The twin objectives of CDM : are they really conflicting?

Abstract

The Clean Development mechanism (CDM) is intended to bring about cooperation between developing and developed countries to reduce emissions and ensure sustainable development (SD). Several studies have examined whether or not the CDM have met what it claims to do. Most of these studies have documented that trade-off exist between the twin goals of the mechanism in which many projects are leaning toward achieving low cost emission reduction at the expense of delivering sustainable development benefits. However, little has been done to identify whether this trade-off is real and whether it is due to conflicting nature of the twofold objectives or due to some other reasons. The paper assesses whether there is a trade-off or win-win situation between the twin objectives of the CDM and analyzes the degree to which these trade-off or win-win situations exist. Based on the review of 76 Project Design Documents of registered CDM projects of renewable energy, energy efficiency, landfill gas, and HFC & N2O projects, econometric analysis has been carried out to address the research questions. The analysis was made based on data gathered on SD benefits and cost information. The main result of the analysis shows that there is a variation in performance across project categories in achieving the twofold objectives. Relatively cost efficient projects categories have lower sustainable development contributions. HFC & N2O projects have the highest cost efficient emission reductions and the lowest contributions to sustainable development. Renewable projects, on the other hand, have the highest sustainable development benefits while they are less cost efficient. Energy efficiency and landfill gas projects have moderate sustainable development contributions. The lowest cost efficient projects are energy efficiency projects. Landfill gas projects have fair contributions to sustainable development and fairly cost efficient. The general relationship between cost efficiency and sustainable development benefits across all projects shows a general trade-off which is attributed mainly to project types. Project scale was found to have less effect on the general trade-off but higher effect on cost efficiency. Nevertheless, the relationship between the twofold objectives within project categories shows a win-win potential in the other three project categories and a trade-off in landfill gas projects.