Tag: CDM

CAN Submission: Views on Suggested Changes to the Modalities and Procedures (M&Ps) for the Clean Development Mechanism (CDM), May 2014

Civil Society Participation in the CDM process (TP Section F2)

Although stakeholder consultation is a key requirement in the CDM registration process, project developers and Designated Operational Entities (DOEs) lack clear criteria or guidance on how to conduct and validate stakeholder consultations. In many cases, peoples and communities that are directly affected are not adequately informed about CDM project activities or programme of activities (PoA) and their potential on-the-ground impacts.

Current CDM stakeholder consultation requirements are insufficient as they are poorly defined, regulated and documented. There are dozens of instances where projects were registered despite insufficient stakeholder participation, strong local opposition and clear evidence that the projects cause harm to the local populations and/or ecosystem.  

As a step to address this shortcoming, Parties to the Kyoto Protocol adopted in Warsaw decision 3/CMP.9 para 20 which requests “the CDM Executive Board, with the support of the secretariat, to collaborate with the Designated National Authorities Forum on collecting and making available, on the UNFCCC clean development mechanism website, information on practices conducted for local stakeholder consultations, and to provide technical assistance to designated national authorities, upon their request, for the development of guidelines for local stakeholder consultation in their countries.”

Despite this decision by the CMP, and earlier decisions to “develop and implement modalities and procedures with a view to enhancing direct communication with stakeholders and project proponents” (Decision 2/CMP.5), the CDM Board has not taken sufficient action to address the shortcomings of the current stakeholder consultation rules. For example, at the 77th CDM Executive Board meeting, the Board decided that the Secretariat shall “inform” DNAs about decision 3/CMP.9 but did not take action to collaborate with DNAs as required per the CMP decision.

This lack of action risks that DNAs may not act upon this important CMP decision. The revised CDM M&Ps should therefore recognize the need for improved guidance and incorporate best practice guidelines for local stakeholder consultation developed by the CDM Board as part of this process in the revised M&Ps.   

In addition to shortcomings in the notice and comment processes, there is no means for stakeholders to raise concerns once a project is registered even if adverse impacts occur during project implementation. The current rules do not provide a formal opportunity to provide comments after the global stakeholder consultation. This means that it is currently impossible to submit comments about a specific project, e.g. if comments submitted during the local or global stakeholder consultation process have not been validated adequately or if concerns appear after the global stakeholder consultation. This is not only relevant for projects during the validation stage but also for projects during their implementation. A formal communications channel for project specific matters would allow reviewing and addressing concerns efficiently and by doing so avoiding escalation of issues. Allowing comments at an early stage in the process, when they can still be taken into account for decisions related to registration or issuance of credits could help avoid potential future appeals. We welcome the proposed change of the technical report section F 2(d) (i), that the CDM modalities and procedures shall introduce a provision allowing the Board and the secretariat to receive information on complaints regarding issues that are not related to the emission reductions or removal enhancements of a registered CDM project activity or PoA. Such a communications channel for project specific comments should be modeled after the already successfully implemented communications channel for policy matters. In addition, a global stakeholder consultation process at the verification stage after the registration period as proposed in the technical paper section F 2(d) (ii)) would be a positive additional improvement as it would allow comments from stakeholder to follow up on earlier comments made through the local and global stakeholder consultations, it would also provide a crucial opportunity for DNAs to receive additional information about the implementation of CDM project or PoA. However, both improvements are necessary because a global stakeholder consultation during the verification period is only a punctual opportunity which does not replace a more flexible communications channel for case specific matters.

It is also worth mentioning that under the current public participation rules for the CDM, no formal channels between local stakeholders and the Designated National Authorities (DNAs) exist. Prior to registration, comments from the local stakeholder consultation are received by the project proponent, and comments through the global stakeholder consultation are received by the Designated Operational Entity (DOE). Given that it is up to the DNA to maintain the approval of CDM projecs and PoAs, and the confirmation that they contribute to sustainable development, comments received through the project specific communications channel should be forwarded to the relevant DNA.

