Thomas Grammig

CDM
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e-mail: trgram@compuserve.com
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The EU's source limitation of carbon imports to the EU-ETS to Least-developed countries after 2012 has coincided with the CDM Executive Board's final rule details for PoAs and this coincidence contributes to a new phase of the CDM.  With appropriate additionality criteria, methodologies, project blueprints and verification, this new phase will gradually lead to large emission reductions.  With sufficient experimentation by investors, the energy ladder in particular household classes can be addressed in CDM regulations.  I have outlined the household characteristics in Brazilian Favelas as elements of PoA designs.

CDM for Low-income Households

Programmatic CDM attain long sought sustainable development and technology transfer impacts.  Principle-agent relations are an important aspect of PoA because these comprise a 'principle' offering appliances and mass users as 'agents', thereby creating split incentives and information asymmetries.  Among the first 50 PoAs submitted for validation, I suggest salient country differences reflecting principle-agent relations as much as natural endowments.

Programmatic CDM (PoA) First Mover Types

Important PoA elements evolve via contractual arrangements for CPA and methodology adaptations aligning incentives.  Especially for stoves, the monitoring will be revised to raise quality.  The global PoA landscape at the end of 2012 reveals patterns among investor types.  Each one brings its lessons-to-be-learned.  The following two excerpts describe this landscape and parameters in investor choices for post-2012 carbon:

PoA Landscape by January 2013                   NAMA Policy and PoA Strategy

The continuing dynamic among new PoA in 2012 is in Asia and Latin America driven by new carbon business models and new CME entities.  Whereas African PoA are dominated by established carbon accumulators.


CDM rules are ineffective on the natural science and engineering sides, but on the other hand allow a normative ambition - representation of the global public good in negotiations.  The global public good 'Certified Emission Reduction' (1 CER = 1 ton CO2e) exists mainly in three colours, Chinese, Indian and Brazilian.  My analysis of these differences suggests that the distinctions of these colours remain.  The global public good 'CER' continues to expand following its political and cultural foundations.

Brazil - India - China institutional context

These differences help to design capacity building instruments effective in the CDM context in each country.  The best empirical analysis of CDM project distribution shows that cost differences cannot explain the patterns in these three countries, "Even for the three individual countries that we examined, investments were not concentrated in projects with the lowest unit costs" (Rahman, Larson, Dinar, 2012: 24).  The same data shows that within each country over time costs increase, so some economic incentives are at work.

National policies' impacts on CDM


The UNFCCC is the source of normative value for the carbon markets but has little geo-political capacity.  The relation between the UNFCCC and the G20 is not clear and could evolve into one between a slowly evolving rulebook that creates more and more commons and global bargaining for their distribution.  However, if the bargaining requires excessive re-writing of the rulebook it can thus become a labyrinth.  External sovereignty of governments could originate from both sides of that relation (Reinicke, 1998).


Rahman SM, Larson DF, Dinar A. 2012, "The Cost Structure of the Clean Development Mechanism", World Bank Policy Research Working
            Paper
no. 6262, Washington DC: IBRD.
Reinicke W. 1998, Global Public Policy: Governing Without Government?, Washington DC: Brookings Institute.
Sebenius James K. 1995, "Towards a Winning Climate Coalition", In I. Mintzer, Negotiating Climate Change: The Inside Story of the Rio
            Convention
, Cambridge UP, p. 277 - 320.