Another Way (Stichting Bakens Verzet), 1018 AM
Edition 04: 30 January, 2011.
Edition 07 : 21 November, 2011.
Edition 08 : 29 May, 2012.
Study points : 05 points out of 18
Minimum study time : 125 hours out of 504
The study points are awarded upon passing the consolidated exam for Section C : The Model.
[Study points 03 out of 18]
[Minimum study time: 85 hours out of 504]
The study points are awarded upon passing the consolidated exam for Section C : The Model.
SECTION 02. INTRODUCTION.
For a critical general
analysis of carbon trading see : Kill, J. et al, Trading Carbon : How it Works
and Why it is Controversial, FERN, www.fern.org, Moreton in Marsh and
A "certified emission reduction" or "CER" is a unit representing one ton of carbon dioxide-equivalent (CO2-e) sequestered or abated, using global warming potentials defined by 2/CP.3. CERs are issued to project participants in Clean Development Mechanism (CDM) projects under Article 12 of the Kyoto Protocol and the prescribed CDM modalities and procedures (3/CMP.1, Annex, paragraph 1(b)).The value of CERs varies sharply over time. Prices on 14th November 2009 were about € 14 per tonne.
main source for information on the Clean Development Mechanism (CDM) is the CDM
website of the United Nations Framework Convention on
Climate Change (UNFCCC). Many will find the Rulebook : Clean Development Mechanisms Rules, Practices
and Procedures developed by Baker and McKenzie for the www.cdmrulebook.org website easier to
navigate. The Baker and McKenzie
rulebook includes an A-Z index of key words which is easy to consult. The www.cdmrulebook.org
site is not, however, complete. For instance, it says what a Designated
Operational Entity (DOE) is, but does not provide a list of approved DOEs. The list of DOEs can instead be found at the
UNFCCC site. There are currently 48 of them. Most of them are based in
industrialised countries, though there are some in “emerging” countries too.
Designated Operational Entities (DOEs) intermediate between the people
proposing a project and the CDM Executive Board which approves it. They
evaluate and validate initial project applications and carry out periodic
inspection and certification activities ensuring on-going compliance with the
CDM conditions. Most of these DOEs are large international institutions which in practice may complicate
or facilitate procedures. Project proponents depend on their decisions.
Furthermore, if the issuing organ (in
the case of CDM projects, the Executive Board) makes an arbitrary decision
either with regard to registration or to issuance of certificates, applicants
have no remedy. In December 2010 there was still no CDM appellate body to
handle appeals against the decisions of the CDM Executive Board. A preliminary discussion
on this issue took place during the UNFCCC meeting in Cancun (
Click here to see a diagram of the basic CDM structures, with explanations. The CDM Executive Board has 20 members. 10 of them are nominated by the members of the Kyoto Protocol, 1 by each of the 5 regional United Nations groupings, 2 by annex 1 members (industrialised countries), 2 by non annex 1 members (other and developing countries) and 1 by small island developing states. The present chairman is Jamaican. The present deputy-chairman is English.
introduced Programmes of Activities (PoA) appear to offer greater potential for
CDM financing of integrated development projects in developing countries. A programme of activities defines parameters
for CDM activities to be included in the programme. It is a sort of convention.
Once registered by the CDM Executive Board, the PoA applies to activities
brought under it from time to time without the need for project by project
applications. For more information refer to : Beaurain F., Schmidt-Traub G, Developing CDM Programmes of
Activities : A Guidebook, South Pole Carbon Asset Management Ltd,
Click here to see how this might work on a sub-continental scale in developing countries. In the example, a sub-regional authority is the “owner” of the Programme of Activities which forms an integrated part of its development policy and that of the individual countries the authority represents. The programme is run by a consortium of leading NGOs represented throughout the sub-region. This consortium is responsible for the operation of the programme and for the sale of CER emission certificates. On behalf of the project owner it collects CER emission funds and distributes them either to the sub-regional authority itself in repayment of the initial project funding or to the cooperatives responsible for the on-going management of the structures created in each individual integrated development project area. Its activities are controlled and audited by a DOE (Designated Operating Entity) which acts on behalf of the Clean Development Mechanisms (CDM) Executive Board (EB).
