Ways towards achieving real benefit of Clean Development Mechanism

According to the United Nations Framework Convention on Climate Change (UNFCCC), the Clean Development Mechanism (CDM) is a market-based mechanism which assists more developed countries in reducing their greenhouse gas emissions (GHG) by investing on projects in less developed countries. The UNFCCC suggests that the CDM is designed by taking on the economic value of certified emission reduction credits. This mechanism is actually a smart approach to encourage the private sector to take an active role in reducing  GHG emissions from the source. It also encourages private economic actors to move from business-as-usual to a more environmentally conscious business.

However, an article discussing about CDM in Indonesia argues that the real benefits of CDM projects can be obtained if there are some improvements on the project assessment criteria to allow only the projects which hold genuine sustainable development value. In addition, CDMs have been criticized as being cheap, easy and legal pathways for more developed countries to escape from their obligations to reduce greenhouse gas emissions within their own borders. To put it in another way, CDM has allowed more developed countries to take the ‘not in my backyard’ policy.

Thus, I would suggest that CDM requires reform, which could entail two alternative approaches whereby real benefits of CDM can be genuinely derived. Firstly, the CDM can be devised as an incentive rather than an option for meeting emission reduction targets. More developed countries are allowed to execute CDM if only they have achieved certain level of emission reduction targets within their own country. This approach might seem to apply the command and control policy, but it may encourage more developed countries to make some efforts nationally before making investments to reduce emissions in other countries.

Secondly, CDM projects should be strongly compelled to adopt technology transfers from more developed countries to less developed countries. The current CDM mechanism is also criticised for not promoting renewable projects. The technology transfers can also be paired with a binding requirement for more developed countries with the largest share of historical and current greenhouse gas emissions to provide technological assistance to less developed countries in order to undertake cleaner and greener development.

The current voluntarily-based CDM might be ineffective because it would only involve environmentally conscious companies. It is more defective if they are running the business in less developed countries whose government has little or no commitment in dealing with climate change. Certainly, a genuine solution through CDM should be made whereby real emissions reduction can  be achieved.