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Enhancing Sustainable Development through the Clean Development Mechanism (CDM)

The Clean Development Mechanism (CDM) is a pioneering multilateral trade system emphasizing sustainable development as outlined in Article 12 of the Kyoto Protocol. It aids Annex I countries in meeting emission reduction targets while generating income for credits from approved projects. However, current CDM activities often prioritize high-yield projects with limited sustainable development contributions. The Kuyasa Thermal Efficiency project in South Africa demonstrates how renewable energy and efficiency interventions can combat energy poverty, create jobs, and enhance health outcomes, serving as an international replication benchmark.

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Enhancing Sustainable Development through the Clean Development Mechanism (CDM)

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  1. The CDM and LocalSustainable Development

  2. The CDM Point of Departure • CDM is the first multi-lateral trade mechanism insisting on Sustainable Development in article 12 of KP “…assist Parties not included in Annex 1 in achieving Sustainable Development and contributing to the ultimate objective of the Convention….” • CDM assists Annex 1 countries in meeting their emissions reduction targets in return for income for credits derived from projects that contribute to sustainable development

  3. Assessment of CDM objectives • An accredited DOE verifies the reduction in emissions resulting from a CDM project activity • The determination of the SD contribution is left to the host country government.

  4. Is the CDM delivering on SD? • Slack SD rules to attract CDM related FDI • Current CDM pipeline dominated by high yield (HFC, CH4,N2O) low abatement cost projects, with low SD contribution. • Renewable energy, energy efficiency, etc. are marginalised as uncompetitive in CDM market.

  5. Current overview

  6. Kuyasa Thermal Efficiency in Low-income Housing:Project Scope Retrofit 2309 low-cost houses in Kuyasa, Khayelitsha with: • Insulated ceilings, • solar water heaters and • CFL’s (energy efficient lighting)

  7. Thermal Efficiency Upgrade • The Kuyasa project pre-empts a rise in domestic electricity use in low income urban areas in South Africa through the installation of renewable energy and energy efficiency interventions • This required the establishing of a baseline that takes into account the suppressed demand for energy services as a result of energy poverty and lack of energy infrastructure • The registerstration of the project as a CDM project will enable it to access carbon revenues to subsidise the capital expenditure. Its Gold Standard rating ensures a premium ito the price it is able to command. • The project has numerous benefits including reduced expenditure on space heating, water heating and lighting, a reduction in respiratory health impacts, and the creation of employment opportunities

  8. Project Benefits BENEFITS • Alleviates energy poverty through access to affordable, renewable energy and energy efficiency measures • Saves R600/hh/annum in energy costs: reduced expenditure on space heating, water heating and lighting, • Creates over 100 person years employment • Improves health conditions • Improves local air quality • Reduces peak energy demand • reduction in respiratory health impacts • Benchmark for replication internationally South Africa Western Cape City of CT Kuyasa

  9. The Public Sector and CDM • Financial barriers: the need for bridging finance and working with public mony in a speculative environment • Legal & institutional: legislation, bureaucracy, inflexibility, lack of capacity to manage risk • Dedicated Resources: climate change action vs. development objectives • Policy vacuum: NCCRS not translated to the local level.

  10. Ensuring SD in CDM • Project Developers: Maximise southern benefits through selection of projects, choice of investors (CER buyers), and timing transactions. • DNA: Establish robust SD criteria, in line with country dev. priorities for project appraisal. Provide effective and enabling framework for project approval. • Public Sector and Public Sector Partnership: How do we incentivise the private sector to undertake emissions reductions in renewable energy and energy efficiency in sectors crucial to SD • Civil Society: Vigilance in appraisal of DNA decisions

  11. Thank you, shirene@southsouthnorth.org Website: www.southsouthnorth.org www.cdmguide.com

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