Climate Change Policy: Clean Development Mechanism

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4118 Climate Change Policy: Mitigation

Elise Tsang 2800322

Climate Change Policy: Clean


Development Mechanism
Contents
Introduction

Clean Development Mechanism in relation to United Nations


Framework Convention on Climate Change and Kyoto Protocol

Main Money Instruments used by Clean Development Mechanism 5


Organisations that Oversee Clean Development Mechanism

Monitoring and Reporting Clean Development Mechanism

Appropriateness, Efficiency and Effectiveness of Clean Development


Mechanism
8
Conclusion

Reference List

10

Introduction
Climate change is a universal issue being faced by todays society, where
the changes of climate are interfering with natural behaviours and cycles
of life. The changes in climate has shifted significantly over the years,
these results are due to the causes of human activities (UNFCCC, 2014).
Human activity contributes heavily towards climate change because of the
high demands of the current population. The current societys demands
are rapidly growing, and therefore mass industrial manufacturing has
been operating to cater for these high demands and producing many
waste materials, by-products and emissions affecting the environment and
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Elise Tsang 2800322
atmosphere (Parson & Karwat, 2011). The importance to maintain and
control wastes generated is essential in order to sustain a livable
community for future generations. Intergovernmental Panel on Climate
Change (IPCC) have reports which emphasizes that the need to address
climate change is necessary or else the cycle of living will be interrupted
and cause fatal consequences (Reinman, 2012). Policies are needed in
order to guide industries and companies to manage operations and
emissions. The United Nations (UN) has a United Nations Framework
Convention on Climate Change (UNFCC), which an international
agreement was created called the Kyoto Protocol. The purpose of the
Kyoto Protocol is to have an international standards and guideline to
maintain and reduce emissions for the countries that have accepted the
agreement. In the Kyoto Protocol there are three components:
International Emissions Trading, Clean Development Mechanism (CDM)
and Joint Implementation (JI). This report will focus on the Clean
Development Mechanism (CDM) and the purpose of this mechanism. The
report will also analyse its uses, the links of CDM back to the Kyoto
Protocol and the UNFCC, organisations that oversee the CDM, countries
involved, instruments used to monitor and report on the CDM, and an
interpretation on whether the CDM is a well-designed policy in terms of
appropriateness, efficiency and effectiveness.

Clean Development Mechanism in relation to United Nations Framework


Convention on Climate Change and Kyoto Protocol
The Clean Development Mechanism (CDM) is a segment of the Kyoto
Protocol (Article 12, 1997), allowing countries to reduce and cap
greenhouse gas emissions with the goal of slowing the processes of
climate change. The UNFCCC is an international joint treaty created in
1992, where parties gather to share ideas and goals to preventing climate
change and is how the Kyoto Protocol came into existence. The Kyoto
Protocol is under the United Nations Framework Convention for Climate
Change (UNFCCC), the goal of both treaties is to stabilise greenhouse gas
concentrations in the atmosphere at a level that will prevent dangerous
human interference with the climate system. The Kyoto Protocol (1997) is
a framework for countries that have agreed to the Kyoto Protocol and are
bound towards reducing greenhouse emissions for a better future. There
are currently 195 parties with the UNFCCC and 192 involved with the
Kyoto Protocol. The Kyoto Protocol helps stimulate green development and
help organisations reduce emissions in an efficient manner. The CDM
promotes projects involved to be more energy-efficient and create more
sustainable ways for development and reduce unnecessary emissions. The
projects must provide reports on the amount of emissions that would have
been generated before CDM and sustainable actions are undertaken which
is called baseline. Additional is the term used when a project has
undertaken CDM, both baseline and additional information must be
collected and reported back to the CDM to be able to calculate the credits
for each project. Therefore, results will need to be monitored, recorded

