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A high-level panel has called for "urgent action" to safeguard the UN's Clean Development Mechanism (CDM) by providing extra support to under-represented developing countries and focusing on sustainable development priorities.
CDM allows developing economies to earn credits for projects that reduce greenhouse gas emissions, such as renewable energy production. These credits, known as Certified Emission Reductions (CERs), are equivalent to one tonne of carbon dioxide and can be traded globally, so that industrialised countries can meet their emission-reduction targets under the Kyoto Protocol.
But the CDM is now under threat from a collapse in the carbon market.
"The price of CERs is about two [US] dollars, down 70 per cent from a year ago," as there is far more supply than demand, said Joan MacNaughton, vice-chair of the panel and president of the Energy Institute in the United Kingdom.
The panel presented its report at a CDM Executive Board meeting in Bangkok this week (10 September).
CDM projects range from renewable energy such as wind, solar or hydropower to afforestation or fuel-switching schemes.
But only one quarter of approved CDM projects currently declare their sustainable development impacts. The report recommends that more systematic monitoring and verification of sustainability is built into project proposals.
Also, developing countries are not equally equipped to monitor this impact, so the CDM Executive Board will provide funds to "designate an independent forum to do this for them," said MacNaughton, though she did not disclose the funding available.
"We can help build national capacity, provide experts and best-practice examples, and train local people to ensure sustainability in developing countries," she added.
Chandra Bhushan, deputy director-general of the Centre for Science and Environment (CSE) in India, who contributed to the report, said: "The criteria [for measuring sustainability] must be specific to a project and not a blanket condition.
"For example, the sustainable development criteria for a standalone industrial project to increase energy efficiency would be very different to that of a forestry project or a decentralised clean energy access project."
The panel also recommends building capacity in developing countries and regions currently under-represented in the CDM, such as Sub-Saharan Africa. Two-thirds of projects are operating in China and India, and the rest in only 43 other countries.
General capacity issues include a lack of infrastructure, social amenities, regulation and political stability. There are also specific CDM capacity problems in some countries, including a lack of human and political resources.
The panel's recommendations to the CDM Executive Board, the UN Framework Convention on Climate Change (UNFCCC) and policymakers aim to ensure "access to consultants" and to improve capacity building by standardising procedures for monitoring as well as providing a new grant scheme to prioritise underrepresented regions, said MacNaughton.
Bhushan argued that a "gold standard" mechanism should be implemented to value and price projects in terms of additional social and economic benefits, not just reductions in greenhouse gas emissions, as the low price of carbon means many projects in developing countries will not happen otherwise.
Another key recommendation is to revise the membership of the CDM Executive Board to include expertise and not just regional representation.
Toyin Adejonwo-Osho, a lecturer in the law faculty at the University of Lagos, Nigeria, and an environmental consultant, disagreed that the panel composition needs to be revised.
"The regional distribution on the panel is perfect as it is," she said.
Bhushan agreed: "There should be a regional balance within any experts appointed by the CDM Executive Board, because climate change is not just a scientific issue: it is a political and social one too."