Requirements for the developmental additionality of the Clean Development Mechanism and role of official development assistance
The difficulty of giving expression to the problems of development, as they appear today outside the arena of the fight against climate change, is leading to a total absence of follow-up, in terms of concepts and methodology, regarding the differentiation between the Clean Development Mechanism (CDM) and the Activities Implemented Jointly (AIJ).
Moreover, examining the logic of potential investors within the framework of the CDM reveals that the objective is no longer always to maximize environmental revenue but rather the sum of such revenue plus the commercial revenue of a conventional investment project. It follows that the CDM will not necessarily lead to the exploitation of least cost carbon reduction possibilities.
Such a lack of consideration for both the demands of developing countries and the decision-making logic of private actors generates a double threat: the resurfacing of these countries’ unwillingness and miscalculation of the anticipated incentive effect on private economic agents of Appendix 1 countries.
Following the results concerning the leverage effect of the CDM on the economy of the host country, which we found and published within the framework of GICC1, we propose to progress in the elaboration of a micro-economic formalization, this time at the level of the decision to invest in particular projects – a level that integrates at the same time the environmental revenue, the social revenue (or ‘developmental’ revenue) and the commercial revenue, within the modelling of the decision-making processes of both potential investors and host countries. This theoretical effort will be tested using sectoral data (MARKAL simulations) and actual projects from the existing range of funding organizations (GEF, FFEM, PCF, AIJ). Once the sectoral leverage effect and role of domestic development policies have been made clear, we will naturally consider the role of official development assistance, whose linkage with the CDM is currently being questioned.
Christophe De Gouvello, CNRS - CIRED
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- Climate Policy and International Climate Negotiations