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German Environment Ministry Study Develops Quality Criteria for CDM Post 2012

February 2010 - As part of its CDM/JI Initiative, the German Environment Ministry (BMU) commissioned a study on potential quality criteria for a reformed CDM. What led to the research study was the ongoing criticism of the lacking additionality of CDM/JI projects. Also, many observers question whether the project activities really do promote sustainable development in the host countries, as called for in the Kyoto Protocol. The debate covers proposals such as using positive/negative lists or discounting CERs from projects deemed to be less sustainable. The European Parliament has presented an extremely far-reaching proposal of only recognising premium certificates generated from Gold Standard projects in the EU Emissions Trading Scheme. A key objective of the research study was to analyse whether Gold Standard requirements stand the test of practice, i.e. whether they actually lead to higher-quality projects.

Recommendations on CDM Reform

BMU commissioned the Wuppertal Institute to conduct the study, whose results are now available. The researchers recommend integrating additional binding approval requirements into the CDM rules. These should ensure additional benefits to foster sustainable development and boost the environmental integrity of the mechanism. The additional requirements take in, among other things, closer scrutiny of the environmental and socio-economic impacts of project activities. For example, consideration should be given to air and water quality, effects on biodiversity and safeguarding local cultural heritage at the project location. In addition, the authors recommend prescribing significantly greater public participation. A monitoring plan will assist documentation of these additional requirements and compliance with it will be subject to binding verification by the Designated Operational Entity (DOE). Also, the climate impact of projects will be secured by means of more intensified assessment of additionality, including through the use of standardised baselines and a more robust financial analysis.

Implementation at UN Level

The study recommends implementing these changes at UNFCCC level. This would overcome the scepticism shown by many host countries regarding more stringent evaluation of a project’s contribution to sustainable development. If binding additional requirements were introduced for all host countries, the feared competitive disadvantages could be prevented. The study also develops alternative scenarios for rules for individual states or groups of states.