November 20, 2000

Mind that CDM: Discounting the future

Unclean Development Mechanism
Cheap Development Mechanism
Clever Delay Mechanism

Why CDM deserves to be called all this and more...

Climate negotiations have always been like walking in a landmine-infested area for Southern delegates and civil society in the past. Remember how we stepped on CDM at Kyoto? We from the South thought we were talking about a clean development fund until almost the last day of negotiations, an idea we warmed up to immediately because it was straightforward and simple - polluters would pay into a common fund for not meeting commitments. But just when we mellowed to the idea, it turned into that monster of confusion, the clean development mechanism.

The magical overnight transition was wrought through the good offices of the US delegation, which always works overtime in the interests of the American
people - or at least, in the interests of the American people who pay generously into campaign funds. Tired and overworked Southern delegates found, to their confusion, that not only had terminology changed but also the concept. This here was no straightforward polluter pays principle. It was, in fact, a very clever way to drive down the price of meeting commitments. In the North, this is called economic efficiency. In the South, this is clever carbon accounting, a way to pass the buck to the poor.

Here’s why:

Bypassing the Poor

There is a strong concern among poorer, less industrially developed countries that cdm will totally bypass them (see: African delusion). Studies show that if CDM is restricted to 10 per cent of annex I emissions reduction, at least 80 per cent will be achieved in China. It should be noted that even India and China will have to compete for least-cost options which will reduce their ability to ensure that climate change abatement projects address their national priorities in sustainable development.

Will CDM promote sustainable development

The Kyoto Protocol says that besides ‘assisting’ annex I countries, CDM will promote ‘sustainable development’. But nobody knows how a market-based mechanism will achieve this aim.

Tax the poor to help the poor

A share of CDM proceeds will be used to pay for the adaptation costs of developing countries. This provision literally amounts to taxing the poor to pay the affected poor.

Increased costs of clean technologies

Economists predict that CDM may increase many carbon savings options that currently cost as little as US $10-25 per tonne of carbon to as high as US $200-300 per tonne in the long term

Discounting the future

CDM encourages the current generations of developing countries to sell off their cheaper emissions control options today, leaving future generations straddled with high cost options tomorrow. It is literally a scheme that offers cash-strapped developing country governments an opportunity to discount the future. And nobody knows what would be the form of international cooperation at that time.

Buy cheap, use later

A particularly sinister clause in the Kyoto Protocol is that industrialised countries can buy up a large amount of emissions reduction credits from developing countries, then bank these emissions for future use. In this way, a rich country can siphon off the advantages of the current cheap emissions reduction possibilities in developing countries for its own benefit for a long time to come. Even worse, if the ‘fungibility’ clause is adapted at this meeting, industrialised countries can purchase numerous low-cost emissions reduction credits from developing countries and then sell them later at a higher cost.

Ensuring global warming by subsiding carbon energy systems

CDM could ultimately prove to be a disaster for combating climate change. As all least cost options are in the carbon-based system, cdm will subsidise these energy technologies. It will create further obstacles in the penetration of non-carbon based energy technologies and could lock them out for several decades of the 21st century. Thus ensuring that a high order of climate change becomes inevitable.

Developing nations may end up selling the rights of future generations

return to the index