The SD Tool enables changes to be made to the sustainable development co-benefit (SDC) report throughout project implementation including after registration. Stakeholder comments are a key source of information to know about potential negative impacts of CDM projects as reflected in the draft voluntary tool for highlighting the co-benefits of CDM projects at EB68, Annex 22. To strengthen civil society participation in the CDM process local stakeholders should have a formal communication channel to DNAs. DNAs may request project proponents to update the SDC report at any time during project implementation, should the SD benefits or negative impacts have changed since registration of the project.  

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The CDM Must Protect Human Rights

During the CDM workshop held this past June, Parties heard firsthand testimony from Weni Bagama, who spoke out passionately about the impacts of the Barro Blanco CDM project -- a 29 MW hydroelectric dam currently under construction on the Ngäbe indigenous territories in Panama.

Weni described how the company failed to adequately consult the affected communities, a clear violation of CDM rules and international human rights standards. Despite concerns raised regarding consultation and other human rights abuses during the validation process, the CDM executive board approved the project in January 2011.

Since then, James Anaya, the UN Special Rapporteur on the rights of indigenous peoples, visited the affected communities to investigate the human rights abuses associated with the hydro project. In his concluding statement, the Special Rapporteur highlighted the Barro Blanco case, and clearly articulated the international human rights obligations that should apply. He further stated that this case is emblematic of the many development projects that are threatening the lives and livelihoods of indigenous peoples in Panama.  

Barro Blanco does not stand alone.  It is one of many projects that illustrate how the CDM has failed to ensure that projects are designed, implemented and monitored in a manner that protects human rights. In Cancun, parties agreed to ‘fully respect human rights in all climate change-related actions’. This has not yet been realized.

Now is the time to translate words into action. As part of the CDM review process to be concluded this week, ECO calls on Parties to establish safeguards that would help to prevent social and environmental harm, promote greater accountability, and ensure the effective participation of all stakeholders.

But don’t be fooled into thinking that the negotiations on the the CDM appeals procedure – now punted to the next session – can adequately protect the rights of affected communities. Now is the time for real reform to protect human rights in the CDM.

A side event on human rights in the CDM will take place today at 11:30 am in Room Cracow (Level 2, Zone B2), to discuss how the experiences and lessons learned from the CDM can inform the design of new market-based mechanisms.

 

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CAN Intervention in the COP19 CMP Plenary on CDM, Agenda Item 4, 13 November, 2013

Thank you Mr. President,

I am Falguni Joshi speaking as a member of the Climate Action Network.

When discussing the matters relating to the Clean Development Mechanism, delegates must remember that the recent IPCC report highlights that the remaining global carbon budget is very small and shrinking fast.

Impacts of climate change are worsening rapidly and the need to reduce emissions immediately and permanently has never been more vital and urgent.

This reality is in stark contrast with the performance of the CDM to date. Recent research shows that it is likely that on the whole, the CDM delivered only 40% of the emission reductions it sold. The CDM has also not delivered on its second goal: to bring sustainable development benefits. During this session, we urgently call to:

  • Fundamentally reform additionality requirements, including shorten the length of crediting periods
  • Exclude large scale power projects and clearly climate damaging technologies such as coal power
  • Establish a grievance mechanism for local stakeholders and ensure that all CDM projects uphold human rights
  • Improve the CDM’s contribution to sustainable development by establishing a monitoring mechanism

Thank you. 

EU Already at 27% below 1990 – Time for Merkel, Hollande and Cameron to Wake Up

 

ECO is amused by the blind belief in carbon markets the European Union maintains, while its own emission trading scheme has become a zombie. In the ADP, EU has argued that “new market mechanisms will deliver ambition”. Really? At home, Europe’s own emission trading is currently blocking ambition, and in fact encouraging a shift from gas to coal, as the emission allowance prices have crashed.

The reality is that demand for carbon market units is at an all-time low. Current prices are looming at around 0.4 Euro for Clean Development Mechanism (CDM) offset credits and at around 4 Euros for European allowances. The EU flagship policy is close to dead due to the reluctance of German Chancellor Merkel to fight for her legacy as a “climate chancellor”. This has allowed the conservatives in the European Parliament to block even the back loading of EU ETS (EU jargon for a temporary, short-term fix to the ETS).

