reforming carbon governance. the clean development mechanism (cdm) from an emerging economy...
TRANSCRIPT
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Reforming Carbon Governance. The Clean Development Mechanism (CDM) from an emerging economy
perspective
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The Sonderforschungsbereich (SFB) 700
- 20 individual research projects covering theory, political order, security, economy and environment (www.sfb-governance.de)
- Five universities and research centers in Berlin and Potsdam, some 20 scholars and more than 45 Ph.D. students involved
- Focus on non-OECD countries- Project by University of Potsdam focuses on carbon
governance in developing and emerging economies
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"The Clean Development Mechanism [the offset part of the Kyoto Protocol], which provides about 95% of the offsets used in the European market, is clearly broken and should be quickly phased out."
Fred Krupp, President EDF, Wall Street Journal Environmental Capital blog, 20 March, 2009
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Policy question
Shall a post-Kyoto agreement include an offset mechanism like the Clean Development Mechanism (CDM)?
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Research question
What effects did the CDM have in its major host countries (Brazil, China, and India)?
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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Anticip
ate
d
em
issions
with
out C
DM
De fa
cto
em
issions
with
CD
M
Reduc-tion
Host country (developing country, Annex II country)
Kyoto-Protocoldefined amount of CO2 emissions
Trading Carbon Emission Reductions
AdditionalCO2 emissions
Industrial country (Annex I country, or private firm from annex 1 country)
Transfer of technology and resources
How does a CDM work?
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Objectives of the CDM
1. Cost-effective mechanism for Annex I countries to offset GHG
2. Induce practices of sustainable development in host countries
Strongest link regarding carbon governance between developing and developed world
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Use of market instruments to provide mitigation options efficiently and effectively
Private actors interact directly with international organizations
Development of several multiactor, multilevel public-private partnerships (PPPs) and new networks
New actors in respective countries
The CDM a „new mode of governance“
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Initiation of PPP
rule setting
rule implementation
Closure of PPP once dispensable OR transformation into business relationship
Business operation under the shadow of hierarchy
20042001 2008
Low project risk
High project risk
Carbon market evolvement
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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Fundamental critique
• Don‘t commodify nature!• No impact at all!• Distortion from real problems
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Technical critique regarding the fulfillment of the objectives
• Hardly any contribution to sustainable development• Questionable additionality
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Critique regarding the governance of the CDM
• Important sectors left out• Regional disparities (LDC 0.9% of all projects)• Red tape and unprofessional bureaucracy
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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All CDM Projects in the Pipeline in Brazil + Mexico + India + China
as a fraction of all projects
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1-
04Q
2-04
Q3-
04Q
4-04
Q1-
05Q
2-05
Q3-
05Q
4-05
Q1-
06Q
2-06
Q3-
06Q
4-06
Q1-
07Q
2-07
Q3-
07Q
4-07
Q1-
08Q
2-08
Q3-
08Q
4-08
Pro
ject
s
Mexico
Brazil
China
India
(Source: UNEP 2009)
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No. of projects
in pipeline
(registered)
% share of
worldwide
total projects
in pipeline
Volume of
kCERs up to
2012 in
pipeline
3 most
common
project types
3 most
common
project types
worldwide
Brazil
352 (150) 7,8% 188.294
Biomass energy;
hydro power;
agriculture
1.Hydro power
2. Biomass
energy
3. Wind powerChina
1682 (433) 37% 1.567.120
Hydro power;
wind power;
energy
efficiency
India
1208 (395) 26.6% 461.617
Biomass energy;
wind power;
energy
efficiency
(Source: UNEP 2009)
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The CDM in Brazil
• Strong local capacities and increased awareness• Introduction of cleaner technologies (landfill, small hydro)• Push for renewable energy (> Profina)• CERs 20th largest export commodity
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The CDM in China
• Strong local capacities, increased awareness, and rise of local project developers and DOEs
• Push for renewable energy• Slowly emerging discourse on climate change within
public • HFCs taken care of
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Number of CDM projects in China by type
Biomass energy4,3%
Biogas1,6% Coal bed/mine
methane3,8%
EE ow n generation
15%
EE industry0,6%
Wind19%
Fossil fuel sw itch1,9%
N2O1,7%
HFCs0,7%
Hydro47%
Landfill gas3,4%
(Source: UNEP 2009)
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The CDM in India
• Strong local capacities, increased awareness, and rise of local project developers and carbon financiers
• Push for renewable energy, in particular wind energy and biomass
• Small push towards decentralized energy system
In India most projects where additionality is questionable but also most projects where sustainable practices have been induced
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Number of CDM projects in India by types
Fugitive 1%
Fossil fuel sw itch4%
EE supply side2%
EE ow n generation
10%
EE industry13%
Cement3%
Hydro10%
Landfill gas2%
Wind25%
Biogas3%
Biomass energy27%
(Source: UNEP 2009)
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The CDM in emerging economies
• CDM a successful instrument to link emerging markets into Kyoto
• Market mechanism accepted and perceived as successful in the most important host countries
• Strong ownership of governments• Multilevel regulation problematique but no race to the
bottom• Strong output legitimacy, weak input by civil society
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Brazil China India
Government Holds up ‘environmental
integrity’ in project
development
Keeps control of market and
foreign actors, but also
provides capacity
development
Has facilitating role for CDM
market development
Project
developers/
Consultancies
Heavy competition, but
informal cooperation among
biggest consultancies
International and domestic
project developers
Many unilateral projects
developed by Indian
companies
Buyers/traders Financial community has large
interest in developing carbon
market and trading, but so far
with limited success
Banks have no interest in
trading, hardly an interest in
project financing
Slowly emerging awareness
among national banks
Civil society Awareness, but limited
engagement in CDM
Awareness, positive
position, no capacity
Engagement in project
activities, but no watchdog
Epistemic
communities
Strong involvement from key
scientists in methodology
development and cooperation
with DNA
Involvement of scientists in
CDM capacity development
and project development
Mostly among development
assistance community +
business community
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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The radicals
- Stop CDM!- Tax carbon or build a global cap and trade system!
<->- Path dependency- Vested interests
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Scale it up!
- PoA- Sectoral/ policy CDM- Large potential of rather cheap CERs with probably good
sustainable development impact
<->- Who is setting the baseline?- MRV?
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Increase the scope!
- Include LULUCF- Include CCS- Include nuclear
<->- Technical problems, partially MRV- Strong political opposition
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Reform the governance structure!
- Professionalize EB- Set-up an appeals body
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Increase sustainability!
- Include discount factors for CERs- Set international SD standards
<->- Vested interests
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Overview
- What is the CDM?- Why is it so heavily criticized?- The CDM in Brazil, China and India- Reform proposals - So what?
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CDM in post-2012 architecture
• Will play a role as a „temporary tool to help transition countries toward broader commitments“ (GAO 2008, 38) in a reformed way
• Still strongest link between Annex I and II countries• CDM only one instrument towards a low carbon future
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Thank you for your attention!
Contact details:Markus Lederer
[email protected] +49 331 977 3531
University of Potsdam, Germany