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Sustainable Solutions: A Holistic Proposal for Clean Development Mechanism Reform

Jay Duffy

International Environmental Law

Professor Ruth Gordon

May 5, 2010

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Table of Contents

I. Introduction …………………………………………………………………..…………3

II. Emergence of the Kyoto Protocol and the Basis for the Clean Development

Mechanism…………………………………………………………………………...……5

A. The Kyoto Protocol………………………………………………………...…..5

B. Structure of the Clean Development Mechanism……………………..……….6

a. Supplementarity………………………………………………...………8

b. Additionality…………………………………………………………..10

i. Baseline………………………………………………………...11

ii. Additionality Assessment……………………………………..12

iii. Leakage……………………………………………………….12

III. Problems in Implementing the Clean Development Mechanism……………………13

A. Breadth of Clean Development Mechanism Projects and Technologies……..13

B. Equitable Geographic Distribution of Clean Development Mechanism

Projects…………………………………………………………………………...15

C. Sustainable Development under the Clean Development Mechanism……….17

IV. Reforming the Clean Development Mechanism……………………………………..20

A. The Clean Development Fund………………………………………………..22

B. Discounting Clean Development Mechanism Projects……………………….24

V. Conclusion……………………………………………………………………………27

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I. Introduction

Beginning with the Industrial Revolution, over a century ago, the industrialized

world has been burning its way to economic ascendancy.1 Cheap and dirty fossil fuels

made rapid development possible but pumped greenhouse gases (GHGs) into the

atmosphere at unprecedented rates.2 There remains little debate that concentration of

GHGs is leading to climate change; the debate now centers on how to incorporate

environmental rules and regulations mid-race.3

It does not matter which country emits GHGs, once emitted they travel the globe

with equal effect and remain in the atmosphere for many decades.4 Therefore,

unparalleled global cooperation is necessary to combat climate change.5 Ironically, while

the industrialized world is primarily responsible for the current crash course with global

warming, its effects will disproportionately fall on poorer nations.6 Further, poorer

nations are economically incapable of installing adaptation measures to cope with the

predicted droughts, disease, extreme weather and flooding of island nations.7

Industrializing and poor economies, however, reject the idea that the industrialized world,

which benefitted from decades of burning cheap fossil fuels, can now demand expensive

limits on emissions, which they contend will stymie their economic development.8 At the

same time, the industrialized world is looking for alternatives to domestic action that

could reduce the costs of meeting emissions caps and ways to engage the less developed

world in the climate range.9 The Clean Development Mechanism (CDM) was created

under the Kyoto Protocol as a flexibility mechanism to address these dual interests.10 The

CDM allows industrialized countries to receive carbon offsets to assist in meeting their

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emission caps by investing in clean energy projects in the developing world, which are

generally less expensive than implementing similar projects in their own countries. 11

The CDM has successfully prompted a significant number of projects; currently

there are approximately 4,200 projects in the CDM pipeline.12 Still in its nascent stage,

the CDM, however, falls short of its pledge to implement sustainable development and

equitable geographic distribution.13 As the Kyoto Protocol’s term comes to a close in

2012, it will be important to implement reform that will create incentives for projects that

while perhaps initially more expensive and difficult, will ultimately foster sustainable

progress.

Part II of this article will briefly introduce the Kyoto Protocol and provide a more

detailed explanation of the CDM framework and intentions. Part III will discuss the

stumbling blocks that the CDM has encountered throughout its implementation including

the breadth of projects implemented under the mechanism, the inequitable geographic

distribution of projects, and a disappointing record of sustainability. Part IV will look at

two promising, complementary and comprehensive options for reform: a Clean

Development Fund and discounted CDM projects. Part V will conclude aggressive

engagement between industrialized, industrializing and undeveloped nations is crucial,

and that further reforms are necessary to fulfill the Kyoto Protocol’s commitment to

sustainable development.

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II. Emergence of the Kyoto Protocol and the Basics of the Clean Development

Mechanism

A. The Kyoto Protocol

In 1992 the United Nations Framework Convention on Climate Change

(UNFCCC) was negotiated.14 The UNFCCC recognized the principle of “common but

differentiated responsibility” in combating climate change and in doing so provided the

“ethical anchor” for the international climate regime:

The Parties should protect the climate system for the benefit of the present and
future generations of humankind, on the basis of equity and in accordance with
their common but differentiated responsibilities and respective capabilities.
Accordingly the developed country Parties should take the lead in combating
climate change and the adverse effects thereof.15

This recognition was essential to engaging the less developed world.16 The

industrialized countries account for three-quarters of fossil fuel combustion, which has

led to emission of GHGs and climate change.17 With the climate at the brink, the

unindustrialized world is foreclosed from using the same cheap and dirty fuels to spur

economic growth and is expected to face a disproportionate share of the effects of climate

change.18 In order to get emerging market countries and the undeveloped world to agree

to the mere premise of combating climate change, the industrialized world must absorb

the majority of the burden to reduce their emissions and assist in reducing the emissions

in the less developed world.19

The goal of the UNFCCC treaty was to stabilize the concentration of GHGs in the

atmosphere at levels that would prevent dangerous anthropogenic interference with the

climate system.20 The UNFCCC merely set the goal and the process by which signatories

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would negotiate various protocols to realize this goal.21 In 1997, the most important of

these protocols was negotiated in Kyoto, Japan.22 The Kyoto Protocol establishes GHG

emission caps for industrialized nations and nations in economic transition (Annex I

Parties) for the period of 2008-2012.23 Non-Annex I Parties have no such commitment

and there is much debate as to which countries should be considered “nations in

economic transition.” 24

The Protocol entered into force on February 16, 2005 when the requisite number

of countries representing 55% of 1990 GHG emissions ratified the treaty.25 As of

December 3, 2009, 189 Parties have ratified the Protocol, not including the United

States.26

B. Structure of the Clean Development Mechanism

The Kyoto Protocol establishes various flexibility mechanisms to assist Annex I

Parties in meeting their GHG emission caps in a cost effective manner.27 Article 12 of

the Kyoto Protocol establishes one such mechanism: the Clean Development Mechanism

(CDM).28 The twin aims of the CDM are to assist non-Annex I Parties in achieving

sustainable development and to aid Annex I Parties in complying with their emissions

caps in a cost-effective manner.29 Non-Annex I, industrializing Parties do not want to

undertake expensive caps, but because climate change requires a global solution, in

addition to assisting Annex I Parties, the CDM envisions investment in non-Annex I

Parties which will pave the path to a cleaner energy infrastructure and economic

development with GHG emission caps.30 Properly implemented, the CDM will create a

bridge for emerging economies by promoting sustainable development and ensuring that

future caps placed on these countries will not be detrimental to their economies.31

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Annex I Parties may undertake qualifying projects to reduce GHG emissions in

non-Annex I Parties, and non-Annex I Parties may also undertake their own projects.32

Further, private parties may also participate in CDM projects and generate CERs to sell

or offset emissions to comply with caps their own government’s placed on them.33 These

qualifying projects result in tradable Certified Emissions Reductions (CERs)34 that Annex

I Parties can use toward satisfying their emissions reductions or non-Annex I Parties may

sell to capped Annex I Parties.35

Article 12(5) of the Kyoto Protocol provides that participation in the CDM must

be voluntary and approved by each Party involved, the emissions reductions must be real,

measurable and have long-term benefits related to the mitigation of climate change and

the reductions in emissions must be additional to any that would occur in the absence of

the certified project activity.36 Beyond this the Kyoto Protocol provides very little

guidance on the implementation of the CDM.37

The Marrakesh Accords, created in 2001, gave substance to the CDM and its

daily operations.38 An Executive Board was established to, among other things, maintain

the CDM registry for issuance of CERs, approve methodologies for measuring baselines

and additionality and accredit the entities that verify and approve issuance of CERs.39

A Designated National Authority (DNA) must be appointed by each Party

participating in the CDM for the purpose of considering and approving projects.40 A

Party that wishes to begin a project must submit a Project Design Document (PDD) to the

DNA in each country.41 The PDD must include, among other things, a description of the

project, a proposed baseline methodology, an estimation of the projects operational

lifetime, a description of additionality of reductions above reductions that would have

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occurred without the project, environmental impacts, stakeholder comments and a

monitoring plan.42 The DNA then evaluates the PDD and issues a letter of approval with

confirmation that the project will contribute to sustainable development in the host

country.43

A Designated Operational Entity (DOE), accredited and designated by the

Executive Board, validates the proposed project and reviews the methodology for

measuring emission reductions as well as makes available to the public all information

obtained about the project.44 Based on the DOE’s validation report, the Executive Board

registers the project.45 The DOE then monitors and verifies emissions reductions, and

based on their verification report, the Executive Board issues CERs.46

a. Supplementarity

Articles 6 and 17 of the Kyoto Protocol provide that emissions trading “shall be

supplemental to domestic action” for the purposes of meeting emissions reductions.47

Under Article 12 Parties may use CERs to “contribute to compliance with part of their”

emissions reductions.48 The Marrakesh Accords provide little additional guidance,

stating only that the “use of the mechanisms shall be supplemental to domestic action and

that domestic action shall thus constitute a significant element of the effort made by

each” to reach their emissions reductions.49

Due to these vague requirements, it is unclear how much domestic action Annex I

Parties are responsible for and to what extent they can supplement this action with CDM

CERs.50 While flexibility mechanisms must be sufficiently available to make

implementing the CDM more cost efficient and investment in CDM projects

economically viable, there is treaty language and logistical reasons which require

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imposing limits.

The first is the climate regime’s ethical anchor: “common but differentiated

responsibility,” as outlined in the UNFCCC.51 The domestic industries within Annex I

Parties disproportionately contributed to climate change and should not be allowed to buy

their way out of it by investing in non-Annex I Parties.52 The responsibility to take the

lead must require developed countries to do more domestically.53

Second, the reason it is less expensive for Annex I Parties to reduce emissions in

non-Annex I Parties is because the technology in those countries is less sophisticated than

that in Annex I Parties.54 It is cheaper to replace old technology with modern technology

in non-Annex I Parties to create offsets than it is to prematurely retire or retrofit older,

dirty sources in the industrialized world.55 However, even modern technology is not

sufficient to create the emissions reductions necessary to avoid catastrophic climate

change.56 Annex I Parties must be developing the technology of the future now and

assisting developing countries in bypassing dirty technology entirely.57 Limits on the

extent to which an Annex I Party can use the CDM to fulfill their emissions reduction

requirements would spur the innovation necessary to meet these critical goals. Unlimited

CDM CERs may allow Annex I Parties to delay necessary domestic innovation and

revolution.58

Finally, the treaty language clearly requires that a significant amount of the

emissions reductions come from domestic action and this language should be more

clearly defined into order to give meaning to the supplementarity requirement.59

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b. Additionality

To avoid giving emissions credits for projects that were already inevitable, the

Kyoto Protocol requires that CDM emissions reductions are additional to any that would

occur in absence of the project.60 This additionality requirement has been one of the most

difficult to accurately assess and has the greatest potential to undermine the core goal of

the Protocol by actually increasing emissions.61 Furthermore, claims of additionality

have been shown to be false in as many as 20% of CDM projects.62

In order for the CDM to be effective projects and reductions must be occurring

strictly because of a CDM investment.63 If emissions reductions would have occurred

anyway or the projects were already underway, they cannot be attributed to the Annex I

Party reductions.64 For example, the UNFCCC is currently trying to improve energy

efficiency for individual companies in less developed countries under the CDM. In

doing so, they will ask the companies whether or not the measures they are proposing to

improve their efficiency would take place normally or whether they would need

additional support to take the measure.65 To measure additionality the UNFCCC and

Executive Board will assess whether the project is economically attractive to the

company in the absence of the CDM or whether the company would face real barriers to

its implementation without the CDM.66 Existing policies and regulations within host

countries will count as “business as usual” and therefore projects under those policies are

ineligible for CDM.67

This can create the perverse incentive to avoid strict environmental policies in

order to remain attractive to CDM project developers.68 Indian development experts, for

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example, express concern that although India has enormous potential for expanding wind

power the government is careful not to implement a policy mandating a certain

percentage of their energy come from wind power for fear that wind power expansion

would then be “business as usual” and disqualified from obtaining CERs as a CDM

project.69 A thoughtful and precise assessment of additionality is necessary to reward

progressive behavior while ensuring the integrity of the CERs and climate regime.

