Benchmarks more cost-effective and less vulnerable to bias, says Clean Development Mechanism study

A key component of the Kyoto Protocol on Climate Change is the CDM, a system whereby industrialised countries will fund clean technology projects in the developing world in return for carbon credits (see related story).

Debate has surrounded how best to determine which projects should receive approval under the CDM, with environmentalists worried that loopholes will allow far-from-‘green’ technology being exported to the developing world. A study for the US EPA has suggested that CDM projects should not be approved project-by-project, but, instead, benchmarks should be established for sectors or sub-sectors.

The study, entitled Evaluation of Benchmarking as an Approach for Establishing Clean Development Mechanism Baselines, is the work of the Tellus Institute (based in Boston, USA) and the Stockholm Environment Institute. Commissioned by the US EPA, the report summarises the differences between a project-by-project approval system for CDM projects and using benchmarks.

The authors acknowledge that a benchmark that covers too heterogeneous a sector could create market distortions, but that some type of benchmarking system is preferable to case-by-case approval. They argue that benchmarks are more cost-effective, offer more transparency and are less open to bias and/or corruption.

Case studies from Argentina, China, South Africa, Thailand and the United States are detailed.