At COP-19 in Warsaw, Parties will review the modalities and procedures of the Clean Development Mechanism (CDM) under the Subsidiary Body for Implementation (SBI 39) and will decide on further guidance on the CDM under the Conference of the Parties to the Kyoto Protocol (CMP).
Parties and admitted observer organizations submitted their views and suggestions on the review to the UNFCCC earlier this year in response to a public consultation (see the submission by Carbon Market Watch, which we summarize below, as well as submissions by Parties and submissions by other observer organizations)
The CDM is in a precarious situation, as demand for its Certified Emissions Reductions (CERs) is very low and is projected to remain low until 2020, if Parties do not increase their mitigation pledges. Because of the lack in demand and the oversupply, prices have dropped over 90% in the last year and a half and are now at around Euro 0.4. This also impacts the quality of offsets. At such low prices, it is safe to say that it is not possible to implement new projects that are additional.
Carbon Market Watch believes that the supply-demand imbalance needs to be addressed by countries raising their mitigation targets and by the CDM reform dramatically improving the social and environmental integrity of the CDM. The Carbon Market Watch believes that the CDM can only have a viable future if there is political willingness for fundamental reform. Such reform must address the following issues:
- Fundamentally reform additionality requirements
- Shorten length of crediting periods
- Ensure that all CDM projects uphold human rights
- Improve the CDM’s contribution to sustainable development
- Strengthened civil society participation in the CDM process
- Set-up a grievance mechanism
- Improve the constitution and conduct of the CDM Executive Board and supporting bodies