While project managers are allowed to design their own methodologies the United

Nations Environmental Programme (UNEP) produced the following guideline in

assessing additionality and the most successful methodologies will incorporate similar

considerations.70 The UNEP provides modalities include establishing a baseline,

assessing additionality with respect to multiple considerations and accounting for

leakage.

i. Baseline

The baseline is the starting point for additionality analysis and represents business

as usual.71 “The baseline for [a CDM] project is the scenario that reasonably represents

the anthropogenic emissions by sources or anthropogenic removals by sinks of

greenhouse gases that would occur in the absence of the proposed project.”72 Further,

the baseline must be established on a project specific basis and in a transparent manner,

taking into account relevant nation and sectoral circumstances and uncertainties and

using conservative assumptions.73

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ii. Additionality Assessment

Next, the project developer and the Designated National Authority must consider

how the baseline scenario is changed by the proposed CDM project by completing a five-

step assessment, as follows:

Step 1: Identify realistic and credible alternatives to the proposed project

activity.74

Step 2: Investment Analysis – Determine whether or not the project activity is

economically or financially less attractive than other alternatives.75

Step 3: Barrier Analysis – Determine whether the proposed project activity faces

barriers that prevent widespread implementation of the project and do not prevent

widespread implementation of at least one alternative.76

Step 4: Common Practice Analysis – Analysis of the extent of diffusion of the

CDM project technology or practice in the relevant sector or region.77 This step serves as

a credibility check on the Investment and Barrier Analyses, because if similar projects are

underway nearby it is difficult to claim that the project would not occur in the absence of

CDM.78

Step 5: Impact of CDM Registration – Present impacts of benefits and incentives

derived from the CDM on the economic and financial hurdles or other identified barriers

faced by the project.79

iii. Leakage

Finally, reductions in emissions by sources within the CDM project boundary,

measured from baseline emissions, must be adjusted for leakage.80 Leakage is defined as

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the “net change in anthropogenic emissions by sources of [GHGs] which occurs outside

the project boundary, and which are measurable and attributable to the CDM project…”81

Leakage often occurs when reducing emissions in one area (the CDM project) leads to

compensation and increased emissions elsewhere thereby rendering the project less

successful.82 Because CERs are granted for net emissions reductions, emissions that were

increased elsewhere because of the CDM project must be subtracted from the emissions

reduced by the project on-site.83 To reduce leakage, the monitoring domain must be

extended past the boundaries of the CDM project itself and the potential for

compensation elsewhere must be anticipated.

III. Problems in Implementing the Clean Development Mechanism

A. Breadth of Clean Development Mechanism Projects and Technologies

Thus far, under the CDM, Annex I Parties have received CERs for limited types

of projects and technologies.84 Reduction of nitrous oxide, hydrofluorocarbons,

perfluorocarbons account for 75% of all CERs issued while renewable energy projects

only account for 13%. 85

The case of HFC-23 reduction projects provides an example of the perverse

incentives to obtain CERs at the expense of real emission offsets.86 HFC-23 is a partial

replacement for other gases being phased out by the Montreal Protocol, a treaty

combating ozone depletion.87 HFC-23 is almost 12,000 times more potent a GHG than

carbon dioxide.88 In most of the industrialized world, plants have voluntarily eliminated

HFC-23 emissions.89 The cost of eliminating these emissions is very low and the CERs

were much more valuable than even the production of the gas.90 This led to an incentive

to produce the gas, turn it into a CDM venture and capture valuable CERs.91 Experts

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believe that due to the ease with which HFC-23 can be eliminated a fund similar to the

Montreal Protocol would have been more efficient and led to investment in more

productive CDM projects.92

The same profit-seeking behaviors that led the industrialized world to degrade the

atmospheric commons are taking place within the mechanism proposed to combat

climate change.93 The sustainable solutions to climate change are more expensive and

time-intensive and have yet to truly be required.94 Even outside the parameters of the

HFC-23 fiasco, zero-carbon energy systems, such as solar and wind, are bypassed for

“clean” fossil fuel technology.95

In an unrestrained CDM market, the project developers seek to capitalize on their

investment and therefore exhaust the cheapest and easiest means of obtaining CERs

before considering more expensive and difficult projects.96 Renewable energy projects,

which provide long-term benefits but face barriers and are more costly with a low return,

are less economically viable.97 Renewable energy infrastructure has relatively high

installation costs, but boasts very low operating costs and the supply is essentially infinite

and largely free of external costs.98 Barriers to CDM projects utilizing renewable

technology bar the widespread dissemination of renewable energy.99

Because energy efficiency and renewable energy projects often pay for

themselves over time, it can be difficult and expensive to prove that these projects

achieve additionality.100 Further, renewable energy generally reduces carbon dioxide,

which creates one CER per ton instead of other GHG super-pollutants such as HFC-23,

which create 11,700 CERs per ton.101 Renewable energy projects are also generally

small-scale projects, thereby limiting the CER return on the CDM project investment.102

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These barriers create the perverse potential for project developers to avoid the extra time

and cost to defend these projects and therefore avoid zero-carbon projects altogether.103

Unfortunately, while a Designated National Authority has the right to set his or

her own CDM project priorities and sustainability requirements, most poor countries

would prefer some investment to none.104 Therefore, nations that could otherwise bypass

the dirty fossil fuel era altogether - should their investment priorities change - are instead

installing or perpetuating fossil fuel energy infrastructure.105

It is irresponsible to perpetuate the use of fossil fuels in developing countries, as it

will only be more expensive to entrench these already economically depressed countries

in an unsustainable energy system that will inevitably need to be converted.106 In addition

to the moral argument against pushing unsustainable systems on vulnerable countries,

Kyoto Protocol’s commitment to sustainability arguably does not allow for

implementation of fossil fuel technology.107

B. Equitable Geographic Distribution of Clean Development Mechanism

Projects

The Marrakesh Accords express the “need to promote equitable geographic

distribution of clean development mechanism project activities at regional and

subregional levels.”108 However, according to UNEP 78.4% of all CDM projects are

taking place in Asia and the Pacific, 17% in Latin America and merely 2.5% in Africa.

Mexico, India, China and Brazil account for 71% of all project hosts.109

While the CDM was intended to assist all non-Annex I Parties, the private parties

primarily responsible for implementing CDM projects have evidenced clear preferences

for countries with an advanced bureaucracy able to handle the technical and logistical

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requirements of the CDM, as well as for emerging economic markets where they may

gain a foothold in a burgeoning economy.110 In addition to requiring the institutional

infrastructure to handle high-CER-yield projects, investors favor stable countries where

the risk of project failure is low.111 Also, the additionality requirement makes it difficult

for the least-developed countries to compete because high scale pollution must be abated

in order to earn CERs.112 The poorest countries with the least industry and greatest

instability are therefore left out of the investment and only fall further behind.113 And

non-Annex I Parties have the perverse incentive to develop more quickly and create

substantial pollution that will be worthwhile for an investor to offset.114

Due to the global nature of climate change global participation in the climate

regime is necessary. At least two-thirds of projected GHG emission increases between

now and 2030 are expected to come from outside the industrialized world.115

Therefore, non-Annex I Parties must acquire the technology necessary for sustainable

development through the CDM so that they may join the Annex I Parties and put caps on

their emissions.116 Four countries receiving the majority of the benefits intended for all

developing countries will not suffice for a long-term solution nor does it meet the

commitment to equitable geographic distribution of CDM projects.

The Nairobi Framework was adopted in 2006 in an attempt to remedy these

inequalities.117 The Framework intends to build the capacity for poor nations to

undertake CDM project activities by assisting Designated National Authorities in

becoming fully operational, promoting investment, and improving information sharing,

outreach and education.118 With the assistance of the Nairobi Framework, six sub-

Saharan African countries initiated a CDM capacity development project to which Annex

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I Parties have contributed.119 The group is also developing joint proposals in order to

efficiently and effectively bargain as a collective.120 Despite encouraging progress under

the Nairobi Framework, such as the Second Africa Carbon Forum, which recently took

place in Nairobi, Kenya, Africa still remains underrepresented in the CDM.121

C. Sustainable Development Under the Clean Development Mechanism

Any climate change regime must address both the need for societies and economies to

expand, as well as the international imperative to curb the emissions that are currently the

by-product of that expansion.122 This thorny issue requires a solution that produces

cleaner and more sustainable energy production, thereby allowing for economic growth

without adding to the climate crisis.123 The Kyoto Protocol states that a goal of the CDM

is to “assist Parties not included in Annex I in achieving sustainable development.”124

Sustainable development is a framework for fostering and improving human


quality of life and well being by integrating economic development, human rights,
peace and security, and environmental protection. It focuses not only on the
current generation but to future generations as well. Sustainable development is
the officially recognized international approach for maintaining and improving
the human condition.125

The Designated National Authority (DNA) within potential CDM project host

countries must approve the project and confirm that it is consistent with the country’s

sustainable development.126 DNA’s, particularly within the poorest countries, however,

are often desperate for investment and will accept the terms of the Annex I Party in order

to receive the project, at the cost of their social and environmental needs.127

Further, the emerging norm of environmental democracy encourages access to

pertinent information for citizens affected by environmental decisions, the right to

participate in decision-making processes, and the right to access all administrative

proceedings.128 While inviting stakeholder comments and summarizing those comments

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are a requirement of the Project Design Document there is no instruction regarding how

to obtain that input and projects need not be cancelled if local opposition is strong.129 It is

imperative that the “invitation” to comment is through culturally appropriate means and

will be timely and visible to those affected.130 Additionally, the government may be

removed from the realities of the communities in which the projects will be taking place,

and may even have motives that are not in the communities’ best interest.131 The

possibility of failing to meet the requirements of environmental democracy is

compounded by the potential imposition of Western structures and values on less

developed nations.132

For example, the Norwegian company TreeFarms purchased land in Uganda and

Tanzania and to develop a tree farm in an effort to offset gas-fired power plants.133

TreeFarms was implicated in displacing and further impoverishing local farmers.134 The

land was purchased from the governments for a very low price and the local people were

thrown off their land and lost their only food source.135 TreeFarms hired local people for

only four months for planting at less than $1.00 per day and they were never

compensated for the loss of their livelihoods.136 While this particular project was not

under the auspices of the CDM, the financier of the TreeFarms projects, Green

Resources, is currently developing projects for the CDM by expanding and adding to

these projects.137

The building of large hydraulic dams to create CERs under the CDM in China also

exemplifies some of the environmentally unsustainable practices prevalent within the

CDM.138 The water that gathers behind the dams collects silt that would otherwise be

washed away.139 Millions of people are displaced due to the rising water, erosion,