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and collected in order to gain credits and keep track of the trades to meet
the goals of the agreement.
Main Money Instruments used by Clean Development Mechanism
The CDM is the first global approach to prevent climate change, with a
new set of standards and credit scheme. Projects that are bound to CDM
will earn certified emission reduction (CER) credits which each is
equivalent to one tonne of carbon dioxide. 2% of CERs will be used for the
UNFCCCs Adaptation Fund, which is used to finance projects in developing
countries that need extra support in reducing climate change effects. The
credits can be used, traded or sold to industrialised countries in order to
meet the requirement of reducing emissions as outlined under the Kyoto
Protocol and is also known as emissions trading (Article 17, Kyoto
Protocol). Currently, the European Union possesses the largest operating
emissions trading scheme. CERs are the main form of trading units used
for the CDM, but there are other trading units used, including:
A removal unit (RMU) on the basis of land use, land-use change and
forestry (LULUCF) activities
an emission reduction unit (ERU) generated by a joint
implementation project (UNFCCC, 2014)
This method is used to encourage more sustainable development and
processes within organisations and parties to become more aware of
climate change and provide more flexibility on industrialised countries to
meet their requirements.
Organisations that Oversee Clean Development Mechanism
The CDM Executive Board is the committee that manages and organises
all engagement processes, collaboration and consultation with
stakeholders of CDM. The CDM Executive Board identifies and reviews
with the stakeholders about improvements on current systems and
programs, documentations, operations, guidelines. Understanding the
information collected will allow further improvements to be made towards
the CDM. The need to incorporate stakeholders opinions on CDM
processes is important to judge whether the whole mechanism is heading
towards the overall goals. There is another committee, the Strategy,
Collaboration and Communication (SCC) unit, which organises other
events focusing on general public input. The SSC will conduct annual
workshops, provide documentation and inform the public of the work of
CDM.
Developing countries and developed countries are the two types of
countries that are involved in CDM. Through literature reviews, it was
gathered that the developing countries would overall benefit from the
CDM, by selling CERs to of the developed countries and gain benefits (Das
& Sengupta, 2011; Karakosta, Doukas & Psarras, 2009). The Kyoto
Protocol requirement is to reduce globally approximately 430 million
tonnes of carbon dioxide with the hope of CDM will help reduce the
majority of these emissions. The goal to reduce global greenhouse gas
emissions and to encourage sustainable development in developing

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Elise Tsang 2800322
countries is an ideal outcome from CDM. By helping developing countries
investing in sustainable development, it will help slow the processes of
climate change and encourage participating developed countries to buy
CERs from the developing countries. Developed countries will generate
more emissions and usually needing more emission capacity allowances
and is where the emissions trading process begins. CDM is closely related
to the Pigovian tax theory, where pollution is costly for polluters and
encourages parties to search for more cost efficient and sustainable
development (Das & Sengupta, 2011). Currently, large developing
countries such as India and China are potential participants of CDM
projects. These countries contribute significantly towards manufacturing
goods and the emissions produced in ratio to per capita is very little than
of developed countries emissions (Das & Sengupta, 2011).
Monitoring and Reporting Clean Development Mechanism
In order for a project to be CDM certified, the project will require an
approval letter from the Conference of the Parties serving as the Meeting
of the Parties to the Kyoto Protocol (CMP). The CMP is authorized to make
decisions on behalf of the CDM. The designated national authority (DNA) is
the organisation given the responsibility to be able to entitle projects on
behalf of CDM. The CDM Executive Board is the contact parties will
encounter for any further assistance of projects. A designated operational
entity (DOE) is an independent There are a number of branches and
departments that also assist the functions of CDM, these include a
methodologies panel, accreditation panel, registration and issuance team,
small-scale working group, afforestation and reforestation working group
and also a carbon dioxide capture and storage working group. These
groups are all manage different aspects of CDM operations. There are also
forms and approval processes before a CDM project can be incorporated
as a CDM project and deadlines, dates for submissions and also links and
email addresses for enquiries are also available. Project participants are
required to submit monitoring reports to request for issuance of CERs; the
reports submitted are available online providing transparency for public
viewing. Meetings and consultations are held between parties
participating with the CDM and the CDM Executive Board, public informing
sessions are held as well as documents on CDM website is available.
Monitoring, evaluating, reporting, verifying and certifying are the steps
implemented to determine impacts of greenhouse gases and emissions.
This cycle is used to achieve six goals:
Increasing the accuracy of data for estimating greenhouse gas
emission impacts
Provide most recent data for revision of CDM projects
Consistency and transparency throughout the process
Enhance credibility of the projects with stakeholders
Reducing costs by providing methodologies and consensus approach
Reducing financing costs, allowing projects to have joint funding
There are different types of methods to collect data, these include:
engineering calculations, surveys, modeling, end-use metering, on-site
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inspections and audits and collection of utility bill data. After the data has
been collected analysing data will be the next step of the process. These
methods include: engineering methods, basic statistical models,
multivariate statistical models and integrative models. Different data will
require different approaches of analysis. The need to monitor conditions of
projects will enable a deeper understanding of CDM and its processes.
Appropriateness, Efficiency and Effectiveness of Clean Development
Mechanism
There are positives and challenges of the CDM but the awareness and
recognition of climate change would be one of the most significant factors
of the CDM. The CDM is the first international treaty program attempting
to resolve a wicked problem of climate change where there is no given
solution. The mass and effects of climate change is controversial and
needs to be addressed in order to maintain a sustainable environment for
the future. The approaches taken to prevent further effects of climate
change were to find the main contributors to climate change, in this case
was greenhouse gas emissions from human activity. The causes of human
activity were recognised and found that the processes of generating
goods has caused much emissions, harming the atmosphere and
environment. The approach of CDM is to encourage developing countries
to undertake sustainable development practices with the hope of reducing
these emissions and in turn reduce climate change. CDM is a marketbased mechanism (Tatrallyay & Stadelmann, 2013; Rory Clarke, 2008)
encouraging international awareness of greenhouse gas emissions and
support the developing countries into more sustainable development.
CDM can be a way to support developing countries into committing to
sustainable development through making an agreement with the Kyoto
Protocol.
CDM is a new concept and approach of solving the problem of climate
change, and will therefore have challenges within the process. There is
only one CDM process for all different types of project sizes, this has been
a problem and have been more difficult for small CDM projects in
developing countries to gather baseline and additional data while
monitoring methodologies of CDM in their projects (De Lopez et al., 2009).
Small scale project have also found that there was no benefits to the
community or the region and do not see much interest in the process and
according to the CDM reports many small projects have failed to deliver
results. CDM projects need to calculate a baseline of what would have
been emitted if the CDM was not used; this data could be unreliable and
predictions may not be accurate to actual results. Projects may not be
transparent with their hypothesis of additional data (project results with
using CDM), in order to gain extra CERs (Tatrallyay & Stadelmann, 2013;
Drew & Drew, 2010). CER may be the goal of developing countries and the
concept of reducing climate change may be pushed aside. CDM has
provided inconsistent results because of the poor structure of
methodologies for projects and the stakeholders and targeted audience is
much too broad, ranging from local to international participation, this

