CDM Projects under the Kyoto Protocol: A Methodology for Sustainability Assessment – Experiences from South Africa and Uruguay

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, industrialised countries may finance greenhouse gases mitigation projects in developing countries. The Kyoto Protocol explicitly requires that the CDM shall assist developing countries to achieve sustainable development. However, a clear definition of sustainability for CDM projects is still debatable. MATA-CDM (Multi-Attributive Assessment of CDM Projects) is an approach that facilitates a quantitative assessment of potential projects regarding their contribution to sustainable development. This paper presents applications of MATA-CDM in two different countries. In South Africa, the application was done mainly for academic and demonstrative purposes, whereas in Uruguay it was implemented together with the responsible Designated National Authority (DNA). The work in both countries included the selection of sustainability criteria and measurable indicators. Experts weighted the criteria using personal interviews and a multi-stakeholder workshop. This method was applied to three potential CDM projects in South Africa and one in Uruguay. Results show that under the conditions of this study, the MATA-CDM approach yet fails to yield a perfect quantitative overall sustainability assessment of CDM projects but that several findings could be useful to further develop the approach with the aim to translate the vague term sustainable development to a mainstream project level. Valuable experience was in particular collected with different stakeholder processes to perform criteria weighting.     

Climate negotiations at a crucial stage: the Hague meeting of contracting Parties in November 2000 and its follow-up

The author discusses the central issues of the UN Framework Convention on Climate Change and the Kyoto Protocol in the general context of the Rio process. The nexus of issues under negotiation in relation to climate change are viewed in the context of multilateral diplomacy for sustainable development. The article outlines the background to the important Sixth Conference of the Parties, held in the Hague in November 2000, and highlights the relationship between the main actors in the negotiations. Finally, the main results of the Hague negotiations are presented, followed by comments on follow-up procedures and perspectives.     

Towards a grand deal on subsidies and climate change

Recent studies have identified public subsidies as a principal cause of unsustainable development. Worldwide, governments are spending up to $U950 billion a year on subsidies. Many of these public subsidies fail to serve their purpose and in fact, often turn out as policy failures as they further distort trade and cause environmental harm. The energy sector is among the most subsidized sectors in the world, receiving over $U240 billion per annum of public subsidies. This article highlights current energy subsidies and their implications. The article examines: (i) the global size and distribution of energy subsidies in industrialized and developing countries; (ii) the impact of these subsidies on the economy, equity and the environment and their role as barriers for sustainable development; (iii) the political economy behind public subsidies and the various political and institutional barriers and lock-in mechanisms that cause subsidies to become entrenched in economic and public structures; and (iv) proposals for effective subsidy reform in energy policies, suggesting a global strategy to eliminate energy subsidies. OECD governments are in a position to take the lead, and the UN Framework Convention on Climate Change presents an excellent opportunity of striking a political grand deal and linking the reform of energy subsidies to a meaningful participation of developing countries to the Kyoto Protocol. Moreover, if sinks are to be included in the clean development mechanism (CDM), it is crucial to include the removal of forestry subsidies in the grand deal.     

Policy,Institutional and Market Barriers to the Implementation of Clean Development Mechanisms (CDM) in China

China is the second largest emitter of greenhouse gases (GHG) in the world, with potentially about two thirds of total Certified Emission Reductions (CERs) for Asia on the world carbon market (). Since 68% of its primary energy is from coal, China's average energy intensity is 7.5 times higher than the EU and 4.3 times higher than the US (EU, 2003 The European Union on-line. (2003). (http://europa.eu.int/index_ns_en.htm accessed Oct 2003  [Google Scholar]). Therefore, introducing advanced clean technologies and management to China represents opportunities for Annex I countries to obtain low-cost CERs through CDM projects, and access to one of the largest potential energy conservation markets in the world.

CDM can provide a win-win solution for both China and Annex I countries, and the Chinese government considers that the introduction of CDM projects can bring advanced energy technologies and foreign investment to China, thereby helping China's sustainable economy and generating CERs. As energy efficiency is generally low and carbon intensity is high in both China's energy supply and demand sectors, numerous options exist for cost-effective energy conservation and GHG mitigation with CDM.

This paper reviews current Chinese policies and administrative and institutional settings for CDM cooperation, and discusses existing policy, institutional and other barriers in the energy market by drawing on observations and experience from previous initiatives such as Cleaner Production and energy efficiency. Some options to remove these barriers are addressed. In order to make CDM projects feasible, China's government needs to promote awareness, streamline administrative systems, and be more active in building a competitive edge in the world carbon market.     

