CDM negotiations in Warsaw – Small reform or pathway to transition?

Lately, market participants have come to expect little excitement from the Clean Development Mechanism (CDM). As the market continues to be depressed with no recovery of demand in sight, changing the rulebook of the CDM may not seem like a priority. Yet in Warsaw Parties were tasked to do just that: review the underlying rules of the CDM, its Modalities and Procedures (M&P), as part of a long-planned mandate. What could have been treated as a fulfillment of the mandate with minimal effort opened the door for a wider reconsideration of the fundamentals of the CDM, triggering a diversity of views and sometimes heated debate. Outside the limelight of the Warsaw negotiations, Parties discussed rather big changes to the CDM, including how it could be transformed into a tool with broader applicability, fitting wider purposes than offsetting by Annex I countries and thereby opening up new sources of demand. Parties also discussed rethinking some of the basic guidance on the project cycle, the institutional architecture of the CDM and the eligibility of projects.

The briefing note provides a background analysis of the CDM decisions reached in Warsaw and highlights the main topics of discussion.