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landslides and pollution created in conjunction with these dam projects.140 Further, many

of these projects do not meet the “additionality” requirement because they were

underway before the CDM was instituted.141 Hydro projects account for 27% of all CDM

projects and 64% of those are within China, therefore the implications of unsustainable

hydro projects have broad implications.142

Examples such as these abound and experts are growingly concerned about a “race to

the bottom.”143 Impoverished countries do not have the bargaining power to demand

lucrative, or even fair, arrangements, and because the CDM relies on non-Annex I Parties

to ensure sustainability there are often is often no system of checks to ensure just

treatment.144 Historically, sustainability contributions do not add the market value of

CERs and because they are costlier are often avoided altogether.145

The Executive Board approves a Designated Operational Entity (DOE) because non-

Annex I Parties lack the capacity to monitor and verify emissions reductions.146 In

practice, however, the project developers generally retain the DOE, leading to

troublesome conflicts of interest that undermine the entire system’s integrity.147 The

Executive Board has never cited a lack of sustainable development as an impetus for

rejecting a CDM project.148

While the Parties made a commitment under the Kyoto Protocol to sustainable

development there are reasons outside of treaty and ethical obligations to incentivize

sustainable development. Potential co-benefits of sustainable development within the

CDM are considerable and include “reductions of other air pollutants, improved human

health, higher agricultural production, reduced stress on natural eco-systems, lower air

pollution control costs, higher employment and greater security.”149 These co-benefits are

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intrinsically and economically valuable and could offset a substantial fraction of climate

change mitigation costs in the future.150

It was a failure of precaution and an unconsidered use of cheap and dirty fuels that

created an energy system that has since suffocated the atmosphere with GHGs.151 The

solution to climate change must be comprehensive, cautious and sustainable to avoid

perpetuating already entrenched problems or creating new ones.152

IV. Reforming the Clean Development Mechanism

To date the CDM has been successful in many respects. CDM projects represent an

unprecedented transfer of wealth from the developed to the developing world.153 Further,

the CDM was the compromise by which developing nations agreed to sign on to the

Kyoto Protocol and without which would have significantly less participants.154

However, as the Kyoto Protocol term draws to a close in 2012 and a new protocol is

developed, the initial term must be reviewed and the CDM must be corrected to deal with

the inequities in geographic distribution, the spectrum of technology and projects and the

preference of flexibility over sustainability.155

Many reforms have been proposed, including creating quotas for the number of CDM

projects that each country may host and creating a judiciary that would give private

parties and/or countries involved in the CDM an avenue to seek remedies when projects

are problematic.156 Further reforms include measuring additionality in terms of emissions

avoided instead of emissions reduced, thereby allowing countries with minimal energy

infrastructure and emissions to receive renewable energy projects that would leapfrog the

fossil fuel energy era entirely.157

Additionally, the CDM Executive Board, supported by European countries as buyers

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of CERs, is trying to make it easier for project developers to get credits from aggregating

emissions reductions from small-scale household projects through its “programme of

activities” (POA) methodology of assessing additionality.158 The POA allows a group of

similar projects to be approved and administered under the umbrella of a single project,

thus reducing transaction costs and makes the approval process simpler.159 Thus far, only

two projects have been registered under this methodology and one is awaiting

registration; they include distribution of energy efficient light bulbs to households and

methane capture and combustion from animal waste. The host countries are India, Brazil

and Mexico.160 While they are among the countries that receive the bulk of CDM

projects along with China, the programme of activities methodology should promote

projects in poorer countries with fewer emissions but very high-energy intensity.161 Many

times the single projects available in poor countries are too small to be commercially

attractive or viable but under POA additional projects may be added at anytime during

the lifetime of the activity and incorporated over a wide area - including other

countries.162 It is expected that the POA methodology will advance the opportunities for

small and poor countries to gain access to the CDM.163

Two of the most promising reforms, however, are the Clean Development Fund and

CDM Discounting. These methods contemplate the dual purposes of CDM: creating

flexibility and sustainable development. In combination they lay out potentially

comprehensive methods of ensuring that the solutions to climate change do not

exacerbate the existing economic inequities and are true to the “ethical anchor” of the

Marrakesh Accords.

A. The Clean Development Fund

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During the negotiations of the Kyoto Protocol, Brazil proposed a Clean

Development Fund which would be financed by fines levied against Annex I Parties

when they failed to meet their emission reductions.164 These funds would be distributed

amongst non-Annex I Parties for mitigation and adaptation projects.165 The proposal was

formally endorsed by the developing nations but was eventually passed up for the

CDM.166 The reason the Clean Development Fund was passed up is the same reason that

the implementation of the CDM has frequently led to unjust terms in the poorest

countries.167 While Brazil and China are modern emerging economies, non-Annex I

Parties as a whole suffer institutional inadequacy, which makes it difficult to navigate

both treaty negotiation and CDM project execution on equitable terms.168 The Annex I

Parties’ preference for the CDM trumped the Clean Development Fund.169 A vestige of

the Clean Development Fund remained, however, and a share of the proceeds from CDM

projects are used to assist developing country parties meet the costs of adaptation to the

adverse effects of climate change.170 The Adaptation Fund’s potential is yet unseen, the

board of the Fund called for adaptation project proposals on April 13th, 2010 however

their current funds amount to 63 million, which is well below the estimated 75 to 100

billion necessary per year for adaptation, measures.171

The Adaptation Fund is a start but clearly not sufficient. To truly allow for

adaptation as well as the mitigation called for under Brazil’s original proposal money

must be diverted from many other sources. Potential sources include an increased

percentage taken when CERs are issued pursuant to a successful CDM project, fees on

Annex I Parties tied to their emissions and, as originally proposed, fines when Annex I

Parties fail to meet their emissions reductions.

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Along with mitigation and adaptation projects funds could be used to create

institutional capacity within the poorest nations which are facing clear barriers to the

CDM because of their lack of centralized or abundant emissions but also do not have the

expertise or necessary technology to engage in meaningful bargaining when opportunities

do arise.172 The Designated National Authorities within these countries must be able to

provide clear guidelines specifying their sustainable development criteria and priorities to

project developers.173 Host countries must also have the institutional capacity to enforce

their criteria and priorities.174 A comprehensive Clean Development or Adaptation Fund

in conjunction with the CDM would go a long way to remedy this imbalance in

negotiating by funding local and regional initiatives such as the Nairobi Framework on a

broader scale.175 As described in the previous section, the Nairobi Framework is an

initiative launched in 2006 that has as its objective assisting developing countries,

especially those in sub-Saharan Africa, to improve their level of participation in the CDM

through enhancing the capacity of DNAs, building capacity to develop and promote

CDM projects, improving information sharing, outreach and interagency collaboration.176

Along with its important work in mitigation and adaptation, the more heavily

financed Fund under this reform would finance education, resources, access as well as

administrative costs necessary to meaningfully negotiate, verify and monitor CDM

projects.177 To have industrialized countries who degraded the atmospheric commons en

route to their economic position where they now have adequate resources take that power

to dictate a treaty and the terms to CDM contracts contradicts the ethical underpinnings

of the CDM and its commitment to sustainable development.

B. Discounting Clean Development Mechanism Projects

23
While a more adequately financed Adaptation Fund with a broader mission would

bring poor countries to square one, ensuring that they have the capability to stave off the

worst effects of climate change as well as giving them the institutional capacity to even

sit at the CDM table, reforms must be taken to open the CDM market to less developed

countries. Further, reforms must ensure that CDM projects undertaken meet the

commitment made to sustainable development and equitable geographic distribution

under the Kyoto Protocol and Marrakesh Accords.

While GHGs travel the globe with equal effect, and scientifically, reductions in

one location equal reductions in any location, the climate change regime designed by the

Kyoto Protocol is about more than climate science.178 Not all countries are equal with

respect to energy development nor the challenges faced from missing out on the fossil

fuel driven economic boom, nor are they equal with respect to the impact climate change

will have on them.179 Additionally, not all technological alternatives to fossil fuel are

equal in their environmental and social consequences.180 In these early stages, the CDM

has created flexibility, but had largely ignored these technology and geography

differences.181 A discounting scheme, proposed by John Copeland Nagle, that

differentiates between emerging economies and the least developed countries as well as

projects that do and do not aide in sustainable development would create the economic

incentives to incorporate these commitments.182

While many commentators have suggested discounting CDM projects the most

thoughtful and comprehensive model suggests multiplying a factor gleaned from the host

countries Human Development Index (HDI) by a sustainability factor tied to each type of

project.183 You would then multiply the CERs resulting from the CDM project by this

24
number.184 The objective being to adjust the CDM to provide the most credits for the

most sustainable projects in the least developed nations and less credits to unsustainable

projects in the most overrepresented countries within the CDM.185

The HDI is a holistic statistic developed by the United Nations composed of

statistics for life expectancy, education and gross domestic product.186 The United

Nations Development Program releases the statistics for over 180 countries annually.187

Generally the forty countries identified as “very high human development” and

considered “developed” appear on the Kyoto Protocol’s Annex I, while non-Annex I

Parties find themselves on various tiers of the HDI as “developing countries.”188 While

the CDM Executive Board or the UNFCCC Parties could use these numbers to create a

discount factor as they saw fit the rankings are useful and appropriate as is.189 For

example Mexico is ranked 53 on the HDI therefore their discount rate would be .53 and

Niger is last on the HDI at 182 therefore their discount rate would be 1.82.190 Therefore

all technologies being equal for every ton of GHG emissions reductions a project

developer would receive .53 CERs for a project in Mexico and 1.82 CERs for a project

hosted in Niger.191

Broadly speaking, to discount technologies you would rank them according to

their impact on sustainable development, which includes environmental and social

impacts.192 Therefore renewable energy would receive full credits while reduction of

super pollutants would receive discounted credits.193 This mechanism would also allow

the CDM to incorporate, currently excluded, nuclear energy and carbon capture and

sequestrations at discounted rates.194 Ranking technologies would require specific

formulas and annual review as is done with the HDI.195 Currently operational, private

25
sustainability appraisers that use the Gold Standard sustainability matrix, could inform

sustainability discount rates.196

A group led by the World Wildlife Fund, SouthSouthNorth and Helio

International created a methodology to assess sustainability in 2001.197 Project

developers and CER purchasers who want independently validated, plainly additional

CERs, which promise sustainable development benefits in a renewable energy economy

go through the Gold Standard’s rigorous requirements on top of the Executive Board’s

requirements.198 This program has been very successful and at its heart is a

comprehensive matrix, which assesses the sustainability of CDM projects.199 The matrix

evaluates projects based on eight sustainability indicators (mitigation of climate change,

local environmental sustainability, the balance of payments, macroeconomic

sustainability, cost effectiveness, technological self-reliance, and sustainable use of

natural resources) and ten feasibility indicators.200 This matrix could be adapted and

reviewed annually by scientists, policymakers, and sociologists and informed by CDM

participants to attach an appropriate discount rate to each technology.201

The multiplier for each type of technology would then be combined with the HDI

multiplier for each host country as follows, for example:

Brazil .75 Niger 1.82 China .92 Haiti 1.49 Mexico .53
Wind Power .75 1.82 .92 1.49 .53

26
1.0
Hydroelectric .56 1.37 .69 1.12 .40
Dams
.75
Carbon .38 .91 .46 .75 .27
Capture and
Storage
.50
Super- .19 .46 .23 .37 .13
pollutant
Reduction
.25

The precise numbers would be decided by the CDM Executive Board or the

Parties to the UNFCCC and updated annually so project developers could engage in

decision-making accordingly.202 Clearly this method would create incentives for meeting

the commitment to geographic distribution and sustainability by, for example, making it

more profitable to install wind power in Niger than engage in super-pollutant reduction in

Mexico.203 The method would continue to allow the free market to operate and sovereign

powers to calculate their own decisions but would create incentives to meet the Kyoto

and Marrakesh commitments.204

V. Conclusion

The Clean Development Mechanism in this initial term is a good first step; it led to an

essential compromise for the Kyoto Protocol adoption and significant amounts of money

are flowing into the developing world. It is however, only a first step and has fallen short

of many goals. The markets, exploitation and short-term considerations that led to

climate change are influencing the CDM and degrading the system in a similar manner.

