CDM is growing and maturing – but remember that it delivers cost reduction, not lower emissions

The Clean Development Mechanism is two and half years old and has just registered its 1,000th project (press release – pdf).

They’ve got a nice map, which shows that projects are concentrated in India, China and Brazil, and that Chinese projects tend to be larger scale. Between them, the projects have delivered 136 million CERs to date and are expected to deliver 2.7 billion by 2012 (a CDM project earns a CER when it prevents one tonne of CO2e – carbon dioxide or equivalent greenhouse gas – from being released into the atmosphere). By comparison, companies regulated in the EU ETS (which are the main market for CERs) will be allowed to produce just over 8 billion tonnes of CO2e between 2008 and 2012.

CERs are essentially offsets. Companies participating in the EU ETS are allowed to buy a limited number of CERs to offset emissions for which they do not have allowances (EUAs). In the UK, companies may use CERs to offset up to 8% of their emissions.

Like voluntary offsets, CDM projects have been subject to a lot of criticism. Some of the problems are intrinsic to offsetting, such as the difficultly of establishing whether the CDM project would have happened without the additional funding provided by selling CERs. Some say that the scheme has not applied its environmental criteria strictly enough. The project developers complain about a backlog of applications.

It is important to remember that CDM projects do not produce any net reduction in emissions. They make it cheaper for compliance markets such as the EU ETS to meet their cap. In the absence of CDM, companies in the EU ETS would simply have to make more cuts themselves – and arguably make more clearly measurable reductions and investments in clean technology that last longer.

One Response to “CDM is growing and maturing – but remember that it delivers cost reduction, not lower emissions”

  1. Anonymous Says:

    watch out for dodgems!

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