Cdm In The Philippines Promises And Realities Neth Dano National Grassroots Conference on Climate Change Balai Kalinaw, UP Diliman 20-21 April 2009 www.philclimatewatch.org

1. Clean Development
Mechanism (CDM)
in the Philippines:
Promises and Realities
Neth C. Dano
Third World Network

2. What Articlethe CDM?
• Defined in
is 12 of the Kyoto
Protocol
• A flexibility mechanism that allows a
country with an emission-reduction or
emission-limitation commitment under
the Kyoto Protocol (Annex B Party:
developed countries) to implement an
emission-reduction project in developing
countries
• Such projects can earn saleable certified
emission reduction (CER) credits, each
equivalent to one ton of CO2, which can
be counted towards meeting Kyoto

3. What is the CDM?
• It is the first global, environmental
investment and credit scheme of its
kind, providing a standardized emissions
offset instrument (CERs)
• The mechanism stimulates sustainable
development and emission reductions,
while giving industrialized countries
some flexibility in how they meet their
emission reduction or limitation targets

4. What is the CDM?
• Allows developed countries (Annex 1/Annex
B) to earn certified emission reduction units
(CERs) that can be applied to partially meet
their greenhouse gas emissions reduction
commitments under the Kyoto Protocol
whenever they undertake emissions
reduction projects that contribute to
sustainable development in a non-Annex I
Party where land, technology and labor are
less costly, which result in real, measurable,
verifiable and long-term greenhouse gas
reductions that are additional to any that
would otherwise occur

5. CERS FROM CDM
Host Party w/ no Annex I A total emission cap of
emission cap Party will an Annex I Party
get CERs
Acquired
CERs are
GHG Emissions Projection
CERs added and
emission
cap
increases
GHG Emissions
Non-Annex I / Host
Parties will benefit
from project
activities resulting
in CERs
Baseline Project Sustainable
Scenario Scenario Development
Specific Place in a
CER = 1 metric ton of CO2-e
Host Party CDM in Charts. IGES. July 2007.
Photo fr www.vueweekly.com

6. How the CDM
works
• A CDM project must provide
emission reductions that are
additional to what would otherwise
have occurred
• Projects must qualify through a
rigorous and public registration
and issuance process
• Approval is given by the
Designated National Authorities

7. How the CDM works
• The mechanism is overseen by the
CDM Executive Board, answerable to the countries
that ratified the Kyoto Protocol
• Operational since the beginning of 2006, the
mechanism has already registered more than 1,000
projects and is anticipated to produce CERs
amounting to more than 2.7 billion ton of CO2
equivalent in the first commitment period of the
Kyoto Protocol, 2008–2012
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8. Conditions for CDM
Projects
• Assist developing country Parties in achieving
Sustainable Development
• Considered as “Additional” if greenhouse gas
emissions are reduced below the level that
would have occurred in the absence of the
registered CDM project activity
• Public funding from developed country Parties
must not result in the diversion of ODA and
separate from and not counted towards their
financial obligations under UNFCCC and Kyoto
Protocol
• PDD, Validation Report and Letter of Approval
from Host Country are required in order to be
registered as CDM

9. CDM Project Cycle
Project participants
Design
National Operational Entity
Validation /
Authority Executive Board registration
Project participants Monitoring
Operational Entity Verification /
certification
Executive Board Issuance
CER

10. CDM TIMESCALE
Time required
CDM process
For regular For small-scale
project project
Project Development:
New methodology production ~ 6 months Usually not
and approval required
a 1-2 months 1-2 months
The PDD production
The DNA approval (Philippines) 20-25 working 15-20 working
days days
Validation 1 month 1 month
UNFCCC public comments 1 month 1 month
Registration 8 weeks 4 weeks
assuming ALL necessary information is available.
a

11. CDM in the Philippines
• CDM projects registered at CDM
executive board: 21
• CDM projects approved by the
Philippines’ DNA: 59
• CDM projects at or after the validation
stage: 47
• See IGES updates for details
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12. Key Issues in CDM
• Processes and requirements are too
costly, burdensome and centralized
• Requires big investments from the
proponents to start up a project, prove
additionality, and have it verified,
validated and registered
– Verification is done by UNFCCC-accredited
foreign DOE whose costs are borne by the
proponents
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13. Key Issues in CDM
• Resource-poor proponents cannot comply
with CDM process, costs and
requirements
• Small scale project participants are at a
disadvantage in terms of CER pricing
• Results:
– Elite capture in developing countries with CDM projects
– Concentration of CDM projects in big developing countries
– Virtually no CDM project in Africa and LDCs
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14. Key Issues in CDM
• Questions on the methodological and
technical verification processes in
measuring greenhouse gas emissions in
CDM projects
• Inadequate and subjective documentary
evidences to support the justification for
additionality of a project activity
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15. Key Issues in CDM
• Cases of corruption involving DOE and
proponents
– spurious projects
– questionable evidences of “additionality”
– manipulation of methodologies to increase
CERs
– connivance between DOE, DNA and
proponents
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16. Key Issues in CDM
• Emergence of a “CDM industry” that
virtually controls the development of
projects in developing countries and the
marketing of CERs in the carbon market
– In the Philippines, PhilBio facilitated more than
90 percent of CDM projects
– EcoSecurities has virtual monopoly of the
trading of CERs from CDM worldwide
• Economic returns are dependent on the
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price of carbon in the market

17. Key Issues in CDM
• Lack of clear criteria for demonstrating high
sustainable development contribution of project
activities to ensure that the DUAL objectives of the
CDM are met and CERs from such projects with
high SD benefits are accorded first-rate values
• Questionable sustainable development value
• Misappropriation of “sustainable development” to
describe superficial community benefits
– Examples: Construction of basketball courts and waiting sheds,
contribution to local beauty pageants, payment of local taxes, etc.
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