Limitations of Clean Development Mechanism (CDM) applications under the
Development Mechanism (CDM) projects are used to replace or improve on current
energy consumption. If there is no current energy consumption in a given project
area it cannot be replaced or reduced. Some industrialised countries (these
countries are listed in Annex I to the
United Nations Framework Convention on Climate Change (UNFCCC)) currently use
up to 50 times more energy per inhabitant than poor countries. In principle,
the more the energy used, the greater
the opportunities for using it more efficiently. The CDM mechanism applies to
projects in so-called “host” countries which are the ones not listed in Annex I. Emerging economies such as
“If absorptive capacity [of developing countries in respect of
technology transfer] is low then it is difficult to adopt (and adapt, develop,
design) new technological hardware; and to create the skills, knowledge,
organisational changes, and institutional arrangements and linkages necessary
to facilitate its sustainability. ” (Byrne R. et al, STEPS
Working Paper 46,
“….green investment is almost entirely dependent on subsidies, protectionism and debt-financing.” (Quilligan, J.B. , Interest Rates and Climate change : Realigning our Incentives through the Power of the Commons, Kosmos, Vol. X, Number 1, Fall/winter 2010, p. 31, Kosmos Associates, Lenox, 2010.)
“… green economics will lead to a net transfer of wealth from debtors to entrepreneurs, investors and bankers.” (Quilligan, J.B. above, p. 27)
“The global commons are not being exploited merely because nature’s services are underpriced in the market, but because they are being propertized, commodified, susidized and subjected to interest-bearing debt. The carbon price simply perpetuates the myth that property rights and debt-based financing can solve our environmental and social problems, even while the interest-generating structure of the market system undermines its own resource base and is ultimately unsustainable.” (Quilligan, J.B. , above, p. 27)
“So, in terms of green financing, it is not only the carbon price that is problematic : the financial and monetary mechanism of interest compounding through time will not support a self-renewing atmosphere. Conversely, the carbon bubble is also a banking bubble : state capitalism will not sustain its monetary reserve value by continually multiplying the debt of a planet whose biological, chemical and physical resources are constantly being withdrawn. The compulsion for endless economic growth is smothering this planet. By continually inflating financial assets through the expansion of private and public debt and the relentless conversion of our commons into money, we are borrowing time from the biosphere – and time is literally running out.” (Quilligan J.B., above, p. 30)
problem with the CDM system is that it is business- rather than
development-oriented. With the exception of sectors 14 and
01. Energy industries.
02. Energy distribution.
03. Energy demand.
04. Manufacturing industries.
05. Chemical industries.
08. Mining/mineral production.
09. Metal production.
10. Fugitive emissions from fuels (solid, oil, and gas).
11. Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride.
12. Solvent use.
13. Waste handling and disposal.
14. Afforestation and reforestation.
The CDM system is also fraud-sensitive :
states that] Carbon credit carousel fraud in
the EU ETS resulted in losses of about 5 billion Euros in 2008-2009 and is
estimated to account for 90% of carbon trading volume in some countries.”
(Silverstein D., A method to finance a global
climate fund with a harmonized carbon tax”,
One theoretical advantage for projects in the least developed countries (LDCs) (according to their status on the date of the publication of the request for issuance) is that LDCs were exempted from the payment of registration and adaptation fees at the third meeting of the Conference of the Parties (COP) (2/CMP.3, page 13, par. 31) . Many of those countries have not been involved in CDM projects under the Kyoto Protocol at all. Other compliance and monitoring costs are still, however, payable.
02 Approval of projects by the Designated National Authority (DNA).
Each duly prepared CDM project has to receive a letter of approval from a Designated National Authority (DNA) confirming that the project activity contributes to the sustainable development of the host country concerned. The DNA for any given country can be found at the list of designated national authorities at the website of the United Nations Framework Convention on Climate Change. Note that on 9th November 2010, 130 of the 151 non-annex 1 countries that have ratified the Kyoto Protocol had less than 10 CDM applications. Of these, 50 countries had 1-9 projects, 53 countries with a DNA office had had no applications, and 27 countries had no DNA office at all. This may indicate a lack of local expertise and understanding of the complex CDM structures. It may also reflect a belief that the CDM structures were set up more in the interests of the industrialised countries than in those of the poor countries, that there was “little in them” for the world’s poor. This report may give developing countries hope that ways of effectively applying the CDM structure to their benefit can be found.
Exam Block 8 : [4 hours]
Consolidated exam : Section C. [6 hours].
"Money is not the key that opens the gates of the market but the bolt that bars them."
Gesell, Silvio, The Natural Economic Order, revised English edition,
“Poverty is created scarcity”
Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58th
annual NGO Conference, United Nations,
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