The future of the CDM in a Post-Kyoto world
The Clean Development Mechanism tells a story of success. Private and public entities from industrialized and developing countries alike have embraced the mechanism, which is expected to generate four billion tonnes of GHG emission reduction by the end of the first commitment period of the Kyoto Protocol. The creation of the CDM as a market mechanism co-opted the private sector in the global task of curbing anthropogenic GHG emissions. Despite the encouraging response so far, it is clear now that the CDM architecture is burdened by structural flaws which must be dealt with if the mechanism is to achieve its full potential. The CDM's environmental integrity and procedural efficiency have both been under criticism from stakeholders and analysts: the former for overlooking broader sustainable development objectives; the latter for a flawed governance architecture lacking basic due process requirements. Addressing these two pivotal issues calls for balancing two diametrically distinct logics: the logic of international cooperation to realize sustainable development and the logic of the international financial and commodity markets to pursue efficiency and transparency in regulatory procedures. Such a balance can only be achieved under a reformed and strengthened CDM that (i) expands the scope and participation in the mechanism; (ii) adopts sectoral and programmatic approaches, with stringent environmental safeguards; and (iii) incorporates due process standards in its administrative and regulatory procedures. Duly reformed, the CDM has the potential to become one of the cornerstones of a post-Kyoto climate regime.