Unilateral Clean Development Mechanism – An approach for a least developed country?: The case of Yemen

Decision parameters prevailing in the market lead to a slim expression of interest of foreign investors for Clean Development Mechanism (CDM) projects in a bi- or multilateral design in Yemen. The Designated National Authority Secretariat in Yemen experiences the preference of Annex I entities of merely buying Certified Emission Reductions rather than investing in projects. Yemen's ability, like many least developed countries, to carry out unilateral CDM projects is moderate. Domestic project developers perceive difficulties in procuring underlying finance as key barrier in materializing CDM project activities in a unilateral design. The country remains trapped in a “catch 22 situation”. International assistance through low interest loans and capacity building for domestic financial institutions tailored to CDM project activities may trigger the market. Aggravation can be assisted by amending the policies of Annex I countries, in consequence to allocate a substantial share of their procurement activities to Certified Emission Reductions from least developed countries. Acquisition programmes may give preference to projects from host countries not traditionally represented in the pool of attractive CDM destinations.