Carbon Trading & the CDM

The Clean Development Mechanism (CDM) was established under the Kyoto Protocol. It is the most important global carbon trading system. It is intended to lower industrialized countries’ costs of cutting greenhouse gas emissions by allowing them to purchase "carbon credits" that subsidize supposedly low–carbon “sustainable development” projects in developing countries.

International Rivers’ experience in monitoring CDM projects has shown many serious flaws in its theory and application. Project proposal documents are marred by misleading and often patently false claims. International Rivers and others have explained these problems in numerous comments on specific hydro projects submitted during the CDM project approval process.

Many of the projects proposed (and many of those approved) for CDM credits are “non-additional.” This means that they would have taken place without help from sales of carbon credits. The end result is that developed countries are avoiding having to reduce their own emissions by claiming credits for fictitious emission reductions.

The hydropower industry is particularly culpable in cheating the CDM system. By mid-January 2008, 755 hydro projects with an installed capacity of 25,362 MW had applied for credits, almost two-thirds of them in China. International Rivers maintains a spreadsheet with data on hydropower projects in the CDM project pipeline. If the UN body that administers the CDM approves these projects the hydro industry will make billions of dollars from the Northern consumers and taxpayers who will indirectly pay for the credits. Meanwhile the global climate – and the effectiveness and credibility of the Kyoto Protocol – will suffer.

Many observers agree that the supposed “sustainable development” benefits of the CDM have failed to materialize. Only a tiny minority of credits are being purchased from “additional” sustainable energy projects with clear environmental and social benefits.

A European Union law called the Linking Directive regulates the use of CDM credits within the EU’s internal carbon trading system. The directive states that large hydro credits entering the European Trading System must comply with the criteria and guidelines of the World Commission on Dams. To date, none of the large hydros in the CDM pipeline have proven WCD compliance. International Rivers is working to ensure that credits from large hydro projects that cannot prove CDM compliance cannot be used within the European Trading System.

LATEST ADDITIONS:

Jorethang Loop: Response of the CDM Executive Board to SANDRP

Climate Action Network Submission on Developed Country Emission Reductions

SANDRP Letter to CDM Executive Board re. Jorethang Loop Review

Letter to CDM Executive Board re. Proposed Review of Jorethang Loop Hydro

SANDRP Comments on Tala Major Hydro (Bhutan)

CONTACT US:

Patrick McCully
patrick [at] internationalrivers [dot] org
+1 510 848 1155