The international climate rules that emerge in 2012 should contain a reformulated Clean Development Mechanism, says German expert Lambert Schneider in this Tierramérica interview.

Lambert Schneider - Oeko-Institut

The CDM allows industrialized countries to invest in environmental projects in developing countries that make up for their emissions of climate changing gases, as a cheaper alternative to a real reduction of emissions in their own national territory.

Reducing carbon dioxide emissions, for example, by maintaining forests intact, allows a poor country to “sell” carbon credits to the rich country, which in turn allows that country to emit the volume of gases saved.

But in order to reverse the process of climate change, such projects must be “additional”: the net reduction of greenhouse gas emissions has to be greater than the reductions that would occur anyway without the initiative.

That “additionality” is a challenge, says Schneider. Without it, “the net global effect will be an increase in emissions” of climate-changing gases.

In practice, “it is very subjective” to judge whether a project is “additional”, and as such many highly doubtful projects have been approved, said Schneider, author of a critical assessment of the CDM and member of the United Nations methodology panel for evaluating the mechanism.

TIERRAMÉRICA: Do you think there has been any substantial progress towards the December conference in Copenhagen on the UN Framework Convention on Climate Change, which is aimed at reaching a new pact for halting that environmental problem?

LAMBERT SCHNEIDER: The negotiations progressed. The parties are now discussing more concrete proposals to arrive at an agreement in Copenhagen. There are still many different points of view on key issues, and time is running out.

TIERRAMÉRICA: The emissions reductions that industrialized countries are offering are a long way from the scientific recommendations. And the developing nations need financial support to launch effective reduction policies. With the global economic recession, fighting climate change could seem like an obstacle for overcoming the crisis.

LS: The economic crisis could also be an opportunity to confront climate change. Public programs to rebuild the economy could be centered on measures that reduce gas emissions, like promoting renewable energy, improving energy efficiency, and building low-carbon transportation systems.

TIERRAMÉRICA: A pact that replaces the Kyoto Protocol in 2012 faces several problems. One of them is the participation of the leading emitters of greenhouse gases, like the United States and the emerging nations like China and India. Is there a plan to get them to join?

LS: The new U.S. administration is adopting a constructive position, although its position on many issues is not yet clear. For the United States to participate, it's important to reach a fair agreement to share the burden among the most advanced economies.

China and India want the industrialized nations to assume ambitious goals, and to support them in reducing their emissions.

TIERRAMÉRICA: The reduction of greenhouse gases stipulated in the Kyoto Protocol has not been achieved, and instead the emissions keep growing. Why?

LS: Some countries are on the way to meeting their Kyoto commitments, while others need to step up their efforts. One deficiency of the Protocol is that most of the countries of Eastern Europe received emissions permits for volumes much higher than what they generated. Therefore, those extra rights ended up being sold to nations that aren't meeting their obligations to limit emissions.

TIERRAMÉRICA: In your study, you concluded that the Clean Development Mechanism was a commercial success with unsatisfactory environmental results.

LS: There are several problems. The most important challenge is the question of “additionality”: a project has to prove that it can only be implemented through the incentive of selling CDM carbon credits. Otherwise the emissions reductions would take place anyway, but the credits would allow the industrialized country to increase its emissions. The net global effect would be an increase in greenhouse gases.

In practice, it is very subjective to judge whether a project is additional, so many projects with doubtful additionality have been approved.

Another problem is the performance of independent certifiers. The CDM Executive Board — the UN institution that regulates the mechanism — identified serious faults. It suspended the accreditation of the biggest certifier for a while, and many projects approved by those certifiers did not pass the Executive Board's evaluation.

A third limitation is that the benefits of sustainable development associated with many CDM projects are relatively low.

TIERRAMÉRICA: The CDM seems to be a perverse tool: under the premise of helping reduce greenhouse gases it has given way to million-dollar deals, but from the environmental perspective it is a zero-sum game.

LS: There is nothing wrong with making money by reducing emissions. Quite the contrary. The carbon market tells decisions makers: reducing emissions in this way saves costs.

But it's clear that compensation is a limited tool. For each ton of gas eliminated in a developing country, one more ton can be emitted in an industrialized country. In that respect, the CDM is a zero-sum game for the atmosphere.

TIERRAMÉRICA: Can the CDM be reformed, or does it need to be eliminated?

LS: It is necessary to reform it. First of all, it should go beyond mere compensation. For example, for two tons of reductions of emissions in one developing country, an industrialized country should only be allowed to increase emissions by one ton. That way there would be a clear atmospheric benefit.

Second, we need more objective rules to evaluate which projects should be approved. We have to assure that we don't accredit projects that would happen anyway without the CDM, and that initiatives with clear benefits for sustainable development get priority.

Third, we need stronger incentives so that the certifiers evaluate the projects in detail. That can be obtained if the UN pays their salaries, and not the entities that receive the carbon credits. In the long term, the CDM should be replaced by emissions trading schemes that function in the most advanced developing countries.