At its last meeting back in June, the CDM Executive Board issued a call for public inputs on sustainability benefits in the CDM[1]. CDM Watch submitted recommendations to the CDM Executive Board on how co-benefits and negative impacts can be included in the documentation of CDM project activities to maximise a project’s sustainability benefits while minimising its potential risks and harmful consequences. We also explained how stakeholder participation can be improved to achieve greater civic participation, transparency and fairness.

Substantial improvements need to be made to address the fact that most CDM projects not only fail to deliver sustainability benefits. In addition, many projects have caused significant harm to the local population (see also our update on Aguan and the appeals procedure). This has been confirmed by numerous academic studies and by our work with grassroots groups in developing countries. [2]

Why is the CDM failing to contribute to sustainable development?

The reasons are numerous, but a major problem is that host countries get to define their own sustainability criteria for projects. Because countries want as many CDM projects as possible because of the investment they bring, there is little incentive to require strong sustainability criteria that could dampen investment. Sustainability criteria applied by host countries usually lack specificity, transparency and stringency. The assessment process performed by the host country DNAs is usually hasty and superficial. Sustainability requirements are further undermined by the lack of follow up or verification during the monitoring period of a project. Sustainability benefits have no financial value in the current system which results in the majority of CERs coming from projects with little or no sustainability benefits (such as industrial gases and large hydro).

CDM Watch’s recommendations to the CDM Executive Board

Include co-benefits and negative impacts in the documentation of CDM project activities:

 1.       Implement detailed mandatory safeguards and criteria on environmental and social impacts

There is currently no matrix of project-type specific sustainability requirements for projects. The CDM Executive Board should create a matrix of requirements for each methodology to give clear guidance on how sustainability benefits and risks are to be assessed, validated, monitored and verified.

2.       Introduce sustainable development monitoring plans to assess sustainable development benefits

There are no provisions in place to monitor or verify sustainability criteria. The absence of follow-up renders the already weak sustainability criteria of host countries ineffective. Project proponents should be required to submit a sustainable development monitoring plan which spells out how the project will comply with sustainability. These indicators should be monitored and regularly verified by the DOEs.

3.       Suspend or exclude projects from the CDM if they fail to comply with do-no-harm safeguards

If a project activity is found to violate fundamental do-no harm principles, it must be suspended. If the negative impacts are irreversible or not addressed the project must be permanently excluded from the CDM. Project participants must be held responsible for damages caused by the project activity.

4.       Exclude project types that do not uphold UNFCCC goals or undermine other international treaties.

Some project types currently eligible under the CDM harm climate protection goals. For example, the construction of new super-critical coal power plants. Other activities such as issuing carbon credits for the destruction of HFC-23 undermines the goals of the Montreal Protocol.

Projects that pose a significant risk to climate and sustainability goals must be excluded from the CDM. A procedure should be put in place that enables the CDM Methodology Panel to recommend the rejection of methodologies on these grounds and enables the CDM Executive Board to exclude project types that don’t fulfill the UNFCCC mandate or create perverse incentives that undermine other international treaties.

Strengthen and improve the role of stakeholders in the process

To be effective, sustainability criteria and safeguards need strong stakeholder participation rules and requirements. We recommend the following reforms:

1.       Provide clear rules and guidelines on how to conduct local stakeholder consultation

 2.       Increase access to information within the global stakeholder consultation process, for example:

• Set up email notification systems for registration, issuance and methodology processes as well as for all public participation procedures that are time sensitive
• Improve the user-friendliness of the UNFCCC CDM website
• Allow submissions of comments in the language(s) of the host country
• Increase the duration of the public commenting period for projects and new methodologies

3.       Establish a grievance mechanism for affected stakeholders

If negative project impacts develop during project implementation, it should be possible for stakeholders to raise complaints.