With so many goals being pursued simultaneously by the CDM, tradeoffs are inevitable.

The international community, however, must review the initial goals of sustainability and

27
equity in geographical and technological distribution and adequately address the

entrenched inequities in bargaining power in order for a true revolution in energy

infrastructure to occur. Unrestrained markets will continue to exacerbate the gaps

between developed, developing and undeveloped nations. Mechanisms must be put in

place to allow adequate flexibility but also to ensure that social, environmental and most

importantly that GHG emission reduction result from the CDM. The CDM has the

potential and promise to transfer necessary technology to non-Annex I Parties, build

capacity and information sharing, provide incentives for Annex I Parties to accept more

stringent targets and provide revenue to non-Annex I Parties, if implemented responsibly.

The goal is to eventually have every nation under a GHG emissions cap and early,

thoughtful and aggressive action to remedy years of inequity and unsustainable energy

systems must be part of the solution.

By combining a robust Adaptation Fund capable of mitigating future harms, as

well as building capacity for engagement within the poorest nations, with a discount

system that incentivizes sustainable development and equitable geographic distribution

the Clean Development Mechanism would be a exemplar of a holistic and comprehensive

solution to an international crisis.

28
1
See David Takacs, Carbon into Gold: Forest Carbon Offsets, Climate Change Adaptation, and International Law, 15
Hasting W. – N.W. J. Env. L. & Pol’y 39, 53 (2009) (discussing the obligation for countries to clean up the mess they
made on their way to economic success). See also Patricia Nelson, An African Dimension to the Clean Development
Mechanism: Finding a Path to Sustainable Development in the Energy Sector, 32 Denv. J. Int’l & Pol’y 615, 617-18
(2004) (describing the history of a lopsided state of global development).

2
See Jay Duffy, Signing the New Social Contract: Energy Efficient Light Bulbs Won’t Cut it Anymore, 3-8 (Dec. 2009)
available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1562044 (discussing global warming phenomena and
climate science). See generally IPCC, Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and
III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (Core Writing Team, Pachauri, R.K
and Reisinger, A. (eds.)). IPCC, Geneva, Switzerland, (2007) available at:
http://www.ipcc.ch/publications_and_data/publications_ipcc_fourth_assessment_report_synthesis_report.htm.at. See also I.
Allison, et al., The Copenhagen Diagnosis: Updating the World on the Latest Climate Science, The University of New
South Wales, Climate Change Research Centre (CCRC), Sydney, Australia (2009) available at:
http://www.copenhagendiagnosis.com/.

3
See Id., See generally Beyond Kyoto – The Developing World and Kyoto, 20 Geo. Int’l L. Rev. 531 (2008) (full journal
issue dedicated to the role of the developing world in the climate regime now and in the future).

4
See Global Climate Change and U.S. Law 3-7 (Michael Gerrard ed.,
American Bar Association 2007) (providing the factual context for climate change).

5
See John Dernbach, Achieving Early and Sustainable Greenhouse Gas Reductions Under a Post-Kyoto Agreement, 20
Geo. Int’l Envtl. L. Rev. 573 at 574-75 (2008) (explaining that the sum of national, regional and state actions cannot match
the scale, cohesiveness and effectiveness of an international agreement for combating climate change). See also Jonathan
B. Weiner, Property and Prices to Protect the Planet, 19 Duke J. Comp. & Int’l L. 515, 523 (2009) (stressing that an
effective climate regime will include the great majority of current and future major emitting countries).

6
See IPCC supra note 3 at 50-52 (describing impacts on various regions). “Sea level rise is expected to exacerbate,
inundation, storm surge, erosion and other coastal hazards, thus threatening vital infrastructure, settlements, and facilities
that support livelihood of small island communities.” Id. By 2020, in Africa, between 75 and 250 million people are
projected to be exposed to water stress due to climate change.” Id. See also Andrew C. Revkin, Poor Nations to Bear Brunt
as World Warms, N.Y. Times, Apr. 1, 2007 available at http://www.nytimes.com/2007/04/01/science/earth/01climate.html.

7
See Ruth Gordon, The Climate of Environmental Justice: Taking Stock: Climate Change and the Poorest Nations: Further
Reflections on Global Inequality, 78 U. Colo. L. Rev. 1559, 1589-1599 (2007) (describing the unequal effects climate
change will have on “The South” and the lack of resources available to cope with these effects). See also Patricia Nelson
supra note 1 at 616 (describing the disproportionate effects climate change will have on Africa and the difficulties that lie
ahead of the country).

8
See Ruth Gordon supra note 7 at 1601-02 (discussing the Third World’s emphasis on development over the environment).
See also Eric Neumayer, In Defence of Historical Accountability for Greenhouse Gas Emissions, 33 Ecological Econ. 2 pp.
185-92 (2000) (providing arguments in favor of historical responsibility). See also Harro van Asselt and Joyeeta Gupta,
Stretching Too Far? Developing Countries and the Role of Flexibility Mechanisms Beyond Kyoto, 28 Stan. Envtl. L.J.
311, 338-39 (2009) (discussing the developed world’s historical responsibility for climate change impacts and shunning
leadership).

9
See Patricia Nelson supra note 1 at 618 (stating that cost reduction mechanisms make caps more palatable for developed
nations). See also Jonathan B. Weiner supra note 5 at 517. “For climate change, with wide variation in the costs of
abatement across firms, sectors and countries, a cap and trade system could reduce costs very substantially compared to
fixed performance standards and even more compared to central conduct standards.” Id.

10
See John A. Sautter, Note: The Clean Development Mechanism in China: Assessing the Tension Between Development
and Curbing Anthropogenic Climate Change, 27 Va. Envtl. L.J. 91, 93 (2009). “The mechanism has three main aims: (1)
to promote sustainable development in the country that is hosting the CDM project, (2) to limit [GHG] emissions across the
world, and (3) to assist developed countries in meeting their GHG reduction obligations under the Kyoto Protocol.” Id.
11
See supra note 9 and accompanying text. See also infra note 55 and accompanying text.

12
See UNFCCC, “CDM Statistics,” available at: http://cdm.unfccc.int/Statistics/index.html.

13
See Part III “Problems in Implementing the Clean Development Mechanism.”

14
United Nations Framework Convention on Climate Change, May 9, 1992, 1771 U.N.T.S. 107, 31 I.L.M. 849 (entered
into force Mar. 21, 1994) [hereinafter UNFCCC].

15
Id. at Art. III. See also David Takacs supra note 1 at 49-52 (discussing “common but differentiated responsibility
generally).

16
See Brooke Ackerly and Michael P. Vandenbergh, Climate Change Justice: The Challenge for Global Governance, 20
Geo. Int’l Envtl. L. Rev. 553 (2008) (asking and discussing the question: whether one country, entity or person actually
has an obligation to any other country, person or entity). See also Harro van Asselt and Joyeeta Gupta supra note 8 at 320-
21 “One of the important outcomes of the UNFCCC from a developing country perspective was the inclusion of was the
inclusion of ‘principles’ in Article 3…[which] include those of intergeneration and intra-generational equity, common but
differentiated responsibilities and respective capabilities of developed and developing countries, the need for a
precautionary approach subject to a cost effectiveness qualifier, the right to sustainable development and the promotion of a
supportive, open economic system.” Id.

17
See Patricia Nelson supra note 1 at 617.

18
See Id. at 618. See also infra notes 127-28 and accompanying text.

19
See Jonathan B. Weiner supra note 5 at 522 (explaining that the basic principle of international law is that treaties are
only binding by consent and therefore constructing a regulatory instrument that balances demands for various factions is
necessary).

20
See UNFCCC supra note 14 at Art. III.

21
See Id.

22
Conference of the Parties to the Framework Convention on Climate Change: Kyoto Protocol, 1998, 37 I.L.M. 22,
available at: http://unfccc.int/resource/docs/convkp/kpeng.pdf, [hereinafter Kyoto Protocol].

23
Kyoto Protocol, Art. III § 1. The caps are set at GHG reductions below the party’s 1990 emissions levels and the GHGs
include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. Id.

24
See Id. See also Edward Wong and Jonathan Ansfield, China Insists That Its Steps on Climate Change Be Voluntary,
N.Y. Times, Jan. 30, 2010 at A5, available at: http://www.nytimes.com/2010/01/30/world/asia/30china.html (stating that
while China is largest emitter of GHGs they insist reductions be voluntary). See also Albert Mumma and David Hodas,
Designing a Global Post-Kyoto Climate Change Protocol that Advances Human Development, 20 Geo. Int’l Envtl. L. Rev.
619, 623-24 (2008) (describing the diversity of non-Annex I Parties, which include the poorest nations in Africa to India
and China, which have sizeable economies and further explaining that excluding large economies from caps has been cited
by the United States in its refusal to ratify the Kyoto Protocol).

25
Kyoto Protocol supra note 22 at Art. XXIV. See also UNFCC, “Status of Ratification of the Kyoto Protocol,” available
at: http://unfccc.int/kyoto_protocol/status_of_ratification/items/2613.php.

26
See “Status of Ratification of the Kyoto Protocol” supra note 25.

27
See David Takacs supra note 1 at 520 (explaining that the Kyoto Protocol has three flexibility mechanisms: cap-and-
trade, Joint Implementation and the CDM). See also Ruth Gordon supra note 7 at 1561-62 (arguing that large
industrializing nations are the primary beneficiaries of these flexibility mechanisms and the poor and least industrialized
countries are generally marginalized).

28
Kyoto Protocol supra note 22 at Art XII.

29
See Id. See also Sam Headon, Whose Sustainable Development? Sustainable Development under the Kyoto Protocol,
the “Coldplay Effect,” and the CDM Gold Standard, 20 Colo. J. Int’l Envtl. L. & Pol’y 127, 135 (2009) (discussing the
potential conflicts between sustainability and cost effectiveness).

30
See Andrew Schatz, Discounting the Clean Development Mechanism, 20 Geo. Int'l Envtl. L. Rev. 703, 742 (2008)
(concluding that, “the international community must create a legal framework that maximizes emissions reductions at the
lowest cost, reduces market inefficiencies, and paves the way for a sustainable global energy infrastructure”).

31
See John C. Dernbach supra note 5 at 611 (stating that the CDM should encourage developing country participation by
including provisions for increasing stringency over time).

32
Kyoto Protocol supra note 22 at Art XII § 1 (noting that companies, governments, and organizations like the World Bank
are allowed to invest in, or own, emission reduction projects in Non-Annex I countries).

33
See David Takacs supra note 1 at 54 (arguing that many of the problems under the CDM arise because private actors are
not, or do not believe themselves to be, bound by international environmental legal norms). Private actors generated $30
billion under the CDM in 2006. Id. “[P]rivate actors…have found multifarious ways to profit from the [CDM] while
evading real reductions in GHG emissions.” Id.

34
See First Emissions Credits Issued Under Kyoto Protocol, Oct. 20, 2005, available at:
http://cdm.unfccc.int/CDMNews/issues/issues/I_WJHSF1N67JGAORWII2BKVAI8O74B5A/viewnewsitem.html. A CER
is equal to one metric ton of carbon dioxide. Id. Greenhouse gases other than carbon dioxide are measured in carbon
dioxide equivalents to determine the number of CERs they will count for when reduced. Id.

