Methodology for CDM eligibility criteria definition

Abstract

This study analyses different issues related to defining approaches to limit CDM eligibility in the context of the evolving future climate regime. This is based on the notion that in the future climate regime all countries will need to contribute to global mitigation efforts. It is highly likely that a more differentiated spectrum of national contributions by developing countries will also result in a more strongly differentiated eligibility of CDM project types and host countries. Therefore, the study develops a set of criteria for limiting CDM eligibility. After a thorough assessment and discussion, four scenarios for limiting Certified Emission Reduction (CER) supply for imports into domestic emission trading schemes (ETS) are determined. Based on the indicator sets and the chosen scenarios representing different choices of eligibility criteria, the respective credit quantities, geographic distribution and project type distribution are modelled quantitatively in order to arrive at an estimation of the global impact on CER supply of each scenario. The study also assesses ways to reinforce the mitigation impact of the CDM by discounting of CERs. Options exist to set strong incentives that strengthen the positive developments in the CDM, and to further align the mechanism with the political objectives of the UNFCCC process