You are here > Home / Publications / The Clean Development Mechanism: How Do We Get There From Here?
The Clean Development Mechanism: How Do We Get There From Here?
Abstract
The Clean Development Mechanism (CDM) is provided for under Article 12 of the Kyoto Protocol, which was agreed to at the Third Conference of the Parties to the UN Framework Convention on Climate Change in Kyoto, Japan in 1997. It will enable non-Annex I countries to benefit from project activities in their countries that result in certified greenhouse gas (GHG) emission reductions. These emission reductions can be purchased by Annex I countries to contribute to their compliance with their emissions limitation obligations under the Protocol. Certified emission reduction units (ERUs) can be created any time beginning in the year 2000 and used to achieve Annex I compliance beginning in 2008. The Kyoto Protocol says little about how the CDM should be designed and implemented. Article 12.6 of the Protocol states that “the Conference of the Parties serving as the meeting of the Parties to [The Kyoto Protocol] shall .. elaborate modalities and procedures with the objective of ensuring transparency, efficiency and accountability ….” The way in which CDM rules are written and implemented will determine the capacity of the CDM to direct flows of capital among countries to reduce the costs of stabilizing GHG concentrations in the atmosphere and to contribute to sustainable development in developing countries. Currently, though, there appear to be differences among countries in the interpretation of the design and functioning of the mechanism. Some Parties view the CDM as a market mechanism while others view it more as an organization similar to the GEF or the Multilateral Fund of the Montreal Protocol. The purpose of this paper is to describe some of the key issues in the design of the CDM and important functions that will need to be performed in establishing and implementing the mechanism. Special attention is given to the roles that international financial institutions (IFIs) could play. In addition, the paper examines a number of issues that are of special importance to Latin America and the Caribbean.
Citation
Kerr, Suzi and Tim Hargrave. 1998. "The Clean Development Mechanism: How Do We Get There From Here?" Paper prepared for the Inter-American Development Bank.
Motu code: MYS0008
JEL codes: