Reforming the CDM for sustainable development: lessons learned and policy futures

The Clean Development Mechanism (CDM) has successfully demonstrated that market-based mechanisms can achieve some cost effective emissions reductions in developing countries. However the distribution of CDM projects has been extremely uneven across countries and regions, and a few technologies and sectors have dominated the early stages of CDM experience. This has caused some to question whether the CDM has fallen short of its potential in contributing to sustainable development. We review the broad patterns of CDM project approvals and evaluate 10 CDM projects according to their sustainability benefits. The difficulty of defining “sustainable development” and the process of defining criteria by individual non-Annex 1 governments has meant that sustainable development concerns have been marginalized in some countries. Given these observed limitations, we present possible CDM policy futures, focusing on the main proposals for a post-2012 climate regime. Five options for enhancing the sustainable development benefits in the CDM are discussed, including proactive approaches to favour eligibility of emission reduction projects which ensure such co-benefits.