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The Kyoto Protocol’s Clean Development Mechanism (CDM) has a significant role to play now and after a new climate change agreement, which governments will agree in Paris in December, takes effect in 2020.

At a discussion convened by the CDM Executive Board on the margins of the international climate change negotiations in Bonn, panelists cited the CDM’s ability to incentivize investment in emission reduction and development projects, its value as a results-based financing tool, and its usefulness as a tool to facilitate cooperation on climate action.

Under the CDM, emission reduction and development projects in developing countries earn a saleable credit for each tonne of greenhouse gas they reduce or avoid. Countries with an emission reduction obligation under the Protocol can use the credits, called certified emissions reduction (CERs), to cover a part of their commitment. The mechanism has incentivized the registration of more than 7,900 projects and programmes in 107 countries.

Going Beyond What Was Possible

Panelist Laurence Mortier of the Federal Office for the Environment, Switzerland, highlighted the CDM’s ability to allow countries to increase their level of commitment to reduce emissions, “to go beyond what we could otherwise achieve.”

She also cited the need for reforms to the CDM, and perhaps some new elements. The CDM Board is currently focused on simplifying and streamlining the mechanism.

Panelist El hadji Mbaye Diagne, a member of the National Committee of Climate Change, Senegal, and a long-time climate change negotiator on behalf of African and Least Developed Countries, applauded the CDM Board’s efforts to improve the mechanism in past years and its establishment of regional collaboration centres to promote and raise capacity for the CDM on the ground in West and East Africa.

Africa remains under-represented with just 2.6 percent of registered CDM projects, but the continent hosts 33 percent of CDM programmes of activities (PoAs). These PoAs are a relatively recent innovation that allows an unlimited number of even very small projects, over a wide area, even across borders, to be administered together.

Mr. Diagne said Parties and the Board should now give further consideration to “what could the Board do and what is the role of the CDM in poorer countries.”

Finance Sector Wants Greater Clarity on CDM Future

Panelist Daniel Rossetto of Climate Mundial Limited spoke on behalf of private sector investors when he called for clarity on the future of the CDM. Parties used to the subtleties of the negotiations might know or expect that the CDM has a future and there will be demand for CERs, but it is “absolutely crucial” that this is made explicit to the private sector. Such clarity could maintain private sector interest and buoy prices for CERs, he said.

Panelist Peer Stiansen of Norway, a representative of the Nordic working group for global climate negotiations and a former Chair of the CDM Board, highlighted the CDM’s strengths as a tool for cooperative action. “This process is really about cooperation, so why wouldn’t we pursue it. CDM is something we know and like,” said Mr. Stiansen.

The panel was moderated by EB Board Chair Lambert Schneider. Others on the panel included Board Vice-Chair Eduardo Calvo and Thomas Forth of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, Germany.

Closing the Emissions Gap

Mr. Forth among other things stressed the CDM’s potential contribution to “closing the emissions gap” pre-2020 with existing projects, and its potential in the context of the Paris agreement post-2020, allowing a prompt start to action under that agreement.

The Board Vice-Chair argued for using the CDM, and avoiding the pain of “reinventing wheels.”

Mr. Calvo called on Parties to protect what has been created under the CDM. To do so will require maintenance of its infrastructure, maintenance of a governance structure, and “wide engagement of Parties that want to make use of it after 2020.”

Interventions from the floor stressed the need for ensuring environmental integrity, increasing CDM’s focus as a development tool, especially in underrepresented regions, and ensuring meaningful stakeholder engagement to safeguard communities potentially affected by projects.

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