Sandbag, famous for its brilliant carbon market analysis, estimated in its blog yesterday that in 2012 Europe's emissions fell 27% below 1990 levels, once offsets surrendered into the EU ETS are factored in. This renders EU’s 20% by 2020 target irrelevant, and means that the EU’s ETS will remain useless in the foreseeable future. This is very unfortunate, not only for EU’s own climate investments (which now lack an incentive) but also for climate finance, because low price and low demand means low revenues.

The EU always wanted to link up with emission trading schemes in China, California and the like. But now the question is, why would they link up with the EU, when all EU has to offer is a zombie market with no demand? Without a much more rigid climate target, or CO2 taxes that guarantee a minimum price for the pollution allowances, the market approach plays into the hands of those who want to invest in fossil fuels.

ECO wonders how Merkel, Tusk, Hollande and Cameron can explain their inaction to the citizens of Europe, who have been seriously affected by the unprecedented heavy rainfalls and consecutive flooding. Due to the lobby pressure of a few industries, the lives, homes and livelihoods of Europeans will be further put at risk.

But European leaders have a chance to fix it. This autumn, the European Commission will present a proposal for new 2030 climate and energy targets, and the time for the European leaders to make decisions is in March 2014. The COP in Warsaw will be the first litmus test for Tusk, Merkel (yes, there is an election before...), Hollande and Cameron on whether Europe will be able to phase out any investment into new, coal fired power plants, put renewable energies at the forefront of energy supply (and not catastrophic, highly risky nukes) and take energy efficiency seriously. The impact on the UN talks could be significant.

Europe will host two COPs within the next two and a half years. They have a particular responsibility to lead us to a good treaty in 2015. Continuing “business as usual” would mean putting the livelihood of millions of European (and other) citizens at risk.

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CAN View: On possible changes to the modalities and procedures for the clean development mechanism, March 2013

 

At CMP8, Parties confirmed the decision to review the modalities and procedures of the CDM (CDM M&P) and invited admitted observer organizations to submit to the secretariat, by 25 March 2013, their views on possible changes to the modalities and procedures for the clean development mechanism. The above mentioned NGOs welcome the opportunity to submit their views.

Introduction

The CDM is at a cross-road. In 2012, the market collapsed and prices, currently below one Euro, may not recover any time soon. At current price ranges, it is all but impossible to implement CDM projects that are truly additional.  The reason for the price collapse is two-fold: first, low demand due to very weak emission reduction targets; and second, a significant over-supply of carbon credits due to lenient rules, in particular rules on additionality. Such lenient rules allow for business-as-usual projects to qualify for the CDM and hence have resulted in the issuance of millions of credits that do not represent any emission reductions. Both the lack of demand due to insufficient ambition and the over-supply have to be addressed urgently.

Despite the uncertain future of the CDM, CAN believes that it is important to address its flaws and improve its rules for the following reasons:

1)     Its rules have served and will continue to serve as a blueprint for other carbon market mechanisms. Because the CDM is used as a reference by many other emerging schemes, it is vitally important that its rules are well -designed and have integrity.

2)     Despite the imbalance between supply and demand, a significant number of credits are expected to be used by Parties that plan to join a second commitment period. If these credits come from projects with poor environmental integrity, the CDM will continue to undermine the already weak emissions reduction targets.

 

Heros and Zeros: Adaptation Fund Facts & Figures

More and more countries seem to recognise the progress and achievements of the Adaptation Fund in recent years.  Progress so far was featured at a side event last Friday, held jointly by the Adaptation Fund Board.

First the good news.  Only two years after the first call for proposals, 25 concrete adaptation projects have been approved so far and USD 160 million has been allocated.  Direct access is now approved for 14 countries, and many more have expressed interest. 
 
The bad news is that the key funding source, the share of proceeds of CERs from the Clean Development Mechanism, has now almost totally dried up.  At the end of 2010, it was estimated that revenues would come in as much as USD 400 million by the end of 2012, but only USD 180 million can actually be realised with the current all-time low CER price. 
 
Some developed countries have made contributions to the AF to the tune of USD 120 million, and this is a very good thing. Spain and Sweden have been the heros in this, while UK and Germany have contributed only a tenth as much relative to their GDP than Spain or Sweden (roughly a tenth). 
 
