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A two-track CDM: improved incentives for sustainable development and offset production

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  • Asbj�rn Torvanger
  • Manish Kumar Shrivastava
  • Nimisha Pandey
  • Silje H. T�rnblad

Abstract

The Clean Development Mechanism (CDM) has been criticized in the literature for encouraging a focus on offset production (OP) at the expense of achieving or encouraging sustainable development (SD). It is argued that one explanation for this is that there is no commonly agreed definition of SD and, moreover, the priority of CDM project developers is often to produce cost-effective OP. Many of the proposals to address these drawbacks are not politically feasible. It is argued that the CDM should be split into a two-track mechanism, with one track for offset production and the other for offset production with an emphasis on sustainable development benefits. This would enable the political deadlock to be broken, allow the inclusion of SD benefits in the price mechanism itself, and allow both SD and OP objectives to be simultaneously achieved. Policy relevance The CDM has been criticized for failing to achieve its sustainable development objective, for verification problems regarding the mitigation effects of projects' emissions, for being complex and bureaucratic, and for the very limited participation by the least developed countries. Given the adoption of a second period of the Kyoto Protocol and the discussion of new market mechanisms in the context of negotiating a new global climate agreement to be adopted in 2015, it is time to explore the ways in which the CDM might be reformed. A two-track version of the CDM is proposed, with one track focused on credit (offset) production and the other track focused on sustainable development. This system could improve the incentive for achieving sustainable development, reduce the uncertainty regarding whether real emissions reductions have been achieved, and be attractive to both developing and industrialized countries.

Suggested Citation

  • Asbj�rn Torvanger & Manish Kumar Shrivastava & Nimisha Pandey & Silje H. T�rnblad, 2013. "A two-track CDM: improved incentives for sustainable development and offset production," Climate Policy, Taylor & Francis Journals, vol. 13(4), pages 471-489, July.
    • Handle: RePEc:taf:tcpoxx:v:13:y:2013:i:4:p:471-489
    DOI: 10.1080/14693062.2013.781446
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    1. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
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    Cited by:

    1. Wolfgang Buchholz & Dirk Rübbelke, 2020. "Overstraining International Climate Finance: When Conflicts of Objectives Threaten Its Succes," Working Papers 2020.17, Fondazione Eni Enrico Mattei.
    2. Horstmann, Britta & Hein, Jonas, 2017. "Aligning climate change mitigation and sustainable development under the UNFCCC: a critical assessment of the Clean Development Mechanism, the Green Climate Fund and REDD+," IDOS Studies, German Institute of Development and Sustainability (IDOS), volume 96, number 96.
    3. Timothy Cadman & Lauren Eastwood & Federico Lopez-Casero Michaelis & Tek N. Maraseni & Jamie Pittock & Tapan Sarker, 2015. "The Political Economy of Sustainable Development," Books, Edward Elgar Publishing, number 15773.
    4. Drupp, Moritz A. & Baumgärtner, Stefan & Meyer, Moritz & Quaas, Martin F. & von Wehrden, Henrik, 2020. "Between Ostrom and Nordhaus: The research landscape of sustainability economics," Ecological Economics, Elsevier, vol. 172(C).
    5. Nasiritousi, Naghmeh & Hjerpe, Mattias & Buhr, Katarina, 2014. "Pluralising climate change solutions? Views held and voiced by participants at the international climate change negotiations," Ecological Economics, Elsevier, vol. 105(C), pages 177-184.
    6. Manish Kumar Shrivastava & Saradindu Bhaduri, 2019. "Market-based mechanism and ‘climate justice’: reframing the debate for a way forward," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 19(4), pages 497-513, October.
    7. Ottonelli, Janaina & Lazaro, Lira Luz Benites & Andrade, José Célio Silveira & Abram, Simone, 2023. "Do solar photovoltaic clean development mechanism projects contribute to sustainable development in Latin America? Prospects for the Paris Agreement," Energy Policy, Elsevier, vol. 174(C).

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