The skewed distribution of Clean Development Mechanism projects in eligible countries has been well documented. However, only three per cent of the 450 registered projects are situated in Africa. The poor distribution relates both to CDM-specific issues, as well as those correlated with macro-economics, energy infrastructure and levels of development.

Barriers to increased distribution of CDM projects in some African countries and other Least Developed Countries (LDCs) include low levels of energy use and low baselines, uncertainty about the future of CDM post-2012, low-cost high-yield projects crowding out renewable energy and energy efficiency projects, transaction and technical costs, lack of institutional infrastructure and expertise, and a reluctance of local financial services sectors to engage with the process.

Additional issues include the “perceived risk” of investment related to levels of governance, strong civil society opposition to CDM, and a lack of political will. Improving the geographical distribution of CDM projects thus requires the removal of an entire series of barriers and introduction of various measures.

There are a number of proposed solutions to address the identified issues. Within the negotiation process, these include: prompt provision of clear guidance on programmatic CDM, development of standardised baselines, addressing low level of development, and increased impetus on a post 2012 framework  to create certainty around the carbon market.

Specifically, Annex I countries need to facilitate increased capacity building in the private and public sector, designated national authorities (DNAs) and the financial services sector in LDCs. In addition, projects also require dedicated upfront financing coupled with insurance products, as opposed to the dominant “pay on delivery” transaction model.

Additionally, current efforts by the Global Environment Facility (GEF) to promote and remove barriers to energy efficiency and renewable energy should be stepped up.

Moreover, host countries, need improved governance and DNAs need to better fulfil their sustainable development mandate. While CDM promotion through clear policy frameworks and development of project portfolios are key, these activities should occur outside of the DNA to avoid conflicts of interest. It is not clear that DNAs will always halt projects that affect local communities. As such, validators must be given a clear mandate to identify ineligible projects that have not undertaken proper stakeholder consultations or where stakeholder comments clearly have not been taken into account and addressed.

An enhanced system for stakeholder consultation in CDM projects is also required. The stringency of this process should be comparable to that applied to additionality and emissions reductions methodologies.

Finally, while these and other measures can be undertaken to promote CDM in LDCs, it is clear they will never reach the scale of CDM activity in rapidly industrialising countries such as China or India. Nor will CDM solve all their sustainable development problems. Therefore, other means alongside the CDM will need to be developed to promote sustainable development in these countries. One starting point could be to focus GEF financing on countries where the CDM does not perform.