CAN View: On possible changes to the modalities and procedures for the clean development mechanism, March 2013

 

At CMP8, Parties confirmed the decision to review the modalities and procedures of the CDM (CDM M&P) and invited admitted observer organizations to submit to the secretariat, by 25 March 2013, their views on possible changes to the modalities and procedures for the clean development mechanism. The above mentioned NGOs welcome the opportunity to submit their views.

Introduction

The CDM is at a cross-road. In 2012, the market collapsed and prices, currently below one Euro, may not recover any time soon. At current price ranges, it is all but impossible to implement CDM projects that are truly additional.  The reason for the price collapse is two-fold: first, low demand due to very weak emission reduction targets; and second, a significant over-supply of carbon credits due to lenient rules, in particular rules on additionality. Such lenient rules allow for business-as-usual projects to qualify for the CDM and hence have resulted in the issuance of millions of credits that do not represent any emission reductions. Both the lack of demand due to insufficient ambition and the over-supply have to be addressed urgently.

Despite the uncertain future of the CDM, CAN believes that it is important to address its flaws and improve its rules for the following reasons:

1)     Its rules have served and will continue to serve as a blueprint for other carbon market mechanisms. Because the CDM is used as a reference by many other emerging schemes, it is vitally important that its rules are well -designed and have integrity.

2)     Despite the imbalance between supply and demand, a significant number of credits are expected to be used by Parties that plan to join a second commitment period. If these credits come from projects with poor environmental integrity, the CDM will continue to undermine the already weak emissions reduction targets.