ICAO 2013 Environmental Report - page 155

chapter 4
global emissions
icao environmental report
To date, the CDM has registered approximately
7,000 projects and issued almost 1.4 billion units, known
as certified emission reductions (CERs).
The second market-based measure established under the
Kyoto Protocol is joint implementation (JI), which operates
similarly to the CDM but with two notable differences. First,
JI focuses on projects in developed countries, rather than
developing countries. Second, JI has two tracks; its first
track allows an individual developed country to set its own
standards for measuring emission reductions and issuing
units, while its second track operates much like the CDM
in being governed by an international regulatory body. The
first track is by far the larger of the two, with approximately
98% of units under JI being issued under this track.
The third market-based measure is international emissions
trading (IET), which involves the transfer of emissions
units between developed countries, usually between
Current Questions
Negotiations Under the Kyoto Protocol
The three Kyoto market-based measures, particularly the
CDM, have been the subject of intense scrutiny over the
past few years with a view to reforming and strengthening
them. Reforms fall broadly into seven categories:
1. Environmental integrity:
As units correspond to
the difference between baseline emissions (which are,
by definition, hypothetical) and actual emissions,
baselines must be properly set to prevent the issuance
of non-additional units. While the CDM has historically
used project-specific baselines, a growing trend has
been the use of standardized baselines, set conservatively,
that promote greater objectivity and certainty. The first
two standardized baselines were approved in early
June 2013, and more are expected to be approved in
the coming years.
2.Sustainable development:
As explained above, a
condition of registration is that a host country provides
a letter confirming that the CDM project helps it achieve
sustainable development. Several stakeholder groups
have suggested that the criteria used by governments to
provide such letters should be more widely publicized, and
also that the letters should be revocable if a CDM project
is found not to help a host country in achieving sustainable
development any longer. The UNFCCC produces an
annual report on the sustainable development benefits
of the CDM and has called for greater transparency in
this area.
3.Regional distribution:
The geographic imbalance of
the CDM is a frequent source of concern, with over two-
thirds of registered projects (and over three-quarters of
all issued CERs) originating from China and India. That
said, current trends suggest a growing number of projects
in other countries, most notably in Africa. The UNFCCC
has recently opened four regional collaboration centres
– in Colombia, Grenada, Togo, and Uganda – with a
view to building capacity and promoting more diverse
participation in the CDM.
4.Operational efficiency:
In its initial years, the timelines
for registering projects and issuing CERs were protracted,
taking several months and at times up to and exceeding
one year. Allegations of complex, non-user-friendly
guidance were also made. That said, internal operational
reforms and an increased quality of submissions have led
to significant streamlining, and criticisms of this nature
are now almost non-existent.
5. Level of aggregation:
The CDM traditionally assessed
emission reductions on a facility-by-facility basis. This has
prompted claims that much broader coverage is needed,
whereby emissions are measured and then reduced at
broader levels of aggregation (
an entire industrial
sector). The response of the CDM has been the growth of
“programmatic CDM”, in which a bundle of similar projects
can be considered as a single project, thereby allowing
for greater coverage and reducing transaction costs.
6.Net decrease in emissions:
A commonly voiced
concern about the CDM is that it is generally used as
an offsetting mechanism, whereby emissions reduced
in one location simply entitle emissions to be increased
elsewhere. While true, several attributes enable the CDM
to achieve a net decrease in emissions, among them the
use of conservatively set baselines, time-bound crediting
periods, and lower default factors.
7. Governance:
The CDM is governed by a ten-person
executive body. Various reforms have been undertaken
to make its operations more transparent, although further
initiatives are under consideration (
clear criteria for
appointment, objective code of conduct).
These reforms are being considered as part of the review of
the CDM rules, which the Parties to the Kyoto Protocol are
expected to resolve at their year-end meeting in Warsaw.
These reforms have also been informed by the findings
of the High-level Panel on the CDM Policy Dialogue, a
blue-ribbon group which released a comprehensive report
in 2012 on means to reform the CDM.
Negotiations Under the Convention
In parallel with the negotiations under the Kyoto Protocol
on existing market-based measures, the Parties to
the Convention are engaged in negotiations under the
Convention on new measures.
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