As part of its CDM/JI Initiative, the German Environment Ministry (BMU) commissioned a study on potential quality criteria for a reformed CDM. What led to the research study was the ongoing criticism of the lacking additionality of CDM/JI projects. Also, many observers question whether the project activities really do promote sustainable development in the host countries, as called for in the Kyoto Protocol. The aim of the study was therefore to develop concrete options for improving the CDM.
Recommendations on CDM Reform
The study recommends integrating additional binding approval requirements into the CDM rules. These should ensure additional benefits to foster sustainable development and boost the environmental integrity of the mechanism. The additional requirements should take in, among other things, closer scrutiny of the environmental and socio-economic impacts of project activities. For example, consideration should be given to air and water quality, effects on biodiversity and safeguarding local cultural heritage at the project location.
In addition, the authors recommend prescribing significantly greater public participation. A monitoring plan should assist documentation of these additional requirements and compliance with it should be subject to binding verification by the Designated Operational Entity (DOE). Also, the climate impact of projects should be secured by means of more intensified assessment of additionality, including through the use of standardised baselines and a more robust financial analysis.
Implementation at UN Level
The study recommends implementing these changes at UNFCCC level. This would overcome the scepticism shown by many host countries regarding more stringent evaluation of a project’s contribution to sustainable development. If binding additional requirements were introduced for all host countries, the feared competitive disadvantages could be prevented. The study also develops alternative scenarios for rules for individual states or groups of states.