35
See Kyoto Protocol supra note 22 at Art. XII (stating that “Any certified emission reduction which a Party acquires from
another Party in accordance with the provisions of Article 12 shall be added to the assigned amount for the acquiring
Party”).

36
Id. at Art XII § 5.

37
See Id.

38
Conference of the Parties to the Framework Convention of Climate Change, Marrakesh, Morocco, Oct. 29-Nov. 11,
2001, The Marrakesh Accords, U.N. Doc. FCCC/CP/2001/13/Add.2, Decision 17/CP.7 (Jan. 21, 2002) [hereinafter
Marrakesh Accords].

39
See UNFCCC, Report of the Conference of the Parties on Its Seventh Session, Addendum, Dec. 16/CP.7, Annex C-J UN
Doc. FCCC/CP/2001/13/Add.2 (Nov. 10, 2001), available at: http://unfccc.int/resource/docs/cop7/13a02.pdf. The Board is
composed of ten members from parties to Kyoto, mixed relatively evenly between Annex I and non-Annex I
representatives. Id. at Dec. 16/CP.7, Annex C P 7. Decisions are made by a three-fourths majority of members present and
voting if they cannot achieve consensus. Id. at Dec. 16/CP.7, Annex C P 15.

40
UNFCCC, Conference of the Parties First Session, Nov. 28 – Dec. 10, 2005, FCCC/KP/CMP/2005/8/Add.1, 3/CMP.1,
Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol, para. 29.

41
See Marrakesh Accords supra note 38. See also UNFCCC, Guidelines Project Design Document (CDM-PDD) and the
Proposed new baseline and monitoring methodologies (CDM-NM), EB 41 Report, Annex 12, Version 07, available at:
http://cdm.unfccc.int/Reference/Guidclarif/pdd/PDD_guid04_v07.pdf.

42
See Id.
43
See Id. See also infra notes 131-37 and accompanying text.

44
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 at para. 40. See also UNFCCC, “List of Designated National Authorities,” available at:
http://cdm.unfccc.int/DOE/list/index.html. A DOE can be either a domestic legal entity or an international organization. Id.
There are currently twenty-six DOE’s. Id. See also UNFCCC, “Procedures For Accreditation,” available at:
http://cdm.unfccc.int/Reference/Procedures/accr_proc01.pdf.

45
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 at para. 35.

46
See UNFCCC, “Issuance of CERs,” available at: http://cdm.unfccc.int/Issuance/index.html.

47
Kyoto Protocol supra note 22 at Art. VI, XVII (author italics).

48
Kyoto Protocol supra note 22 at Art. XII § 3 (author italics).

49
Marrakesh Accords supra note 38 at Decision 15/CP.7.

50
See infra note 59 and accompanying text.

51
See David Takacs supra note 1 at 49-52 (discussing common but differentiated responsibilities in the climate regime).

52
See John A. Sautter supra note 10 at 117.

53
See Id. “By buying CERs produced from CDM projects, Annex I countries are not forced to make costly changes to
their domestic energy generation, transportation or industrial sectors. Instead, they can pay developing countries to make
changes to their economies in order to reduce GHGs. In this way Annex I countries can claim that they are fighting global
warming and meeting their Kyoto commitments. However, these changes in developing countries, such as adding hydro
dams [or] destroying HFC-23,…can have adverse effects on the local environment and population.” Id.

54
See supra note 9 and accompanying text. See also infra note 55 and accompanying text.

55
See Michael Wara, Measuring the CDM's Performance and Potential 7 (Stanford Univ, Program on Energy &
Sustainable Dev Working Paper No. 56, July 2006), available at: http://iis-db.stanford.edu/pubs/21211/Wara_CDM.pdf; for
a more up to date version See Michael W. Wara, The Performance and Potential of the Clean Development Mechanism
(Jan. 20, 2008), available at: SSRN: http://ssrn.com/abstract=1086242 1774 (explaining that the CDM was designed around
the insight that Annex I Parties could obtain emissions reductions at a lower cost in the non-Annex I countries).

56
See Pew Center on Global Climate Change, U.S. Technology and Innovation Policies, In Brief, No. 7, available at:
http://www.pewclimate.org/docUploads/PEW_In-Brief_7.pdf (discussing the types of technological innovations necessary
to significantly reduce GHG emissions).

57
See Harro van Asselt and Joyeeta Gupta supra note 8 at 339. “Even though the Kyoto Protocol demands that the use of
flexibility mechanisms should be supplemental to domestic emission reductions, this "supplementarity" is not defined.
Thus, it is possible for developed countries to evade their responsibility and leadership obligation, as there would be
""virtual' compliance without physical compliance." By permitting credits from emissions trading, the incentives for
domestic action are reduced, which could result in less - rather than more - technological innovation in the countries buying
the credits.” Id.

58
See supra note 8 and accompanying text.

59
See Harro van Asselt and Joyeeta Gupta supra note 8 at 338-39 and 362-63 (discussing the repercussions of not defining
supplementarity and the problems that could be avoided by defining supplementarity).
60
Kyoto Protocol supra note 22 at Art. 12 § 5(c). See also Marrakesh Accords supra note 38 at Decision 17/CP.7, Annex,
para. 43 (explaining that "[a] CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources
are reduced below those that would have occurred in the absence of the registered CDM project activity").

61
See generally Harro van Asselt and Joyeeta Gupta supra note 8 at 344-48 (discussing additionality and perverse
incentives including cheating and governments abstaining from formulating GHG reducing policies).

62
See Andrew Revkin supra note 6. See also David M. Driesen, Linkage and Multilevel Governance, 19 Duke J. Comp.
& Int’l L. 389, 400 (2009) (citing evidence of the Executive Board approving CDM projects that are not additional).

63
See UNFCCC, CDM Audio Files, “Additionality,” available at”
http://cdm.unfccc.int/about/multimedia/podcasts/index.html.

64
See Id.

65
See Id.

66
See Id.

67
See Id.

68
See Harro van Asselt and Joyeeta Gupta supra note 8 at 347 (citing Christiana Figueres, Sectoral CDM: Opening the
CDM to the Yet Unrealized Goal of Sustainable Development, 2 McGill Int’l Sust. Dev. L. & Pol’y 5, 12-13 (discussing
concerns raised by Latin American countries about losing CDM funding if they strengthen environmental law).

69
See Jyoti Parikh and Kirkit Parikh, The Kyoto Protocol: An Indian Perspective, 5 Int’l Rev. Envtl. Strategies 127, 139-
40 (2004).

70
See UNFCCC, Methodological Tool: Tool for the Demonstration and Assessment of Additionality, EB 36 Report, Annex
13, Version 04, available at: http://cdm.unfccc.int/EB/036/eb36_repan13.pdf. See also Ram M. Shrestha, et al., Baseline
Methodologies for Clean Development Mechanism Projects: A Guidebook, 35-45 (UNEP Riso Centre, Nov. 2005).

71
See Id. See also See Harro van Asselt and Joyeeta Gupta supra note 8 at 345 (discussing business as usual scenarios).

72
Decision 9/CMP.1, Guidelines for Implementation of Article 6 of the Kyoto Protocol, Appendix B (2005). See also
supra note 70. See also Modalities and procedures for a clean development mechanism as defined in Article 12 of the
Kyoto Protocol supra note 40 at paras. 44-52.

73
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 at para. 45.

74
See Methodological Tool: Tool for the Demonstration and Assessment of Additionality supra note 70.

75
See Id.

76
See Id.

77
See Id.

78
See Id.

79
See Id.
80
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 at para. 50-52.

81
Id. at para. 51.

82
See for example Andrew Schatz supra note 30 at 58 (explaining leakage: “communities that formerly relied upon a forest
are likely to cut trees elsewhere; a government may preserve one forest from planned logging and instead offer timber
concessions elsewhere; logging companies denied concession rights in one country may instead cut timber in a neighboring
country.”)

83
See supra note 80.

84
See UNEP, “CDM Projects with CERs Issued” available at: http://cdmpipeline.org/cers.htm#2. See also See also Craig
Hart et al., East Asia Clean Development Mechanism: Engaging East Asian Countries in Sustainable Development and
Climate Regulation Through the CDM, 20 Geo Int’l Envtl. L. Rev. 645 (2008) (presenting a study on technologies
installed through the CDM).

85
See Id. See generally, Steven Ferrey, The Failure of International Global Warming Regulation to Promote Needed
Renewable Energy, 37 B.C. Envtl. Aff. L. Rev. 67 (2010).

86
See Michael Wara supra note 55 at 1781- 90 (providing a detailed study of the strategic manipulation of baselines that
occurred with respect to the HFC-23 projects). See also John A. Sautter supra note 10 at 102-05 (explaining that reduction
in HFC-23 is a one-time event while other renewable projects can continue to produce reductions well into the future).

87
See John A. Sautter supra note 10 at 102 (explaining that HFC-23 is a byproduct of making HCFC-22, a coolant used in
refrigeration).

88
Federal Ministry for the Environment, Nature, Conservation and Nuclear Safety, Renewable Energy and the Clean
Development Mechanism: Potential, Barriers and Ways Forward, A Guide for Policy Makers, 14 (Apr. 2007) available at:
http://www.ren21.net/pdf/virtual_lib_local/CDM-EE-Netz.pdf.

89
See Michael Wara supra note 55 at 1782 (explaining that major producers have voluntarily adopted measures to capture
and destroy HFC-23 in Annex I countries).

90
See Id. (finding that project directors exploit market disparities and often sell their CERs at 10 to 100 times greater than
the cost of abatement).

91
See John A. Sautter supra note 10 at 106 (explaining the unintended consequences that exist because of the large amount
of money that can be generated through selling HFC-23 offsets). See also Andrew Schatz supra note 30 at 721 (explaining
that Annex I Parties are paying China to increase production of HCFC-22 and then paying them again through CDM
projects that reduce HFC-23).

92
See Andrew Schatz supra note 30 at 726-27 (proposing a super-pollutant protocol as an alternative to the CDM).

93
See infra note 96 and accompanying text.

94
See Andrew Schatz supra note 30 at 719-20. “Parties are eager to invest in projects capturing and destroying HFC-23
from refrigeration and semiconductor plants, N[2]O from nitric and adipic acid plants, and capturing methane from landfills
and coal mines. Meanwhile, renewable energy projects and control of emissions from agricultural practices remain less
popular, largely because they require greater investment, more time to come to fruition, and more uncertainty in operation.”
Id.

95
See Renewable Energy and the Clean Development Mechanism: Potential, Barriers and Ways Forward, A Guide for
Policy Makers supra note 91.
96
See Michael Wara supra note 55 at 1764 (explaining that the CDM market is failing because its rules have accounting
loopholes under which project directors can create CERs by paying to jump over hurdles).
97
20 Geo. Int'l Envtl. L. Rev. 645, 650-51, See also Renewable Energy and the Clean Development Mechanism: Potential,
Barriers and Ways Forward, A Guide for Policy Makers supra note 91.

98
See Andrew Schatz supra note 30 at 722 (explaining the carbon dioxide represents 77% of all GHGs making reliance on
super-pollutants especially problematic).

99
See Renewable Energy and the Clean Development Mechanism: Potential, Barriers and Ways Forward, A Guide for
Policy Makers supra note 91 at 9-11 (discussing barriers to dissemination of renewable energy technologies.

100
See Harro van Asselt and Joyeeta Gupta supra note 8 at 351 (comparing the difficulty of proving additionality to the
ease of end-of-pipe projects especially where there are no national regulations for these super-pollutant GHGs).

101
See Renewable Energy and the Clean Development Mechanism: Potential, Barriers and Ways Forward, A Guide for
Policy Makers supra note 91.