But lots of other developed countries have closed their pocketbooks despite the benefits for vulnerable communities addressed by the AF projects. We still have time for pledges coming through from ministers in the next days in Doha, taking their cue from the many individuals who have, once again, reached into their pockets to help build up the Adaptation Fund.
 
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Stabilisation Fund Won’t Save the CDM

It is no secret that the future of the CDM looks grim. According to the High Level Panel on the CDM Policy Dialogue, the CDM will produce an excess of roughly 1.25 billion offset credits because of low ambition by developed countries. This has driven the prices in the cellar and stirred creativity on how to keep the market flourishing. In the CMP opening plenary, India suggested setting up a stabilisation fund to buy up excess offset credits – something that has also been recommended by the High Level Panel on the CDM. A large chunk of the excess offset credits will come from HFC-23 destruction facilities in India and China. Credits form such HFC-23 projects have been banned by major buyers (EU, Australia and New Zealand) for their lack of environmental integrity and sustainable development benefits. With a lack of buyers, such a fund would provide a convenient new source of money!

Even if HFC-23 credits were not allowed in such a fund, there is more to worry about. New findings from the CDM Policy research team show that large-scale power supply CDM projects, which are expected to generate the majority of CDM credits until 2020, are rarely additional and therefore increase global emissions. This means that such a stabilization fund would largely buy up excess credits from industrial gas projects and from projects that are unlikely to be additional. This seems like a terribly bad use of scarce climate finance. Certainly there are much more effective ways to spend mitigation money, such as directly supporting the implementation of renewable feed-in-tariffs and other proven policy measures.
 
Furthermore, if the CDM wants to be fit for the future it needs to get rid of its excess baggage of business-as-usual projects that inflate its supply. Banning credits from project types that are highly unlikely to be additional after 2012 would get rid of 1.6 billion offset credits between now and 2020. Stopping such projects from renewing their crediting period and not allowing the registration of new projects would also go a long way. 
 
Instead of putting money into the CDM stabilization fund, developed countries should raise ambition and put money on the table to help developing countries take actions that transform their economies to low-carbon development path. It’s as easy as that.
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Little Brother’s Lessons For the Future

Joint Implementation (JI) is the much neglected little brother of the CDM. Yet JI needs careful watching, not just because hundreds of millions of credits have been issued under JI that basically launder hot air and have zero environmental integrity. But also, because JI shows us what we could face with new market mechanisms, if we do not insist on stringent international rules and oversight.

Here in Doha, Parties are discussing how to reform the JI to make it fit for post 2012. ECO welcomes the suggestion of eliminating Track 1, under which host countries can unilaterally approve projects and issue credits without any international oversight. 95% of all JI credits have been issued under track 1, many of them with blatantly no environmental integrity. 
 
Let’s look at Ukraine, the biggest supplier of JI credits with 69 projects registered under track 1. Sixty of these projects were audited by one single auditing company, paid for by the project developer. Normally such an audit takes many months, but some of the projects were miraculously audited in as little as 7 days. That hardly inspires confidence… Many of these projects requested registration only in the last couple of years but receive so called “early credits,” for emission reductions achieved before the Kyoto Protocol started, some receiving credits going as far back as 2002. These projects hardly needed application to JI rules, since they were implemented long before the mechanism started functioning.
 
This is not to single out Ukraine. It is just to point out what happens when countries can unilaterally issue credits which can then be used for compliance under a global regime. Short-term self-interest trumps long- term climate security. Dear Delegates, please remember this before you enthusiastically endorse an anarchy of approaches and standards under the LCA’s Framework for Various Approaches. The UNFCCC needs to lay out common rules for mechanisms to ensure integrity. We now know from the JI that approval at national level without UNFCCC oversight simply doesn’t deliver.
 
Unfortunately, the suggested new rules for one unified JI track are insufficient to ensure JI’s climate integrity. Environmental integrity criteria have to be strengthened (i.e. additionality and baseline rules). Non-additional JI projects undermine mitigation goals, especially when they are implemented in countries with a large AAU surplus. Therefore it is vital that only countries that have an ambitious reduction commitment should be able to host JI projects. 
 
The window of opportunity to prevent catastrophic climate change is rapidly closing. We cannot afford any distracting market mechanisms that do not deliver new and additional emission reductions.
 
 
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