T HE CDM- SYSTEM

The CDM is a system that operates both on a national and a global level, as can be seen in figure 1. The figure depicts the process (referred to as CDM project-cycle) that must be followed by those who wish to utilize the CDM. It also explains the rule of the main participants and their abbreviations. Climate change is a global issue where all countries contribute to the problem and all countries will be affected by it, albeit differently. The CDM is a

multi-stakeholder governance agreement designed to provide transparent and

accountable forms of “(...) environmental action at the global level” (Lövbrand et al. 2009:77).

The design of the system is based on legitimacy, in this case input legitimacy.

Input legitimacy comprises of three procedural qualities: transparency,

accountability and participation. The first step in the project cycle should ensure transparency. Transparency refers to the openness of the decision-making

process where those who participate have to have adequate information about the entire process in order to take a stance (ibid.). Anyone attempting to participate in the CDM system must first submit a Project Design Document (PDD) and a Project Concept Note (PCN) to the DNA. The PDD is the most important document in the system; it is the blueprint for getting a project approved under the CDM. It contains a thorough description of the project and its economic, technological, social and environmental effects with regard to GHG emissions.

Currently, CDM projects fall into eight categories⁴, each of which contains several types of projects. Wind power falls into the renewable energy category.

The PDD goes through the cycle in figure 1. In the CDM cycle it is the PDD which gives information to all involved parties and anyone else who wishes to participate. Each PDD and its history throughout the cycle are made available for the public through the UNFCCC website.

4 These are: renewable energy, energy efficiency improvement, projects activities which reduce energy consumption, on the supply and/or demand side, agricultural projects, fuel switching, industrial processes and waste management (CDM Rulebook [Eligible projects] 2008. Retrieved 21.03.2009)

The DNAs are the main CDM authorities in their own countries and they are the first tier of validation for a given project. The DNAs assess whether or not a project meets the sustainable development objectives and if the project stands a chance of being successfully implemented as CDM (CDM Rulebook 2008b).

For a PDD to advance in the cycle, the project must gain approval on the national level. This is done by the DNA in “the host country letter of approval” (ibid.). In order to prove reduction additionality a PDD must include a baseline scenario that represents the volume of projected GHG emissions in the absence of the project, and a project scenario– a forecast of emissions reductions if the project is approved. The difference in emissions between the two scenarios is what the PPs can claim as emissions reductions, and eventually earn CERs for. The baseline scenario is a methodology developed and approved by the CDM EB, and it includes the PPs’ calculations of how much GHG emissions their project will “save” (CDM Rulebook 2008c).

In order to prevent PPs from cheating on their calculations, and thus get more CERs than they should, the EB has approved several companies to act as DOEs.

Figure 1. The CDM Project Cycle

The PP can pick a DOE of his choice. As depicted in Figure 1, they are involved in the CDM project cycle twice: first as validators, confirming that the project fits the CDM criteria, then as verifiers and certifiers of the actual reductions of GHG (CDM Rulebook 2008d). The DOEs operate at an intersection of the global and national levels, as they must apply global CDM rules in a national setting while validating a project. Since all of the approved DOE companies are

transnational corporations such as the auditing firm Deloitte, Det Norske Veritas Certification⁵ (DNV) etc, I have categorized the DOEs as operating on a global level in figure 1. In the first part of the cycle the DOE has to verify that the proposed project meets the current CDM criteria, consult with stakeholders, publicize the PDD via the CDM website and open the PDD for comments (ibid).

The DOE is also to verify that the PP has consulted with local stakeholders such as individuals, groups or communities affected by the CDM project (CDM Rulebook 2008e). This type of participation is a way of giving input legitimacy to the whole process and fosters the inclusion of affected stakeholders. The DOE’s responsibility lies in determining if the project’s developers have fulfilled their duties. The work of the DOE is one part of ensuring accountability in the CDM project cycle (Lövbrand et al. 2009). The DOE is ultimately accountable to the EB. On the national level, participation takes the form of stakeholder

meetings for people affected by CDM projects. In Jaisalmer, I interviewed an engineer working for the wind power manufacturer Suzlon who was responsible for organizing stakeholder meetings. He would announce a stakeholder meeting in local newspapers, and depending on how many had read the notification, he would hold a presentation of the projects and introduce the project’s investors to.

The villagers also had the chance to voice their concerns and wants during these meetings.

After a project undergoes validation by the DOE, the DOE then sends a request for registration to the EB. The EB was established as a supervisor of the CDM in

5 A full list of the DOEs is available at: http://cdm.unfccc.int/DOE/list/index.html

article 12.4 of the Protocol, and includes ten representatives elected from the parties to the Protocol. Besides being the ultimate tier in the CDM cycle, they also approve new methodologies, make recommendations to the Conference of Parties (the supreme body of the UNFCCC, i.e. all signatories of the

Convention), and maintain a registry of CDM projects and a database of rules, procedures and methodologies (CDM Rulebook 2008f).

From the point of view of the PPs, the EB is the last hurdle before they can

receive CERs. When the validated PDDs reach the EB, they are first appraised by a Registration and Issuance Team. On their advice the EB votes on whether the project is to be registered. This is the point where the project is formally

recognized as a CDM project. The EB is foremost a global actor, as one of their functions is to consider the global effects of single CDM projects.

After that stage, it is up to the PP to monitor actual emission reductions achieved by the project, and submit a request for verification to the DOE. The DOE

conducts an independent review of the monitoring data, and certifies that the emission reductions of the registered CDM project are real. In the last leg of the cycle, the certification report is sent to the EB which issues the specified number of CERs. These are issued on a global level, and they can be bought by Annex I parties (CDM Rulebook 2008g).