Skip to content

Cleaning Up and Still Earning: The Clean Development Mechanism and Pollution Control in Asia

Thursday, March 17th, 2011
save trees

As one of the fastest growing regions in the world today—and concurrently the most populous region and a region where poverty is still prevalent—Asia is no stranger to the limitations, problems and negative externalities of growth and poverty.

Asian policymakers cannot seek to limit themselves to economic growth alone precisely because other issues must be dealt with in order for the region to truly enjoy bona fide improvements.

One of the most pressing problems the region faces is environmental degradation and pollution. This, as many Asians know all too well, has for too long been an inescapable and unavoidable consequence of growth given the fact that most nations in the region—even the largest and most dynamic, such as China—are saddled with “legacy technology” for power generation and other key operations. This is outdated technology that is exceedingly inefficient and burns extremely high amounts of fossil fuels. Moreover, other problems shared by many Asian nations, such as the infrastructural inadequacy that causes massive traffic jams and other such problems, further exacerbate this region-wide problem. The nations in the region have been aware of such pressing problems for some time already. There has been considerable international effort and resources poured into the creation of high-level international frameworks and agreements to help manage polluting behavior and improve efficiency. One of these is the Clean Development Mechanism (CDM).

This article will look at the Clean Development Mechanism, explore how it seeks to reduce greenhouse gas emissions in Asia from the Japanese perspective, and then explore some of the issues and challenges that have come to the fore as this mechanism has been implemented.

The Clean Development Mechanism (CDM)

According to the Clean Air Initiative for Asian Cities, the CDM is a project-based mechanism under the Kyoto Protocol—the legally binding international agreement that works to reduce the emission of greenhouse gases worldwide. The CDM is one of the Flexible Mechanisms of this protocol, the others being Joint Implementation and Emissions Trading.

As defined in Article 12 of the Kyoto Protocol, the CDM has two basic aims. First, it exists to help countries that are under binding greenhouse gas emissions targets, known as Annex I countries or industrialized nations, achieve compliance with these stated commitments. Second, it also aims to assist countries that are not covered by Annex I, namely developing nations, to prevent dangerous climate change from occurring, which is the objective of the UN’s Framework Convention on Climate Change (UNFCCC), and to achieve sustainable development as well.

As discussed in the Primer on the Clean Development Mechanism prepared by CRL Energy for the World Energy Council, the development of the CDM is traceable back to the 1980s. Scientific evidence began to mount regarding the linkage of increased atmospheric concentrations of greenhouse gases—carbon dioxide, hydrofluorocarbons, nitrous oxide and so on—to global climate change. In reaction to this development, a global agreement to deal with the problem was crafted under the auspices of the United Nations General Assembly, which established the UNFCCC in 1992 at the Earth Summit in Rio De Janeiro, Brazil. The UNFCCC consequently entered into force on March 21, 1988.

The UNFCCC aims to stabilize atmospheric greenhouse gas concentration below levels pre-determined to be dangerous. Such stabilization was to be achieved within a time period sufficient for ecosystems to adjust, in order to prevent disruption of global food production and not threaten sustainable economic development.

The supreme body of the UNFCCC is known as the Conference of Parties (COP). This body first convened in 1995 in Berlin, Germany and has met yearly ever since. It is composed of over 170 nations that have all ratified the UNFCCC, and aims to review how the UNFCCC is implemented in each of the signatory nations, periodically reviewing commitments in light of individual climate change program effectiveness, new scientific findings and developments. In December 1997, 159 nations attended the Third Conference of Parties to the UNFCCC held in Kyoto, Japan. The nations assembled crafted the Kyoto Protocol—the legal instrument that would help nations respond to any modifications in the will to realize the UNFCCC’s objectives, as well as new scientific findings. The Protocol required the aforementioned Annex I nations to reduce their combined greenhouse gas emissions by 5.2 percent from 20082012. The Primer, however, adds that these targets have since been adjusted thanks to economic growth, which has served to increase emissions from industrialized nations. As a consequence, these nations have been required to reduce their emissions by more significant amounts.

