Who should be bailed out - him, or Bangladeshis? (source: autocar.co.uk)

Low-lying Bangladesh is often cited as one of the countries likely to be worst hit by climate change, particularly due to sea-level rise. Urgent measures in Bangladesh’s 10-year action plan are predicted to cost $5 billion in the first five years.They’ve already raised $45 million from donors, but now there are fears that support will dry up as the financial crisis bites in rich countries, which one of their negotiators for Copenhagen has already expressed. Such fears are echoed by the likes of UNDP and WWF, who fear it is unlikely rich countries will step up to the plate.

Given the UN Adaptation Fund (see previous posts) depends on CERs for its financing, the recent fall in the carbon price is bad news for adaptation. Some estimates suggest nearly 20% of the fund’s worth has been lost. The GEF has indicated that it may start being more vocal about pushing donor countries to finance adaptation.

In any case, it certainly looks bad if the US, Britain and others are pumping billions into their banks and car manufacturers (high carbon emitters and lazy good-for-nothings who have dragged their heels on fuel efficiency) whilst leaving developing countries to face the music. This is the height of climate injustice, and you can expect a lot of noise to be made if things haven’t improved by the time Copenhagen comes along…

*update* 23/2/09 – this Guardian story follows a similar theme

Talks at Poznan about a re-engineering of the Clean Development Mechanism, Kyoto Protocol’s righteous son, have been Bonn-ed. This does not come as a surprise for some observers, but disappointment is understandable. As a flagship of the Kyoto Protocol’s market-based approach to climate change, one could have hoped that delegates fixed at least the most visible holes perforating its surface.

What holes?

UNFCCC recently removed DNV’s CERs verification licence. The unease about project managers hiring the verification team then found, rightly or wrongly, an a posteriori justification. (DNV said it would win back its licence within a month).

Speaking of discomfort, the demonstration of additionality by the project promoters themselves also raised concerns throughout the short history of CDM. With acute information asymmetry between promoters and the Secretariat, the demonstration of additionality can potentially suffer credibility deficit.

Finally, the environmental impact assessment (EIA) of CDM projects is regarded as insufficient. A good EIA would make sure, for instance, that we don’t remove CO2 from the atmosphere ruining an entire ecosystem in the process of doing so.

What can be done? Some suggestions from delegates, bloggers and specialists.

• UNFCCC, not promoters, should hire and pay verification firms directly.
• UNFCCC, not promoters, should assess additionnality.
• Promoters should be required to conduct sound EIAs for CDM projects.

CDM being a rather complicated tool, its short history has given much weight to the procedural status quo. Project promoters, countries and Designated National Authorities (DNAs) have climbed up the learning curve of the actual CDM: they probably don’t want to start over again with new procedures.

In order to gather wide interest, an agenda for CDM should try to mix discussions on potential simplifications of project methodologies with discussions on the procedural modifications listed above.