Copenhagen green lights plan to streamline CDM

Reforms agreed at the Copenhagen Summit last week should make it easier for emission reduction projects in developing countries to qualify for the UN's Clean Development Mechanism (CDM) carbon offset scheme, despite ongoing concerns about the long-term future of the high-profile initiative.

While much of the attention in the final few days of the meeting was focused on the emergence of the Copenhagen Accord, the UN also released a number of technical documents, including an agreed set of changes to the CDM titled Further Guidance Relating to the Clean Development Mechanism.

Under the agreement, the CDM Executive Board has been granted permission to streamline registration and issuance procedures for emission reduction projects, and provide new funding to accelerate the development of CDM projects in countries with fewer than 10 CDM approved projects in operation.

Following a number of investigations which found that some of the firms tasked with independently verifying that CDM projects deliver real emission cuts had been cutting corners, the proposed reforms also call for an improved system of "continuous performance monitoring" for the third-party certifiers that assess requests for registration and issuance.

And in a significant move given the CDM Executive Board's controversial recent decision to reject applications from 10 Chinese wind energy projects, the Copenhagen Summit agreed that the executive board should establish new procedures for stakeholders to appeal against decisions.

Lex de Jonge, chairman of the CDM Executive Board, welcomed the changes, predicting that the reforms would serve to "enhance the efficiency of the mechanism, expand its reach, and maintain its environmental integrity".

"I am very happy, and certain that all of my colleagues on the CDM Executive Board are happy, to see that the Board's recommendations for the scaling up and enhancement of the CDM have been endorsed by the Parties to the Kyoto Protocol, " he said.

"Virtually all of the items adopted in the decision were either recommendations made by the Board to the Parties or were based on recommendations of the Board."

However, the final agreement appeared to dodge the contentious issue of which new projects should be allowed to qualify for the CDM, after Saudi Arabia and Brazil became locked in an increasingly bitter row, with each blocking the other's proposal for carbon capture and storage and forestry projects to be allowed to sell UN approved carbon credits.

David Metcalfe, of green business research firm Verdantix, warned that any improvements to the CDM's project approval processes will be undermined by Copenhagen's failure to deliver a binding treaty to replace the Kyoto Protocol when it expires in 2012.

He predicted that investor interest in CDM-approved emission reduction projects is likely to slump without greater certainty over what will happen to the scheme post-2012.

"Speeding up a few bits of paperwork won't have a huge effect if investors don't know for certain what will happen when Kyoto expires in 2012," he said.

"It will take 18 months to two years to get a project up and running, so what investor is going to invest in a new project when the whole mechanism could change a few months after the project is completed?"

The CDM Executive Board maintains that interest in gaining CDM accreditation remains robust, with almost 2,000 projects now registered and 4,200 in the pipeline.

However, analysts are increasingly concerned that investors will back away from the sector without greater certainty that they will be able to continue to sell certified emission reduction credits at a good price post-2012.