20 Nov 2009

Flexible Mechanisms in Support of a New Climate Change Regime

The Clean Development Mechanism and beyond

Noriko Fujiwara

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This report is based on discussions in the CEPS Task Force on the Clean Development Mechanism and Future Flexible Mechanisms post-2012, chaired by Ulrika Raab, Senior Advisor at the Swedish Energy Agency. It was assumed that flexible mechanisms will play a crucial role in facilitating a positive outcome in the UN climate change negotiations in Copenhagen in December 2009, and that they will inspire a wide range of actions by participating countries on their own and directing attention to business investment opportunities. The report outlines the various motives behind the flexible mechanisms and takes stock of the experience acquired with the existing mechanisms. Based on these insights, four options are then identified for future mechanisms – reformed CDM, reformed JI, sectoral crediting and sectoral trading – and compared against three sets of objectives – environmental integrity, enhanced investment and institutional strength at the international level. This report presents the recommendations of the CEPS Task Force, focusing not only on key features of future mechanisms but also on the institutional framework and the transition between them, with the aim of providing clarity on questions related to investors’ access and more predictability about investment conditions.