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BEIJING Nov 30 The Clean Development
Mechanism, part of the U.N's Kyoto Protocol, promotes
investments in emission-reducing projects in the developing
world by companies and governments in rich nations.
In return for building wind farms or other projects, such
investments can earn valuable carbon offsets called certified
emission reductions (CERs) that can be sold for profit or used
to meet mandatory targets to cut emissions.
Reforming the CDM will be part of the agenda at U.N. talks
that start next week in Copenhagen, when negotiators from
around the world gather to discuss a new global agreement to
combat climate change once the first phase of Kyoto expires in
Below are the main issues surrounding the reform of the
China -- by far the biggest generator of CERs -- has
strenuously defended the current system and the onus it puts on
industrialised countries to fund CO2 reduction projects in the
developing world. China says it does not oppose reform, but any
changes should enable more investment and technology to flow
into China and other developing countries.
China has also called for the CDM system to be scaled up --
possibly through a much wider application of "programmatic CDM"
that will allow a whole village or community to earn credits by
installing more efficient cooking stoves, solar panels or
energy-saving lightbulbs. [ID:nSP390197]
Officials also say there should be less bureaucracy and
fewer delays, and streamlining the complex approval process is
expected to discussed at Copenhagen and beyond.
Beijing also opposes European proposals to overhaul the
"project-based" CDM and impose targets on entire industrial
sectors, calling them covert attempts to impose binding
emission targets on developing nations.
THE EUROPEAN UNION
The European Union -- the biggest market for CERs -- has
criticised the CDM on three fronts. First, the CDM has failed
to maintain "environmental integrity" because of its focus on
so-called low-hanging fruit -- easy and cheap greenhouse gas
abatement projects that are not doing enough to curb global
warming. It is also considering a two-tier system in which
low-quality CERs are traded at a lower price.
Second, the CDM so far has been dominated by the most
advanced of the developing nations -- primarily China, India
and Brazil -- while vulnerable and unindustrialised nations in
Africa have been given nothing.
Third, the EU has said the project-based CDM has been too
small in scale to have any meaningful impact on global CO2
Their answer to all these problems has been a sectoral
approach in which emission reduction targets are imposed on
entire industries such as power generation, cement or steel.
According to EU proposals, each sector is assigned a benchmark,
and will be awarded carbon credits if it makes CO2 cuts above
and beyond that benchmark.
Europe still hopes major developing countries such as China
and India can be persuaded to join such a scheme, while the old
CDM could be maintained to fund clean-energy projects in poorer
THE UNITED STATES
The United States never ratified the Kyoto Protocol and
hasn't participated in the CDM up to now, Even though the Obama
administration has made a commitment to implement its own
cap-and-trade regime, many legislators are unhappy with the
idea that domestic CO2 targets can be subject to monitoring and
verification by the United Nations.
Draft climate legislation in the United States allows the
use of overseas mechanisms to offset carbon emissions, and the
country's negotiators have said they could work with the CDM.
But many are still reluctant to join a treaty that commits
its own industries to stringent CO2 cuts without forcing those
in China to do the same. For that reason, they are supportive
of EU sectoral measures, which could help allay U.S. concerns
about lost competitiveness.
Brazil is the third biggest beneficiary of the CDM after
China and India. Analysts have predicted it could earn $16
billion per year should REDD projects -- "reducing emissions
from deforestation and degradation" -- be approved in any new
scheme. However, Brazil is backing a separate REDD scheme,
arguing that the inclusion of forest projects under the CDM
would enable rich nations to meet their CO2 targets on the
Japan has been the second biggest buyer of CERs after the
European Union and has also been calling for reform, saying a
new system needs to ensure developing countries make bigger
commitments to reducing greenhouse gases. It has also called
for more standardised rules for CDM projects, particularly for
the baselines by which a project's CO2 cuts are evaluated.
The CDM has focused primarily on reducing industrial
greenhouse emissions, and it has not brought much to relatively
unindustrialised regions like Africa. According to the latest
statistics from the UNEP Risoe Centre, only around 2 percent of
the total CDM projects and 3 percent of CERs currently in the
pipeline have originated from the continent.
The major parties in the negotiations concede that CDM
wealth should be spread more evenly, and the CDM's executive
board has also said that a more equitable distribution of
projects will be discussed at Copenhagen.
(Reporting by David Stanway, Editing by David Fogarty)
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