102
See Harro van Asselt and Joyeeta Gupta supra note 8 at 351 (explaining that the small scale nature of renewable projects
reduces the credits that can be received and makes it difficult to show that it would not have occurred without CDM
investment).

103
See supra note 94.

104
See David Takacs supra note 1 at 46 (citing Steven R. Ratner, Business, in the Oxford Handbook of International
Law at 810 (Daniel Bodansky et al. eds., 2007). See also S. Scherr Bracer et al., Organization and Governance for
Fostering Pro-Poor Compensation for Environmental Services: CES Scoping Paper no. 4 at 35 (ICRAF Working Paper no.
39, World Agroforestry Centre, 2007). To increase potential for pro-poor outcomes, the opportunity for local conditions to
define the supporting institutional structures and norms are critical. Id. There are a wide range of institutional models that
can benefit the poor, and these tend to include features such as: building upon and strengthening existing institutions of the
poor, allowing flexibility in land use options and in the timeframe for adoption and adaptation of land use, simplification of
monitoring and reporting to fit local capacity, and orientation and training of intermediary organizations who serve as
brokers to the poor and help them to aggregate supply services and mediate with buyers. Id.

105
See Andrew Schatz supra note 30 at 723 (stating that unless we preemptively replace coal-fired energy infrastructure in
developing nations with renewable, nuclear and gas-based systems, little can be done to slow climate change).

106
See Ruth Gordon supra note 7 at 1610 (explaining that subsidizing carbon-based energy will only make it more
expensive to install retrofitting measures in the future).

107
See Harro van Asselt and Joyeeta Gupta supra note 8 at 348 (discussing an interpretation of Article 12 of the Kyoto
Protocol that would not allow technology that is not sustainable). “The question of whether the CDM is promoting
sustainable development can be framed primarily in terms of whether it is promoting renewable energy in developing
countries and thus assisting in the transition away from fossil fuels.” Id. (citing Ben Pearson, The CDM is Failing, 56
Tiempo 12 (July 2005), available at http://www.tiempocyberclimate.org/portal/archive/pdf/tiempo56low.pdf)

108
See Marrakesh Accords supra note 38 at Preamble.

109
See UNEP, “CDM Projects by Host Region” (Mar. 1, 2010), available at: http://cdmpipeline.org/cdm-projects-
region.htm. See generally Harro van Asselt and Joyeeta Gupta supra note 8 at 352-355 (discussing regional concentration of
projects).

110
See David Takacs supra note 1 at 53 (recognizing China’s advanced bureaucracy and its ability to undertake technical
CDM activities). See also Mei Gechkik, Making Transfer of Clean Technology Work: Lessons of the Clean Development
Mechanism, 11 San Diego Int’l L. J. 227, 236-37 (2009). The U.S. government has estimated that China’s clean
technology market will be worth $186 billion in 2010 and $555 billion in 2020. Id. Venture capitalists have thus far only
invested marginal amounts of money in the Chinese clean technology and it remains largely untapped. Id. Therefore,
companies are attracted to the CDM market in China in order to gain leverage to advance their interests in China’s emerging
clean technology market. Id.

111
See Patricia Nelson supra note 1 at 634 (discussing the effects on CDM investment of warfare in Africa and perceptions
of high political risk).

112
See Id. at 633-34 (discussing the problems additionality causes in Africa, which has the lowest fossil-fuel consumption
rates in the world).

113
See Id. (discussing the lock out of low GHG emission countries).

114
See Harro van Asselt and Joyeeta Gupta supra note 8 at 344-49 (discussing additionality and perverse incentives to
avoid regulating emissions). See also supra notes 86-92 and accompanying text (discussing HFC-23 projects).

115
See John Dernbach supra note 5 at 597 (citing Hans-Holger Rogner et al. Introduction, in Intergovernmental Panel on
Climate Change, Climate Change 2007: Mitigation 4, available at: http://www.ipcc.ch/pdf/assessment-
report/ar4/wg3/ar4-wg3-spm.pdf).

116
See Jonathan B. Weiner supra note 5 and accompanying text. See also John A. Sautter supra note 10 at 91 (noting that
global problem must be met with international strategy).

117
See Secretary-General’s Address to the UN Climate Change Conference, Nairobi, Kenya, (Nov. 15, 2006) available at:
http://www.un.org/apps/sg/sgstats.asp?nid=2303.

118
See UNFCCC, “Nairobi Framework – Catalysing the CDM in Africa,” available at:
http://cdm.unfccc.int/Nairobi_Framework/index.html.

119
See UNFCCC, “Fact Sheet: The Nairobi Framework,” available at:
http://unfccc.int/files/press/backgrounders/application/pdf/fact_sheet__nairobi_framework.pdf.

120
See UNFCCC, “Africa Carbon Forum Brochure for Mar. 3-5, 2010,” available at:
http://cdm.unfccc.int/Nairobi_Framework/ACF2010_brochure.pdf.

121
See UNEP, “Regional Distribution of CDM Projects”, available at: http://cdmpipeline.org/cdm-projects-region.htm.
Africa hosts 2.5% of all CDM projects and 32 out of 122 are in South Africa. Id.

122
See John A. Sautter supra note 10 at 91-92 (noting that solutions must limit GHG emissions while recognizing countries
right to expand).

123
See Albert Mumma and David Hodas supra note 24 at 635 (recognizing the need for economies to grow as some 1.5 to
2 billion people in the world have no access to electricity yet the international community must demand that energy is used
energy efficiently and low carbon options are maximized).

124
Kyoto Protocol supra note 22 at Art. XII § 2.

125
See John C. Dernbach supra note 5 at 593-94 (referencing an earlier work, John C. Dernbach, Sustainable Development
as a Framework for National Governance, 49 Case W. Res. L. Rev. 1, 17-32 (tracing history of term sustainable
development from Stockholm Declaration through Rio Declaration and Agenda 21)). See also Patricia Nelson supra note 1
at 622 (explaining that there is no binding definition under the CDM but the most frequently cited definition is that of the
Brundtland Commission: ‘development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.”).

126
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 at para. 40(a).
127
See David Takacs supra note 1 at 82-82 (explaining that leaders within poor countries negotiating for CDM investment
may be desperate for the investment or profiting individually).

128
UNEP, Rio Declaration on Environment and Development, United Nations Conference on Environment and
Development, Principle 10 (June 3-14, 1992) available at: http://www.unep.org/Documents.Multilingual/Default.asp?
DocumentID=78&ArticleID=1163. “Environmental issues are best handled with participation of all concerned citizens, at
the relevant level. At the national level, each individual shall have appropriate access to information concerning the
environment that is held by public authorities, including information on hazardous materials and activities. In their
communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public
awareness and participation by making information widely available. Effective access to judicial and administrative
proceedings, including redress and remedy, shall be provided.” Id.

129
See Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol supra
note 40 para. 37(b). “The designated operational entity selected by project participants to validate a project activity, being
under a contractual arrangement with them, shall review the project design document and any supporting documentation to
confirm that the following requirements have been met: … Comments by local stakeholders have been invited, a summary
of the comments received has been provided, and a report to the designated operational entity on how due account was
taken of any comments has been received” Id. See also David Takacs supra note 1 at 77 (discussing the limited role the
stakeholder comments are given under the CDM regime).

130
See David Takacs supra note 1 at 67. “The Validation Report for the Guangxi project [a CDM project] notes that ‘The
PDD has been made public by February 16, 2006 until April 1, 2006. No stakeholder comments have been received.’ If
relevant stakeholders are local citizens that might be affected by the project, would they know that the project was open for
comment? Would they have access to computers? Would they have the political freedom to publicly oppose such a project?
Would they have the slightest concept of what the project was about? While stakeholder comments are incorporated within
the PDD, it is hard to believe that rural people in China (or anywhere) understand carbon banking well enough to participate
meaningfully in their development.” Id. See also Lambert Schneider, Osko-Institut, Is the CDM Fulfilling its
Environmental and Sustainable Development Objectives? An Evaluation of the CDM and Options for Improvement at 51-
52 (2007), available at
http://assets.panda.org/downloads/oeko_institut__2007____is_the_cdm_fulfilling_its_environmental_and_sustainable_deve
lopme.pdf (explaining that Only 40 percent of PDDs, clearly showed the project hosts had invited all relevant stakeholders
to comment, and many cases revealed shoddy efforts at advertising public comment events such as yelling over a
loudspeaker or only inviting town officials).

131
See supra note 127.

132
See Harro van Asselt and Joyeeta Gupta supra note 8 at 337 (explaining that some describe the CDM as a form of
‘carbon colonialism’). “[C]ommodification of the atmosphere could contribute to the diffusion of Western notions of cost
effectiveness, free markets, law and economics, and property rights, even when it is unclear whether such notions favor, and
are by favored by developing countries, or are compatible with environmental protection.” Id.

133
See David Takacs supra note 1 at 71-74 (discussing project developers generally and the TreeFarms project
specifically).

134
See Id. (citing Larry Lohmann, Carbon Trading: A Critical Conversation on Climate Change, Privatization and Power,
Dag Hammarskjold Centre Development Dialogue No. 48, 238-240 (Sept. 2006), available at:
http://www.scribd.com/doc/8172014/Carbon-Trading-A-Critical-Conversation-on-Climate-Change-Privatization-and-
Power-).

135
See Id. “Because land tenure [in Uganda] was traditional and not formal…villagers have lost more than 30 percent of
their grazing and cropland…” Id. at 72.

136
See Id. (referencing Larry Lohmann supra note 138 at 242).

137
See Green Resources “Plantations,” available at: http://www.greenresources.no/Plantations.aspx (discussing the
companies plantations and involvement with the CDM).

138
See generally John A. Sautter supra note 10 at 107-08. See also John Copeland Nagle, Discounting China’s CDM
Dams, 7 Loy. U. Chi. Int'l L. Rev. 9 (2009).

139
See John A. Sautter supra note 10 at 107-08.

140
See John A. Sautter supra note 10 at 107-08 (explaining that hydro damns in China have displaced an estimated 23
million people and have significant consequences for the surrounding ecosystem, human population and the survival of
indigenous riparian species).

141
See John A. Sautter supra note 10 at 106 (stating that many CDM projects were going to be build regardless of CDM
financing).

142
UNEP, “CDM Projects Grouped By Type,” available at: http://cdmpipeline.org/cdm-projects-type.htm#6. There are
1354 hydro projects and 871 in China. Id.

143
See David Takacs supra note 1 at 73 (discussing Annex I Parties using non-Annex I Parties as a ‘pollution haven). See
also Ben Pearson supra note 110 (defining the “race to the bottom”). “The primary focus of the CDM on producing a
tradable commodity in a specific project boundary at the lowest cost frustrates environmentally-superior outcomes by
directing investors and buyers away from projects with the most overall benefits. Buyers and investors favour projects that
require the least investment, least technology transfer and that provide the least sustainable development co-benefits as these
produce the cheapest credits.” Id. See also Craig Hart et al. supra note 84 at 645 (presenting a study evaluating CDM in
promoting sustainable development in developing countries). “Another example of the CDM producing perverse incentives
and unintended consequences in East Asia involves projects developing palm oil plantations to support biofuel production,
which disrupt indigenous agricultural patterns and lead to deforestation. In East Asia and other regions, these issues have
included displacement of and even violence against indigenous peoples due to large-scale afforestation projects, transfer of
communal lands to private owners for development of CDM projects without compensation to local groups, and projects
that have continued the operation of unsafe or unhealthy conditions such as methane recovery from garbage disposal areas.”
Id. at 649.

