Criticisms: Don't Throw the Baby out with the
By Jørund Buen
Climate Policy Perspectives 8
CDM has delivered greater offset volumes than
anticipated, mainly with money from the private sector in host countries
(underlying project investment) and investor countries (carbon offset
purchasing) and has built considerable institutional capacity.
Criticisms have focused on high transaction costs and lack of scalability;
additionality challenges and lack of net mitigation impact; preventing more
ambitious targets and changes in emissions paths in developed and developing
countries alike; excessive rents and perverse incentives; unbalanced regional
distribution; low local sustainable development benefits; corruption and lack
of transparency; and lack of technology transfer.
While some of these
criticisms are justified, others are outdated. Transaction costs have been
drastically reduced. Excessive rents and perverse incentives in the CDM will be
substantially reduced post-2012. Unbalanced regional distribution will be
reduced by new rules; moreover, this is probably less of a problem than
Some criticisms are erroneously founded. There is no
evidence of CDM preventing more ambitious targets in developing countries while
it could prevent changes in emissions paths in developed countries. Few CDM
projects have serious known problems as regards sustainable development.
Corruption and fraud seem limited; and technology transfer has never been a
core CDM concern.
Ironically, critics often neglect the elements that
need to be improved. To ensure additionality, CDM rules must be tightened to
exclude common practice projects and prevent host countries from changing their
policies to cater for CDM projects.
CDM's scalability and additionality
challenges could be substantially reduced by discounting emission reductions.
There could still be some non-additional projects, but the volume of the
overall portfolio of projects would be additional.