Challenges and opportunities of a post-Kyoto mitigation regime: a survey of the European electricity sector

This paper empirically shows how the uncertainty associated to the absence of a mitigation regime which follows the United Nations Framework Convention on Climate Change Kyoto Protocol (UN FCCC Kyoto Protocol) is affecting investments in abatement activities in the EU electricity sector and, thus, future emissions levels. Based on a survey of EU electric utilities, it identifies the most likely post-Kyoto scenarios considered by them and how they are coping with such uncertainty in their investment decisions. It is found that firms react differently to such uncertainty and adopt different strategies to cope with it, diversifying their emissions control activities. Although most companies foresee post-Kyoto compliance regimes with emissions trading systems, they differ in their perceptions of the form that a post-Kyoto regime could take and are, thus, positioning differently to face such regime. The particular features of each company and the country where they operate affect their perception of the uncertainties, their position regarding a possible post-Kyoto regime and their inclination to carry out mitigation activities. Complying with Kyoto (and, eventually, post-Kyoto) targets significantly influences the investment decisions of European electricity companies. Uncertainty about a post-Kyoto regime may already be affecting investments in mitigation activities in the electricity sector. Therefore, significant progress has to be made in the definition of a post-Kyoto regime. It is urgent to define and agree internationally the emissions reduction objectives and the mitigation instruments that will be accepted for compliance, ensuring continuity of the international emissions trading system foreseen in the Kyoto Protocol.

对美国拒绝批准《京都议定书》的法理分析－－国际环境法的视角

运用共同但有区别的责任原则、风险预防原则、污染者负担原则等国际环境法上的基本原则，针对美国拒绝批准《京都议定书》所持的三个抗辨理由，一一进行了法理分析与批判。     

The Multiple Benchmark System Application to Indonesia,Russia and Panama

Joint Implementation (JI) and theClean Development Mechanism (CDM) have beenestablished under the United Nations Framework Convention on Climate Change (UNFCCC) Kyoto Protocol asproject-based instruments to mitigategreenhouse gases of the industrialisedcountries to the levels imposed by theirKyoto commitments. An outstanding issueassociated with the implementation of thesetwo flexibility mechanisms concerns thechoice of appropriate baseline forcalculating the emission reductions. Thispaper applies a computerised tool thatconstructs and compares different types ofstandardised baselines for projects inIndonesia, Panama and the RussianFederation. It evaluates the effects of theselection of different baselines to theenvironmental integrity of the two Kyotomechanisms.     

Meeting Concentration Targets in the Post-Kyoto World: Does Kyoto Further a Least Cost Strategy?

Preliminary analysis based on an aggregate model of global carbon emissions suggests that constraining emissions to the levels that would be imposed by compliance with the results of the Kyoto negotiations can increase the discounted cost of ultimately limiting atmospheric concentrations. Kyoto targets can be either too restrictive or too permissive depending upon the (currently unknown) trajectory of carbon emissions over the near- to medium-term and the (as yet unspecified) concentration target that frames long-term policy. The discounted cost of meeting low concentration targets like 450 ppmv. is diminished by allowing large sinks and/or by imposing more restrictive near-term emissions benchmarks (even if only Annex B countries are bound by the Kyoto accord). Conversely, the cost of achieving high concentration targets like 650 ppmv. is diminished by disallowing sinks and/or by imposing less restrictive emissions benchmarks. Intermediate concentration targets like 550 ppmv. look like high concentration targets (favoring no sinks and expanded near-term emissions) along low emissions paths; but they look like low concentration targets (favoring the opposite) along high emissions paths. Emissions trajectories that lie above the median, but not excessively so, represent cases for which adjustments in the Kyoto emissions benchmarks and/or negotiated allowances for sinks have the smallest effect on the cost of mitigation.     

A Stochastic Dynamic Game of Carbon Emissions Trading

This paper proposes a computable stochastic equilibrium model to represent the possible competition between Russia and China on the international market of carbon emissions permits. The model includes a representation of the uncertainty concerning the date of entry of developing countries (e.g., China) on this market in the form of an event tree. Assuming that this date of entry is an uncontrolled event, we model the competition as a dynamic game played on an event tree and we look for a solution called S-adapted equilibrium. We compare the solution obtained from realistic data describing the demand curves for permits and the marginal abatement cost curves in different countries, under different market and information structures: (i) Russia's monopoly, (ii) Russia–China competition in a deterministic framework, (iii) Russia–China competition in a stochastic framework. The results show the possible impact of this competition on the pricing of emissions permits and on the effectiveness of Kyoto and post-Kyoto agreements, without a US participation.