144
See Andrew Schatz supra note 30 at 718-19 (explaining that benefits obtained under unequal bargaining conditions may
come at the expense of sovereignty loss, potentially reduced emphasis on domestic technology development and the loss of
cheap reduction options to meet potential future caps).

145
See Harro van Asselt and Joyeeta Gupta supra note 8 at 349 (discussing non-Annex I Parties’ acceptance of inequitable
terms under the CDM and the problem when Annex I countries only invest in ‘low hanging fruit’). See also John A.
Sautter supra note 10 at 111. “[T]he overarching administration of the CDM program as it is being implemented is flawed
with an incentive structure that does not induce involved parties to take actions that promote local sustainable
development.” Id.

146
See David M. Driesen supra note 62 at 394 (discussing the role of the DOE).

147
See Id. (contending that if DNA’s had the capacity to monitor and verify emissions reductions a conflict of interest
might be avoided).

148
See UNFCCC,”Issuance of CERs, Rejected,” available at: http://cdm.unfccc.int/Issuance/rejected.html.

149
See John C. Dernbach supra note 5 at 590 (discussing cost reduction and production of non-climate benefits).

150
See Id. (citing Richard B. Alley et al., Summary for Policymakers, in, Intergovernmental Panel on Climate Change,
Climate Change 2007: The Physical Science Basis 3 (2007)).

151
This sentiment reflects the precautionary principle and urges its extension to economic and market systems, which may
have unintended social consequences. See UNEP, Declaration of the United Nations Conference on the Human
Environment (June 5-16, 1972) Principle 21, available at: http://www.unep.org/Documents.Multilingual/Default.asp?
DocumentID=97&ArticleID=1503. “States have, in accordance with the Charter of the United Nations and the principles of
international law, the sovereign right to exploit their own resources pursuant to their own environmental policies, and the
responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other
States or of areas beyond the limits of national jurisdiction.” Id.

152
See UNDP, “In a divided but ecologically interdependent world, it challenges all people to reflect upon how we manage
the environment of the one thing that we share in common: planet Earth. It challenges us to reflect on social justice and
human rights across countries and generations. It challenges political leaders and people in rich nations to acknowledge
their historic responsibility for the problem, and to initiate deep and early cuts in greenhouse gas emissions. Above all, it
challenges the entire human community to undertake prompt and strong collective action based on shared values and a
shared vision.” Id. See also David Takacs supra note 1 at 87. “Missing is precision, enforcement, justiciability and the will
to shape and use international law to de-emphasize the nation state, and to take ‘the market’ and its relentless
commodification of the Earth’s social and natural assets.” Id.

153
John A. Sautter supra note 10 at 115. See also The World Bank, State and Trends of the Carbon Market, May 2009 at
45-52 available at: http://wbcarbonfinance.org/docs/State___Trends_of_the_Carbon_Market_2009-FINAL_26_May09.pdf.
The World Bank estimates that CDM leveraged over $100 billion in clean energy investment to Non-Annex I countries
through 2008, with another $41 billion in 2008 alone. Id.

154
John A. Sautter supra note 10 at 115.

155
See David Takacs at 41. “The criteria for much international climate change ‘aid’ is not necessarily about mitigating
[GHG] emissions, helping developing nations or poor communities adapt or conserving biodiversity. Instead, a coterie of
actors with overlapping interests has devised complex systems that turn environmental obligations into efficient economic
transactions.” Id. See also Harro van Asselt and Joyeeta Gupta supra note 8 at 344 (stating that the main criticism of the
CDM is that it focuses too much on cost-efficiency and too little on sustainable development).

156
See Youba Sokona et al., The Clean Development Mechanism: What Prospects for Africa?, 109, 115-16, in, The Clean
Development Mechanism: Issues and Options (Jose Goldemberg, ed. 1998) (proposing quotas). See also Ernestine E.
Meijer, The International Institutions of the Clean Development Mechanism Brought Before National Courts: Limiting
Jurisidictional Immunity to Achieve Access to Justice, 39 N.Y.U. J. Int’l L. & Pol’y 873 (2007) (advocating judicial
reforms under the CDM).

157
Patricia Nelson supra note 1 at 634-35.

158
See UNFCCC, Programme of Activities, available at: http://cdm.unfccc.int/ProgrammeOfActivities/index.html. See
also UNFCCC, Procedures for Registration of a Programme of Activities as a Single CDM Project Activity and Issuance of
Certified Emissions Reductions for a Programme of Activities, EB 47 Report, Annex 29, Version 03, available at:
http://cdm.unfccc.int/EB/047/eb47_repan29.pdf.

159
See Id. See also Patricia Nelson supra note 1 at 628 (listing environmentally oriented technologies suitable to rural
villages: efficient cookstoves, biogas-driven water pumping systems, household or village-scale photovoltaics, liquid fuel
production from biomass, biomass co-combustion, wind energy technologies, solar-thermal, methane production from waste
and small hydroelectric plants).

160
See UNFCCC, Programme of Activities – Registered, available at:
http://cdm.unfccc.int/ProgrammeOfActivities/registered.html.

161
See United State Energy Information Administration, “International Total Primary Energy Consumption and Energy
Efficiency,” available at: http://www.eia.doe.gov/emeu/international/energyconsumption.html . Energy intensity is the total
energy consumption per unit of gross domestic product. Id. For reference and comparison following are a few examples of
country’s energy intensity measured in tons of oil equivalent per million dollars: United States 221.7, United Kingdom
141.2, France 170.5, China 231.3, Brazil 146.1, India 189.5, Mexico 180.3, Democratic Republic of Congo 4746.3, Nigeria
776.6, Tanzania 783.5. Id. See also Patricia Nelson supra note 1 at 621-22 (explaining that poor nations lose more energy
to inefficiency and mismanagement than consumption).
162
See UNFCC, CDM Audio Files “Programme of Activities,” available at:
http://cdm.unfccc.int/about/multimedia/podcasts/index.html.

163
See Id.

164
See Harro van Asselt and Joyeeta Gupta supra note 8 at 335 (discussing the negotiation process leading up to the
development of the CDM).

165
See Id.

166
See Id.

167
See Harro van Asselt and Joyeeta Gupta supra note 8 at 341 (discussing differences in the negotiating power of Annex I
Parties and poorer countries).

168
See supra note 144.

169
See Harro van Asselt and Joyeeta Gupta supra note 8 at 335 (explaining the proposal and downfall of the Clean
Development Fund).

170
See UNFCCC, “Adaptation Fund” available at:
http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php. The share of profits to the
Adaptation Fund amounts to 2% of the CERs issued to a CDM project. Id.

171
See Adaptation Board, Letter: The Adaptation Fund becomes fully operational – Request to provide financial resources
to the Adaptation Fund, (Apr. 13, 2010), available at: http://www.adaptation-
fund.org/system/files/Letter_to_request_donations.pdf.

172
See Mei Gechlik, Making Transfer of Clean Technology Work: Lessons of the Clean Development Mechanism, 11 San
Diego Int’l L.J. 227, 250 (2009) (pointing to the high correlation between strong technological capabilities with high levels
of technology transfers). See also Harro van Asselt and Joyeeta Gupta supra note 8 at 363-64 (discussing the potential for
institutional capacity building to mitigate inequities in bargaining power within poorer countries).

173
See Sam Headon supra note 29 at 154-55 (explaining that it is necessary for sovereigns to remain in control of
negotiating CDM projects but capacity building is a prerequisite for negotiating where DNA’s lack the institutional capacity
to engage in the CDM).

174
See Id. at 155 (explaining that capacity is a prerequisite for enforcement of sustainability priorities). See also David
Takacs at 44 (discussing cultivating social resiliency and forging the democratic capacity to help marginalized communities
accrue the administrative, political and technical power to navigate current and future upheavals).

175
See supra notes 117-121 and accompanying text.

176
See supra notes 117-121 and accompanying text.

177
This proposal would provide a means to accomplish the goals articulated in the Copenhagen Accords regarding
“[r]egional and subregional distribution and capacity-building. See UNFCCC, Conference of the Parties Fifth Session, Dec.
7 – 19, 2009, FCCC/KP/CMP/2009/21/Add.1, Decision 2/CMP.5, Further guidance relating to the clean development
mechanism, Para. 49. “[The Conference of the Parties (COP_ requests] the Executive Board to allocate financial resources
from the interest accrued on the principal of the Trust Fund for the Clean Development Mechanism, as well as any
voluntary contributions from donors, in order to provide loans to support the following activities in countries with fewer
than 10 registered clean development mechanism project activities: (a) To cover the costs of the development of project
design documents; (b) To cover the costs of validation and the first verification for these project activities;” Id. “[The COP
requests] the secretariat to enhance its support to designated national authorities and the Designated National Authorities
Forum by, inter alia: (a) Providing training opportunities for clean development mechanism stakeholders on a continuous
basis on the different elements of the clean development mechanism project cycle; (b) Facilitating information exchange
and awareness-raising at the regional and subregional levels; (c) Developing and making publicly available studies on the
potential of the clean development mechanism in the countries identified in para. 47 above, working in close cooperation
with local authorities; (d) Organizing subregional meetings of the Designated National Authorities Forum.” Id. at para. 55.

178
See John Copeland Nagle supra note 142 at 10.

179
See Id. See also Section III. B. “Equitable Geographic Distribution of CDM Projects.”

180
See Id., See also Sections III. A. “Breadth of CDM Projects and Technologies” and C. “Sustainable Development.”

181
See John Copeland Nagle supra note 142 at 10 (noting these failures in the face of the “sustainability” requirement
articulated by the Kyoto Protocol).

182
See Harro van Asselt and Joyeeta Gupta supra note 8 at 366 (explaining the ability of discounting to discourage
unsustainable projects and emphasizing the important of choosing an appropriate discount rate). See also Andrew Schatz
supra note 30 at 727-30 (providing a detailed history and explanation of the concept of discounting). See John Copeland
Nagle supra note 142 at 17 (stating that the discount mechanism he proposes builds on the recommendations of a UNFCCC
working group and citing UNFCCC, Ad Hoc Working Group on Further Commitments for Annex I Parties Under the Kyoto
Protocol, Emissions Trading and the Project-Based Mechanism, p.11, U.N. Doc FCCC/KP/AWG/2008/L.12 (Aug. 27,
2008), available at: http://unfccc.int/resource/docs/2008/awg6/eng/l12.pdf).

183
See Albert Mumma and David Hodas supra note 24 at 639 (discussing the usefulness of the HDI for creating equity
within the climate regime.) See also John Copeland Nagle supra note 142 at 20-21 (describing how the HDI would be used
under this discounting mechanism).

184
See John Copeland Nagle supra note 142 at 21.

185
See Id. (explaining that the multiplier would still commit projects to China but would provide a greater incentive to
develop CDM projects in those countries that have yet to see its benefits).

186
See UNDP, FAQ: What is the Human Development Index?, available at:
http://hdr.undp.org/en/statistics/faq/question,68,en.html.

187
See John Copeland Nagle supra note 142 at 21. See generally UNDP, Human Development Report 2009L Overcoming
Barriers: Human Mobility and Development.

188
See John Copeland Nagle supra note 142 at 21.

189
See John Copeland Nagle supra note 142 at 20-21.

190
See John Copeland Nagle supra note 142 at 21. See also UNDP, Human Development Report 2009 – HDI Rankings,
available at: http://hdr.undp.org/en/statistics/

191
See John Copeland Nagle supra note 142 at 21.

192
See John Copeland Nagle supra note 142 at 28.

193
See Id. (citing David M. Dreisen, Sustainable Development and Market Liberalism’s Shotgun Wedding: Emissions
Trading Under the Kyoto Protocol, 83 Ind. L.J. 21 (2008) (criticizing the CDM’s treatment of super-pollutants)). See also
Mei Gechlik supra note 172 at 284 (discussing the need to prevent mega-sized projects like the HFC-23 projects from
drawing investors away from smaller, valuable projects).

