The Clean Development Mechanism (CDM) of the Kyoto Protocol offers developing countries the opportunity to participate in the effort to reduce global greenhouse gas levels while also benefitting from sustainable development opportunities. To date, the majority of CDM investments have gone to emerging markets such as China, India, Brazil, and Mexico, while least developed countries have largely been absent from the program.
Comparing host country variables to CDM activity finds that human capital and greenhouse gas emission levels are important determinants of which countries have hosted projects and the amount of certified emission reductions (CER) created. Countries that offered growing markets for CDM co-products such as electricity were more likely to be CDM hosts, while economies with higher carbon intensity levels had greater CER production. All of these findings work against least developed countries and help to explain the lack of CDM activity in these settings.
Meanwhile, case study results of potential CDM projects in a least developed country, Niger, demonstrate that the most common variety of CDM project, renewable energy efforts, do not produce enough emission reductions to justify the CDM registration costs. Forestry projects that sequester carbon offer the best combination in terms of financial returns and the dual goals of the CDM. Unfortunately, a ban on forestry-related emission reductions in the European Union Emissions Trading System has significantly reduced the demand for these types of projects. Policy modifications such as simplified methodologies to reduce registration costs and project bundling to increase CER production would improve the chances for least developed countries to host projects.
Through stakeholder interviews, a two-tiered framework of mitigative capacity is applied to Niger to identify impediments to CDM implementation. The framework is also used to analyze a proposed CDM project that is approaching registration. The insights drawn from these applications help to identify successful strategies for navigating through impediments in this setting including targeted capacity building and assistance from outside actors, support for an initial suite of projects, and funding data needs for project registration. These strategies can serve as a roadmap for future efforts in Niger and other least developed countries.