Carbon Market Watch

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The CDM sustainable development tool: why ‘highlighting’ will not deliver (Newsletter #20)

12 Jul 2012

The CDM Executive Board is currently developing a tool to highlight sustainable co-benefits of CDM projects and PoAs. An initially promising opportunity was unfortunately wasted when it was decided that this tool shall be voluntary, with no monitoring in place. Or in other words, useless.

In a timidly courageous effort to address long-standing criticism on the well-known sustainability issues affecting the CDM, the 7th session of CMP in November 2011 requested the CDM Executive Board to “develop appropriate voluntary measures to highlight the co-benefits brought about by CDM projects and PoAs[1] while ensuring the establishment of sustainable development criteria to still be anchored to Parties’ sovereignty.

What has been developed so far, is a tick-box questionnaire of roughly 20 questions divided in sections for, inter alia, co-benefits, no harm safeguards and stakeholder engagement. The ultimate objectives are 1) Improvement of the Executive Board’s ability to demonstrate CDM support to sustainable development 2) Streamlining and publishing of CDM sustainable co-benefits and 3) Keeping national governments in charge of deciding on sustainable development.

These are all good goals for a tool that can be developed even further over time, but unfortunately, as often happens in the CDM, not all that glitters is gold.

The other side of the coin

The draft ‘tick-box’ tool leaves major doubts about its real use and efficacy in highlighting sustainable development and future sustainable development impacts on the CDM due to several fundamental shortcomings:

The first flaw in the new tool lies in its scope. According to UNFCCC provisions, only project participants would be able to submit the filled-in questionnaire. Other stakeholders, including communities affected by the project, would not be able to raise their concerns or challenge the information sent to the UNFCCC.

Another major flaw lies in the tool’s voluntary character. At this stage, project participants can choose to publicly state the project’s contribution to sustainable development or not state anything at all. This flies in the face of the clear CDM mandate, in which creating sustainable development is one of the two requirements of each CDM project. It’s would be like allowing new CDM projects for which real emission reductions are also optional.

Including negative impacts in the evaluation of a project’s contribution to sustainable development is an important step in principle, but becomes all but a joke when it is in a voluntary tool. The tick-box tool asks the project participants to tick entries related to negative impacts their CDM project has or could have on workers, communities and ecosystems. Who wouldn’t tick the box and show to the public that its project activities involve corruption, episodes of discrimination, disruption of local ecosystems or abuses of human rights, just to name some options available?

One of the biggest flaws of all, is that the voluntary tool does not provide for verification or monitoring of claimed benefits unless the project participants decide otherwise. This means that the benefits stated to the public cannot be verified, monitored or challenged if need be, at least not through official channels.

In conclusion, this voluntary tool shows that even in case an honest and brave malefactor would come forward and confess his/her sins, no enforcement would be in place under the current system to make sure that s/he is sanctioned and not granted the respective CERs.

Recommendations

CDM Watch welcomes the effort by the CMP to shed light on sustainable development in the CDM, a long-forgotten side within the system, and sees the tool as an important first step towards future deeper and efficacious measures to tackle sustainable development issues. However, as seen above, the tool is still affected by big flaws and deficiencies which, if not handled soon and properly, could have no or even adverse impacts on the CDM. Also, it is clear that the role of sustainable development within the CDM is still very limited. Our recommendations for future developments of the tool are the following:

Mandatory transparency, validation and verification requirements are essential: current options for sustainable development co-benefits reporting do not include possibilities to challenge statements given by project participants and there are no sanctions established if benefits are not delivered. Even voluntary guidelines could have mandatory transparency and validation and verification requirements. A good  example of this is the Gold Standard.

Monitoring plan must be validated verified: CDM Watch is of the opinion that monitoring on sustainable development should be established in addition to monitoring emission reductions and included in the Project Design Document. The monitoring plan should then comply with safeguard criteria to ensure the project upholds human rights and, if applicable, it should also comply with all sustainable development indicators. Moreover, the submitted report should be forwarded to the stakeholders who were involved in the ex-ante stakeholders’ consultation, so that they can certify the information included in it. Finally, the report should be mandatorily validated and verified by the respective DOEs.

Sustainable development benefits should be incentivised: In order to strengthen the element of sustainable development in the CDM, incentives are needed. This could be done by making the sustainable development monitoring report a pre-requirement and a mandatory condition for CER issuance.

Wide-ranging public consultation on CDM tool: Many experts in other related fields, e.g. the establishment of safeguards, participation requirements and MRV, have already been involved in creating similar tools and guidelines. It is essential to consult those experts for help for the design of this tool.


[1] CMP 7 Draft decision, November 2011