Understanding CDM Methodologies - SuSanA

1. Introduction
Climate Change
is an important
Problem
Cornerstones of
the Climate Policy
Regime
Distribution of
Mitigation Effort
Kyoto Protocol
and Carbon
Market Structure
Climate change due to anthropogenic greenhouse gas emissions has become
an issue of key political and economic importance. The scientific background
has become quite clear, as shown by the summary for policymakers of
the Intergovernmental Panel on Climate Change (IPCC) 4th Assessment
Report published in 2007. It states that “warming of the climate system
is unequivocal, as is now evident from observations of increases in global
average air and ocean temperatures, widespread melting of snow and ice,
and rising global mean sea level” and that “most of the observed increase in
globally averaged temperatures since the mid-20th century is very likely due
to the observed increase in anthropogenic greenhouse gas concentrations”.
The international climate policy regime has developed at a rapid pace during
the last 15 years. The UN Framework Convention on Climate Change
(UNFCCC) was agreed in 1992, the Kyoto Protocol followed and was
finalized in 1997, and the Marrakech Accords negotiated in 2001 have set
the cornerstones of the regime.
As greenhouse gas emissions are distributed across all economic sectors,
their mitigation is a difficult task. So far mitigation technologies are costly
and cannot address the whole range of emissions. To achieve stabilization of
greenhouse gas concentration at a level which prevents dangerous climate
change, an intense mitigation effort is required. Countries have very different
levels of economic development and current as well as historical emissions
and have argued that these differences should be taken into account to
determine their participation in sharing the burden. The UNFCCC has thus
defined the principle of common, but differentiated responsibility, where
industrialized countries – that have been listed in Annex I – take the lead in
mitigation. Non-Annex I countries provide reports on their greenhouse gas
emissions.
The Kyoto Protocol has allocated emissions commitments to industrialized
countries that are listed in the Protocol’s Annex B 1 . These commitments have
been specified in terms of greenhouse gas emissions budgets for the period
2008-2012. To reduce costs for the countries that took up commitments,
a set of market mechanisms has been defined that are unprecedented in
international economic policy. One of these mechanisms, International
Emissions Trading (IET), allows governments of countries with commitments
to sell unused shares of their emissions budgets to other countries. The
second mechanism, Joint Implementation (JI), permits the generation of
emissions credits through projects that reduce emissions. These credits
can be used by the acquiring country to fulfil its Kyoto commitments; an
equivalent amount has to be deducted from the emissions budget of the
country hosting the projects. Finally, the Clean Development Mechanism
(CDM) allows projects that reduce emissions in countries that do not have
an emissions budget to generate emission credits that can be used by
countries that have commitments. The CDM is the only instrument of the
Kyoto Protocol that started before 2008; CDM credits (Certified Emission
Reductions, CERs) can be generated from 2000 onwards.
1
Annex B differs from Annex I of the UNFCCC by the omission of Belarus and Turkey.
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