sustainable development through climate action – what should the future UN mechanism look like?

27 Apr 2017

In May, climate negotiators will again gather to flesh out the rules to implement the landmark Paris climate agreement. One of the topics on the agenda is the Sustainable Development Mechanism. To be effective, the successor to the Clean Development Mechanism must guarantee real, measurable and long-term benefits both in terms of emission reductions and sustainable development.

The Paris Agreement sets out the framework for global climate action after 2020, including a “Sustainable Development Mechanism” (SDM), which is supposed to promote higher climate ambition and contribute to both emission reductions and sustainable development.

Unlike the Clean Development Mechanism (CDM), the SDM must further climate action in a world where all countries have climate mitigation targets. This calls for a radical departure from the CDM’s function and approach of pure offsetting: reductions in developing countries produce credits were meant to compensate for increased emissions in developed countries.

While the future of the SDM, its rules, institutional setup and projects remain unclear, lessons learned under the Clean Development Mechanism serve as a lesson for the mission and approach of the SDM.

Moving beyond offsetting

A recent study published by the European Commission found that 85% of CDM projects and 73% of the potential supply of resulting credits from 2013 to 2020 are unlikely to deliver “real, measurable and additional” emission reductions. When used to compensate emissions growth elsewhere, this leads to an overall increase in emissions and undermines the global effort to fight climate change.

As the window for reaching the 1.5°C goal rapidly closes, the findings underline the urgency to the need to shift away from offsetting as a climate policy approach. Instead of being a copy of the CDM, the future SDM must have a real impact, for example as a tool for results based finance.  

Climate action and sustainable development go hand in hand

The dual mandate of reducing greenhouse gas emissions and fostering sustainable development for the SDM  means that also the sustainable development benefits need to be real, measurable and long-term.

In order to do so, participants must monitor and report not only reduced emissions but also sustainable development benefits contributing towards achieving the United Nations sustainable development goals (SDGs). The SDM has a clear mandate to further the SDGs, this means contributing to transformational change, avoiding fossil fuel lock in, robust stakeholder participation and a grievance process if things go wrong.

Carbon Market Watch will follow  the negotiations in Bonn and look forward to presenting our position also at our side eventEnsuring integrity of Art. 6 PA – challenges and opportunities from a civil society perspective.

Juliane Voigt

More information:

Policy briefing: Good-Bye Kyoto: Transitioning away from offsetting after 2020