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Using CDM Components under Future Market Mechanisms

Background and objective

At the Climate Change Conference in Durban in December 2011 it was decided to introduce a New Market Mechanism (NMM) and develop a Framework for Various Approaches (FVA). Both Approaches, the NMM and the FVA, have in the meantime become components of the Paris Agreement’s Article 6.

On behalf of the German Federal Environment Ministry (BMU) and the Federal Environment Agency (UBA), Perspectives in collaboration with Adelphi conducted three separate research projects which explore different aspects related to the transition from the CDM to the new market mechanisms. The projects have been concluded in 2013.
 

Implementation

The first research project looked at how existing components of the CDM might be used to implement climate action under the new market mechanisms. The project team first produced an overview of existing and future market mechanisms, and then worked out their differences and similarities. Components of the CDM such as demonstrating additionality and determining a baseline were tested for their usability in hypothetical pilot projects conducted under a future market mechanism. Based on three case studies in sample countries, the project team showed how existing CDM methodologies could be used both to calculate baseline emissions and to monitor CDM projects under new market mechanisms, and then identified where expansion efforts are needed.

In a second project, Perspectives developed scenarios for the transition from the CDM to new market mechanisms and national emissions trading schemes. The project team then tested these for their usability. On the basis of differing requirements concerning implementation of the various mechanisms, five categories containing different development paths were produced which are designed to enable the transition from the CDM to future market mechanisms and, ultimately, pave the way for the introduction of national instruments. Using these development paths, country-specific strategies were developed for the transition from the CDM to new market mechanisms in ten countries.

The third research project performed the groundwork to enable expansion of the CDM to take in entire sectors. This kind of sectoral CDM could serve as a bridge to new market mechanisms which have still to emerge. The project team thus analysed the debate and developments on sectoral approaches under existing and future UNFCCC mechanisms. Using the data gained in this process, the team was able to trace the development of sectoral approaches under the CDM and identify potential for sectoral components in future market mechanisms.
 

Results and outlook

All three projects have now been completed, and key findings were discussed with other experts and the broader community at various events. The research findings are to be used to advance the ongoing debate on new market mechanisms and the future of the CDM.

Using CDM Components under Future Market Mechanisms

Role of BMU: Research funding

Lifecycle: 2012 - 2013 (completed)

Implementation: Perspectives Climate Group

Other Organisations Involved: adelphi

Contact: Björn Dransfeld, dransfeld@perspectives.cc

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