Can climate change projects deter clean technology?

A new study explores the potential for greenhouse gas emission reduction projects to speed up the flow of clean technologies to developing countries. Only by selecting appropriate baselines from which to calculate emissions reductions can projects succeed, warns the report, where poor choices of baseline bring additional costs and disfavour innovative, clean technology.

The report, released by US organisation Environmental Defense, explores the potential for the Clean Development Mechanism (CDM) to advance the flow of new, clean technologies to developing countries. CDM is one of the trading tools of the Kyoto Protocol to reduce greenhouse gas emissions.

Can the CDM Spur the Diffusion of New Technologies? A Case Study from the Aluminium Sector explores a case study of an aluminium smelter project in South Africa, highlighting problems encountered in designing a large-scale project that promotes sustainable development, reduces greenhouse gases and minimizes CDM transaction costs.

The study finds that many of the difficulties encountered arise from the fact that CDM projects occur in host countries with no obligation to fit emissions reductions to a finite emissions budget. The absence of a budget forces project developers and CDM accrediting bodies to undertake complicated baseline and verification programs to certify the value of the projects. These checks bring additional costs.

The study concludes that appropriate baselines should be selected to reduce costs and in addition, reward innovative firms who are the first to introduce a newer, cleaner technology or process to the developing world.

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