Cleaning up or passing the buck?
By Jennifer Rankin - 18.06.2009 / 00:00 CET
Jennifer Rankin reports on the clean development mechanism, one of the most controversial emission-reduction schemes.
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Fact file
CDM – TYPE OF PROJECTS FUNDED
Waste handling and disposal
Fugitive emissions from production and consumption of halocarbons and sulphur hexaflouride
Fugitive emissions from fuels (solid, oil and gas)
Metal production
Mining/mineral production
Transport
Agriculture
Afforestation and reforestation
Chemical industries
Manufacturing industries
Energy industries (renewable/non-renewable sources)
Energy demandSource: United Nations Framework Convention on Climate Change (2008)19.45%
1.09%
7.45%
0.13%
0.71%
0.13%
5.78%
0.08%
2.57%
5.13%
56.35%
1.16%
CDM PROJECTS BY REGION
Source: United Nations Framework Convention on Climate Change (2008)
JOINT IMPLEMENTATION
Joint implementation, one of the three mechanisms established by the Kyoto Protocol, makes it possible for developed countries to invest in emission-reduction projects in other developed countries and to get emissions credits that count towards their own goals. The approach is sometimes referred to as project-based emissions trading.
Credits generated under the mechanism are recognised by the EU's emissions trading scheme, although their use is capped. The main idea behind the mechanism is to support foreign investment and technology transfer in countries that host such projects. The scheme was designed for all industrialised countries, but in practice has become focused on transition economies – principally in the former Soviet Union.
But a World Bank report on the state of the carbon market published in May found the mechanism to be “constrained by regulatory delays in registration and issuance” and pointed out that project financing was “extremely difficult to obtain” because of the financial crisis.
The market also weakened amid uncertainty about the rules that will apply after 2012, when the Kyoto Protocol expires; in 2008, only half the transaction volume (and less than half the value) of 2007 was achieved, with European buyers – above all, utilities – still dominant. On the host side, Russia had a 68% market share, with Ukraine second, at 18%. Most of these projects, however, are still at the approval stage.
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