CDM Reform: Improving the efficiency and outreach of the Clean Development Mechanism through standardization
This study is the first outcome of a new work program on regulatory aspects of the Clean Development Mechanism (CDM) started by the World Bank in May 2011 at the Carbon Expo in Barcelona. The guiding principle of this work has been to approach the complex and broad topic of CDM regulation in a strictly technical and step-wise manner, based on real world project experience and a broad consultation with practitioners of the CDM.
This document is the first module in a series, focusing on the topic of standardization of project registration and procedures for both stand-alone activities, using standardized baselines, and Programmes of Activities (PoAs) addressing micro-scale emission reductions. The standardization of CDM procedures has always been an element of the evolving CDM regulation. However, the relevance of standardization has grown beyond incremental improvements of the CDM. It has become one of the core areas in developing the mechanism. The reasons are threefold:
- First, standardization of CDM methodological approaches can contribute to overcoming certain limitations of the CDM in terms of regional and sectoral outreach as well as objectivity in project assessment and approval;
- Second, standardization — if extended to CDM procedures — can improve the efficiency of the mechanism and reduce regulatory risks, transaction costs and time requirements; and
- Third, standardization facilitates a more programmatic and systemic implementation of the CDM in developing countries, which could allow the mechanism to grow beyond its current project-by-project scope.
Against this background, standardization gained momentum in the recent regulatory development of the CDM. At the 6th session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 6) that took place in 2010, in Cancun, Mexico, major progress was made in establishing the concept of standardized baselines. Now it is time to develop the concept further. This study outlines various options to extend standardization to CDM procedures and the CDM project cycle itself and assess how this could improve the efficiency of the mechanism as well as facilitate more programmatic and systemic approaches.