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Recommendations for the review of the modalities and procedures for the Clean Development Mechanism

Prepared for Subsidiary Body for Implementation, 43th Session,

30 November- 11 December 2015

Carbon Market Watch welcomes the opportunity to provide input to the discussions on the review of the modalities and procedures for the Clean Development Mechanism (CDM) – SBI agenda item 5a.

The future role of the UN’s Clean Development Mechanism in the 2015 climate treaty is likely to be limited for a number of reasons. From 2020, also developing countries are expected to contribute to the global mitigation efforts. This has a big impact on the original purpose of the CDM for a number of reasons 1) developing countries will want to account for their own emission reductions 2) developed countries will have to have much higher climate mitigation targets 3) emission reductions in developing countries will have to be financed in addition to climate action in developed countries.

However, richer countries need to ensure that adequate climate finance is made available to developing countries. The CDM could be an appropriate channel for some of that finance if money spent is counted towards climate finance obligations and reductions achieved towards the host countries’ conditional targets. The current Paris negotiation text foresees the establishment of a “mechanism to support sustainable development” under a new Article 3ter which as it stands would open doors for the continuation of the CDM or a similar mechanism.

Nevertheless, in its current form, the CDM falls short of essential requirements, given that any climate mechanism needs to achieve sustainable and transformational change. For example, the CDM’s technology neutrality allows coal power plants to apply for CDM funding. Contrary to all other major climate finance mechanisms, the CDM does not have an accountability mechanism. To consider a future role of the CDM, a fundamental reform is required, including technology eligibility assessments, do no harm safeguards, sustainable development indicators and the establishment of a grievance mechanism.

Carbon Market Watch recommendations for the CDM Review

 –    Establish a CDM grievance mechanism

–     Strengthen civil society participation

–     Improve the CDM’s contribution to sustainable development

–     Achieve net atmospheric benefits

–     Improve additionality testing

–     Improve the membership and composition of the CDM Executive Board

–     Shorten the length of the crediting periods

–     Include national (E+/E-) policies in additionality testing

–     Introduce liability rules for Designated Operational Entities

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