194
See John Copeland Nagle supra note 142 at 28 (citing David A. Wirth, The Sixth Session (Part Two) and Seventh
Session of the Parties to the Framework Convention on Climate Change, 96 Am. J. Int’l L. 648, 653 (2002) (explaining the
exclusion of nuclear power from the CDM)).

195
See John Copeland Nagle supra note 142 at 28.

196
See John Copeland Nagle supra note 142 at 28.

197
See John Copeland Nagle supra note 142 at 28 (citing Steve Thorne and Stefan Raubenheimer, Sustainable
Development (SD) Appraisal of Clean Development Mechanism (CDM) Projects – Experiences from the SouthSouthNorth
(SSN) Project, Forum for Econ & Env’t – First Conf. Prov. 54, 58-62 (2001), available at:
http://www.southsouthnorth.org/default.asp?/library.asp?.) See generally Kelly Levin, Benjamin Cashore and Jonathan
Koppell, Can Non-State Certification Systems Bolster State-Centered Efforts to Promote Sustainable Development Through
the Clean Development Mechanism, 44 Wake Forest L. Rev. 777 (2009) (detailing the Gold Standard and its potential for
promoting sustainability under the CDM).

198
See The Gold Standard, available at: http://www.cdmgoldstandard.org/. (describing their business model)

199
See John Copeland Nagle supra note 142 at 28.

200
See Id.

201
See John Copeland Nagle supra note 142 at 28-29.

202
See John Copeland Nagle supra note 142 at 29.

203
See Id.

204
See Andrew Schatz supra note 30 at 742. “By creating greater incentives for investment in the most economically
distressed nations, the CDM can be used as a tool to empower the poor and improve their quality of life. Likewise, by
providing greater incentives for low-carbon technology transfer, the CDM can stimulate long-term sustainable development
to displace carbon-intensive energy infrastructure.” Id.

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the “Coldplay Effect,” and the CDM Gold Standard, 20 Colo. J. Int’l Envtl. L. & Pol’y 127 (2009).

Kelly Levin, Benjamin Cashore and Jonathan Koppell, Can Non-State Certification Systems Bolster
State-Centered Efforts to Promote Sustainable Development Through the Clean Development
Mechanism, 44 Wake Forest L. Rev. 777 (2009).

Ernestine E. Meijer, The International Institutions of the Clean Development Mechanism Brought
Before National Courts: Limiting Jurisidictional Immunity to Achieve Access to Justice, 39 N.Y.U. J.
Int’l L. & Pol’y 873 (2007).

Albert Mumma and David Hodas, Designing a Global Post-Kyoto Climate Change Protocol that
Advances Human Development, 20 Geo. Int’l Envtl. L. Rev. 619 (2008).

John Copeland Nagle, Discounting China’s CDM Dams, 7 Loy. U. Chi. Int'l L. Rev. 9 (2009).

Patricia Nelson, An African Dimension to the Clean Development Mechanism: Finding a Path to
Sustainable Development in the Energy Sector, 32 Denv. J. Int’l & Pol’y 615 (2004).

Eric Neumayer, In Defence of Historical Accountability for Greenhouse Gas Emissions, 33 Ecological
Econ. 2 pp. 185-92 (2000).

Jyoti Parikh and Kirkit Parikh, The Kyoto Protocol: An Indian Perspective, 5 Int’l Rev. Envtl.
Strategies 127 (2004).

John A. Sautter, Note: The Clean Development Mechanism in China: Assessing the Tension Between
Development and Curbing Anthropogenic Climate Change, 27 Va. Envtl. L.J. 91 (2009).

Andrew Schatz, Discounting the Clean Development Mechanism, 20 Geo. Int'l Envtl. L. Rev. 703
(2008).

Lambert Schneider, Osko-Institut, Is the CDM Fulfilling its Environmental and Sustainable
Development Objectives? An Evaluation of the CDM and Options for Improvement, (2007), available
at:
http://assets.panda.org/downloads/oeko_institut__2007____is_the_cdm_fulfilling_its_environmental_a
nd_sustainable_developme.pdf

Youba Sokona et al., The Clean Development Mechanism: What Prospects for Africa?, 109, in, The
Clean Development Mechanism: Issues and Options (Jose Goldemberg, ed. 1998).

David Takacs, Carbon into Gold: Forest Carbon Offsets, Climate Change Adaptation, and International
Law, 15 Hasting W. – N.W. J. Env. L. & Pol’y 39 (2009).

Harro van Asselt and Joyeeta Gupta, Stretching Too Far? Developing Countries and the Role of
Flexibility Mechanisms Beyond Kyoto, 28 Stan. Envtl. L.J. 311 (2009).

Michael Wara, Measuring the CDM's Performance and Potential 7 (Stanford Univ, Program on Energy
& Sustainable Dev Working Paper No. 56, July 2006), available at: http://iis-
db.stanford.edu/pubs/21211/Wara_CDM.pdf; for a more up to date version See Michael W. Wara, The
Performance and Potential of the Clean Development Mechanism (Jan. 20, 2008), available at: SSRN:
http://ssrn.com/abstract=1086242.

Jonathan B. Weiner, Property and Prices to Protect the Planet, 19 Duke J. Comp. & Int’l L. 515
(2009).

III. Reports

Federal Ministry for the Environment, Nature, Conservation and Nuclear Safety, Renewable Energy
and the Clean Development Mechanism: Potential, Barriers and Ways Forward, A Guide for Policy
Makers, 14 (Apr. 2007) available at: http://www.ren21.net/pdf/virtual_lib_local/CDM-EE-Netz.pdf.

I. Allison, et al., The Copenhagen Diagnosis: Updating the World on the Latest Climate Science, The
University of New South Wales, Climate Change Research Centre (CCRC), Sydney, Australia (2009)
available at: http://www.copenhagendiagnosis.com/.

IPCC, Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and III to the
Fourth Assessment Report of the Intergovernmental Panel on Climate Change (Core Writing Team,
Pachauri, R.K and Reisinger, A. (eds.)). IPCC, Geneva, Switzerland, (2007) available at:
http://www.ipcc.ch/publications_and_data/publications_ipcc_fourth_assessment_report_synthesis_repo
rt.htm.at.

Pew Center on Global Climate Change, U.S. Technology and Innovation Policies, In Brief, No. 7,
available at: http://www.pewclimate.org/docUploads/PEW_In-Brief_7.pdf

The World Bank, State and Trends of the Carbon Market, May 2009 at 45-52 available at:
http://wbcarbonfinance.org/docs/State___Trends_of_the_Carbon_Market_2009-
FINAL_26_May09.pdf.

IV. Guidance

Ram M. Shrestha, et al., Baseline Methodologies for Clean Development Mechanism Projects: A
Guidebook, 35-45 (UNEP Riso Centre, Nov. 2005).

UNFCCC, Guidelines Project Design Document (CDM-PDD) and the Proposed new baseline and
monitoring methodologies (CDM-NM), EB 41 Report, Annex 12, Version 07, available at:
http://cdm.unfccc.int/Reference/Guidclarif/pdd/PDD_guid04_v07.pdf.

UNFCCC, Methodological Tool: Tool for the Demonstration and Assessment of Additionality, EB 36
Report, Annex 13, Version 04, available at: http://cdm.unfccc.int/EB/036/eb36_repan13.pdf.

UNFCCC, Procedures for Registration of a Programme of Activities as a Single CDM Project Activity
and Issuance of Certified Emissions Reductions for a Programme of Activities, EB 47 Report, Annex
29, Version 03, available at: http://cdm.unfccc.int/EB/047/eb47_repan29.pdf.

V. Internet References

Green Resources “Plantations,” available at: http://www.greenresources.no/Plantations.aspx.

The Gold Standard, available at: http://www.cdmgoldstandard.org/.

UNEP, “CDM Projects by Host Region,” available at: http://cdmpipeline.org/cdm-projects-region.htm.


UNEP, “CDM Projects Grouped By Type,” available at: http://cdmpipeline.org/cdm-projects-
type.htm#6.

UNEP, “CDM Projects with CERs Issued,” available at: http://cdmpipeline.org/cers.htm#2.

UNEP, “Regional Distribution of CDM Projects”, available at: http://cdmpipeline.org/cdm-projects-


region.htm.

UNFCCC, “Adaptation Fund” available at:


http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php.

UNFCCC, “Africa Carbon Forum Brochure for Mar. 3-5, 2010,” available at:
http://cdm.unfccc.int/Nairobi_Framework/ACF2010_brochure.pdf.

UNFCCC, CDM Audio Files, “Additionality,” available at”


http://cdm.unfccc.int/about/multimedia/podcasts/index.html.

UNFCC, CDM Audio Files “Programme of Activities,” available at:


http://cdm.unfccc.int/about/multimedia/podcasts/index.html.

UNFCCC, “CDM Statistics,” available at: http://cdm.unfccc.int/Statistics/index.html.

UNFCCC, “Fact Sheet: The Nairobi Framework”, available at:


http://unfccc.int/files/press/backgrounders/application/pdf/fact_sheet__nairobi_framework.pdf.

UNFCCC, “Issuance of CERs,” available at: http://cdm.unfccc.int/Issuance/index.html.

UNFCCC, “Issuance of CERs, Rejected,” available at: http://cdm.unfccc.int/Issuance/rejected.html.

UNFCCC, “List of Designated National Authorities,” available at:


http://cdm.unfccc.int/DOE/list/index.html.

UNFCCC, Nairobi Framework – Catalysing the CDM in Africa”, available at:


http://cdm.unfccc.int/Nairobi_Framework/index.html.

UNFCCC, “Procedures For Accreditation,” available at:


http://cdm.unfccc.int/Reference/Procedures/accr_proc01.pdf.

UNFCCC, Programme of Activities, available at:


http://cdm.unfccc.int/ProgrammeOfActivities/index.html.

UNFCCC, Programme of Activities – Registered, available at:


http://cdm.unfccc.int/ProgrammeOfActivities/registered.html.

UNFCCC, “Status of Ratification of the Kyoto Protocol,” available at:


http://unfccc.int/kyoto_protocol/status_of_ratification/items/2613.php.

United States Energy Information Administration, “International Total Primary Energy Consumption
and Energy Efficiency,” available at:
http://www.eia.doe.gov/emeu/international/energyconsumption.html .

VI. Miscellaneous

Adaptation Board, Letter: The Adaptation Fund becomes fully operational – Request to provide
financial resources to the Adaptation Fund, (Apr. 13, 2010), available at: http://www.adaptation-
fund.org/system/files/Letter_to_request_donations.pdf.

First Emissions Credits Issued Under Kyoto Protocol, Oct. 20, 2005, available at:
http://cdm.unfccc.int/CDMNews/issues/issues/I_WJHSF1N67JGAORWII2BKVAI8O74B5A/viewnew
sitem.html.

Andrew C. Revkin, Poor Nations to Bear Brunt as World Warms, N.Y. Times, Apr. 1, 2007 available
at http://www.nytimes.com/2007/04/01/science/earth/01climate.html.

See Secretary-General’s Address to the UN Climate Change Conference, Nairobi, Kenya, (Nov. 15,
2006) available at: http://www.un.org/apps/sg/sgstats.asp?nid=2303.

Edward Wong and Jonathan Ansfield, China Insists That Its Steps on Climate Change Be Voluntary,
N.Y. Times, Jan. 30, 2010 at A5, available at:
http://www.nytimes.com/2010/01/30/world/asia/30china.html