The CDM was created by the Kyoto Protocol to offer a legal framework to allow Annex I or industrialized nations to create what is known as “offshore” credits through conducting projects that help nonAnnex I or developing nations manifestly reduce their greenhouse gas emissions and achieve sustainable development in the long run. The CDM helps Annex I countries to earn what are known as certified emission reduction units (CERs) by organizing these special projects.

As outlined by a 2003 paper, entitled “Implementation of the Clean Development Mechanism in Asia and the Pacific,” authored by Prof. Dilip Biswas for the Economic and Social Commission for Asia and the Pacific, the benefits of the CDM include a global reduction of greenhouse gas emissions, additional benefits via reduction of other pollutants as well, the creation of a market for carbon investment, a focus on sustainable development, and the creation of a venue for cooperation at many levels, including national, sub-regional, regional and global levels. Those who stand to benefit from the CDM include developed, developing and small inland countries, as well as those whose economies are in transition, and both public and private sectors.

Implementation of the CDM in Asia: observations from Japan

A perspective of how the CDM impacts nations in Asia is provided by Fujitsu Research Institute Senior Associate Hiroshi Hamasaki in a 2004 report. He said that from the developed-nation perspective, the CDM is exceedingly important to offset Japan’s incredibly stringent greenhouse gas reduction requirements under the Kyoto Protocol. Utilizing CDM projects would be able to help developed countries like Japan achieve their reduction goals while being able to maintain stable economic growth. Failure to implement CDM projects in Asia, said Hamasaki, would require Japan to pay a pollution reduction cost of $107.3 per ton of carbon emitted—which would result in a reduction of GDP by 1.1 percent. If, however, Japan actively implemented CDM projects, reduction costs would be correspondingly much smaller, as low as $4.1 per ton of carbon emitted—and would result in far less potential economic reduction and potential social unrest as well.

However, Hamasaki added, CDM projects would be exceedingly desirable as well for developing nations. For instance, China, which was expected to become a leading host for CDM projects, could be seen to benefit significantly from these projects through improving its energy security. In addition, the study determined that the amount of carbon gas reductions China could enjoy from CDM projects would be larger than that of the rest of Asia combined—a reason that was expected to make China extremely popular as a CDM project host.

Last, due to the special nature of environmental problems, which have a way of affecting many countries and not only emitters, implementing CDM projects in Asia can be seen to have favorable effects upon pan-Asian problems such as acid rain—thus having positive externalities that benefit all nations across the region.

Challenges and issues posed by the CDM for the Asia-Pacific region

As the CDM has been implemented, many experts have brought up challenges and issues that may impact the effectiveness of the CDM in Asia and other regions. For instance, the Biswas study determined that it may take significant amounts of time to meet the procedural requirements for CDM projects and that any benefits that may accrue will not be commensurate. Next, project proponents need to be able to agree on specific attributes for project approval and success—general criteria or guiding principles may cause uncertainty. Further, baseline criteria need to be established in order to determine the emissions levels that would occur if the CDM project were not to be held at all in order to have a basis for determining project effectiveness. In addition, constant checks need to be conducted to ensure that projects that would take place even if the CDM were not to be enacted are not credited. Yet another challenge is that of project boundaries and project leakage—participants will need to be able to adequately estimate the effects that are measurable and attributable to the CDM and which are not. Additionally, says Biswas, Return on Investment (ROI) on projects (small projects may not get adequate funding, if at all) and nations’ financial and investment climates may also significantly affect CDM projects.

Other experts have identified certain challenges as well, such as a lack of adequate or expert pollution-level monitoring solutions or facilities in developing nations which was identified by Probe International. Such a lack makes it very hard if not impossible to determine the effectiveness of CDM projects in reduction of polluting output.

Login or register to tag items

Open source newspaper and magazine cms software