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Elise Tsang 2800322
makes it difficult to be able to clearly provide instructions and rules to
reduce emissions (Martinez & Bowen, 2013).
Conclusion
The UNFCCC was able to gather a number of nations together to create
the Kyoto Protocol and generate CDM, which possess processes to
mitigate climate change. CDM has provided much awareness about one of
the most significant issues being faced by todays society to many
nations. There are both positive and limitations on the CDM processes but
with more experience and feedback, more knowledge will be gained and
be able to make modifications to the system.
Reference List
Althaus, C.E., Bridgman, P., 1956 & Davis, G. 2013, The Australian policy
handbook, Allen & Unwin, Crows Nest, NSW.
Callander, B.A. 1997, "Global climatic change - the latest scientific
understanding", GeoJournal, vol. 42, no. 1, pp. 55-63.
Das, D. & Sengupta, P.P. 2011, "Social cost of environmental pollution and
application of counter measures through clean development mechanism:
in the context of developing countries", Environment, Development and
Sustainability, vol. 13, no. 5, pp. 833-844.
De Lopez, T., Tin, P., Iyadomi, K., Santos, S. & McIntosh, B. 2009, "Clean
Development Mechanism and Least Developed Countries: Changing the
Rules for Greater Participation", The Journal of Environment &
Development, vol. 18, no. 4, pp. 436-452.
Drew, J.M. & Drew, M.E. 2010, "Establishing additionality: fraud
vulnerabilities in the clean development mechanism", Accounting
Research Journal, vol. 23, no. 3, pp. 243-253.
Gupta, A. 2014, "Clean development mechanism of Kyoto Protocol",
International Journal of Climate Change Strategies and Management, vol.
6, no. 2, pp. 116-130.
Karakosta, C., Doukas, H. & Psarras, J. 2009, "Directing clean development
mechanism towards developing countries' sustainable development
priorities", Energy for Sustainable Development, vol. 13, no. 2, pp. 77-84.
Martinez, C.A. & Bowen, J.D. 2013, "The ethical challenges of the UN's
clean development mechanism", Journal of Business Ethics, vol. 117, no.
4, pp. 807-821.
Parson, E.A. & Karwat, D. 2011, "Sequential climate change policy", Wiley
Interdisciplinary Reviews: Climate Change, vol. 2, no. 5, pp. 744-756.

4118 Climate Change Policy: Mitigation


Elise Tsang 2800322
Reinman, S.L. 2012, "lntergovernment Panel on Climate Change (IPCC)",
Reference Reviews, vol. 26, no. 2, pp. 41.
Rory Clarke, L. T., 2008, Clean Development Mechanisms can they work? Organisation
for Economic Cooperation and Development , pp. 11-12.
Subbarao, S. & Lloyd, B. 2011, "Can the Clean Development Mechanism
(CDM) deliver?", Energy Policy, vol. 39, no. 3, pp. 1600-1611.
Tatrallyay, N. & Stadelmann, M. 2013, "Climate change mitigation and
international finance: the effectiveness of the Clean Development
Mechanism and the Global Environment Facility in India and Brazil",
Mitigation and Adaptation Strategies for Global Change, vol. 18, no. 7, pp.
903-919.
United Nations 2010, United Nations Framework Convention for Climate
Change, Clean Development Mechanism, available at:
http://cdm.unfccc.int/about/index.html

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