Option analysis for the evolution of the Clean Development Mechanism to engage developing countries in a post 2012 Kyoto commitment

Abstract

There are three main problems in the current climate change negotiation, the mitigation gap, the financial requirement and the different views and perceptions of the problem ; The mitigation gap refers to the difference between the current Green House Gases (GHG) mitigation pledges by developed countries and the necessary GHG reduction recommended by the Intergovernmental Panel on Climate Change (IPCCC), this has been translated into a call for developing countries to adopt mitigation pledges and at the same time a call to expand the carbon market in a post-Kyoto commitment; The financial requirement refer to a lack of funds necessary to treat the former problem and finally exist the problem associated to the difficulties to include the different views of developed and developing countries under the ‘United Nations Framework Convention on Climate Change’ UNFCCC. So far developing countries have been participating in mitigation actions though the Clean Development Mechanism (CDM), a mechanism where developing countries sell carbon credits to developed countries. Even though in the past the CDM was more effective than expected, it has faced critics during its function; furthermore, it does not lead to net emission reductions in developing countries. The aim of this study is first make and overview of the solutions offered to current problems of CDM, second, identify parties with influence capacity over climate change negotiation, and finally to evaluate the level of support that these solutions have within parties with influence capacity over negotiations. The findings of this study show that there were no specific proposals to evolve CDM that can offer a solution to all the critiques to CDM, however alternatives to CDM that involve an expansion of the carbon market, such as Sectoral Approach, National Appropriate Mitigation Actions (NAMAs), and International Mitigation Obligation (IMO) can offer solutions to the majority of those critiques. For the second part of the study a literature review was perform over the negotiation process in the UNFCCC. It was found that the negotiation process is highly complex in nature, therefore, was preferred to study the position of NGOs which participate as observers given the more transparent position on important issues for the negotiation. Two groups of NGOs were chosen for further analysis, the Environmental NGOs (ENGOs) and the Business and Industry NGOs (BINGOs). These NGOs were more active participating in the negotiations through statements and present clear intentions to influence negotiations, also present a solid website-network organization, all together allow them to have a better chance to make their voice heard, comparing with other NGOs groups. Finally, the position of BINGOs and ENGOs converge in their main views for a future of CDM (with few differences on specific topics). They both consider that developing countries should start to declare mitigation pledges and mitigation actions. Both see Sectoral Approach as a mechanism that should be used in a future commitment. Neither ENGOs nor BINGOs oppose to NAMAs, ENGOs call to build the necessary conditions in developing countries for its implementation and BINGOs call for clarification on investment opportunities within NAMA system. IMO on the other hand lack of support. To finance the future of climate change and any expansion to the CDM, both see private parties playing an important role but under different approaches, BINGOs call for the use of public funds to leverage the investment opportunities for private parties. ENGOs, on the other hand, call to have a common fund coming from a levy of each credit transition in the carbon market.