The Role of CDM Post-2012

The report evaluates the Clean Development Mechanism (CDM) and its impact on the EU Emissions Trading System (EU ETS) and developing nations. It finds that a significant portion of CDM projects lack additionality, leading to global emission increases and reduced domestic abatement in Europe. The authors argue that the CDM has failed to facilitate meaningful technology transfer or support a systemic shift to low-carbon development in host countries, often subsidizing carbon-intensive activities instead. To address these failures, the report proposes supply-side restrictions on project eligibility and demand-side reforms in the EU, such as auctioning the right to use CERs, to ensure the mechanism serves as a transitional tool rather than a permanent subsidy regime.

• A significant proportion of registered CDM projects are non-additional, meaning they would have occurred without CDM support. Estimates suggest between one-fifth and two-thirds of projects are non-additional, which may have increased global emissions by 30 to 106 million tons of CO2eq through use in the EU ETS between 2008 and 2009.
• The use of CDM credits reduces the necessity for domestic emissions reductions within the EU. With a 20% reduction target, the required GHG emissions reductions decrease from 13.8% to 7.5% by 2020 (relative to 2005) when CDM credits are used. Under a 30% target, domestic reductions drop from 23.9% to 12.6% with CDM use.
• The CDM has not effectively promoted low-carbon development or technology transfer in developing countries. It has failed to facilitate technology transfer, can discourage the creation of domestic policies like Nationally Appropriate Mitigation Actions (NAMAs), and may support carbon-intensive activities, such as the registration of an Indian super-critical coal-fired power plant.
• The CDM is often not a cost-effective mitigation mechanism due to the creation of large rents. For example, abating all developing HFC-23 would cost approximately €26 million annually, yet Annex I buyers paid between €250 and €750 million through the CDM.
• The mechanism has failed to provide broad regional support, with projects heavily concentrated in a few advanced developing countries. China, India, Brazil, Mexico, and South Korea are expected to generate over 80% of issued credits by 2012, while Least-Developed Countries (LDCs) account for less than 1% of the expected 2012 credit supply.
• There is an inherent conflict between additionality and sustainable development goals. Analysis of Indian projects suggests that those with above-average sustainability performance were more likely to be non-additional, while additional projects often provided fewer sustainability benefits.
• The report proposes several reforms to realign the CDM with its objectives, including limiting eligibility to projects that provide long-term low-carbon benefits, differentiating crediting periods by project type, and introducing tradable or auctioned 'rights to use CERs' within the EU to capture arbitrage rents.

APA

Vasa, A., & Neuhoff, K. (2011). The Role of CDM Post-2012. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/cplci-role-of-cdm-110204.pdf

Chicago

Vasa, Alexander, and Karsten Neuhoff. The Role of CDM Post-2012. Climate Strategies, 2011. https://climatestrategies.org/wp-content/uploads/2014/11/cplci-role-of-cdm-110204.pdf.

Wikipedia

{{cite report |last1=Vasa |first1=Alexander |last2=Neuhoff |first2=Karsten |title=The Role of CDM Post-2012 |publisher=Climate Strategies |date=January 2011 |url=https://climatestrategies.org/wp-content/uploads/2014/11/cplci-role-of-cdm-110204.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vasa2011role, author = {Vasa, Alexander and Neuhoff, Karsten}, title = {{The Role of CDM Post-2012}}, institution = {Climate Strategies}, year = {2011}, month = jan, url = {https://climatestrategies.org/wp-content/uploads/2014/11/cplci-role-of-cdm-110204.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }