Summary:

The clean development mechanism (CDM) is often seen as providing the financial benefits and transfers of cutting-edge green technology that enable developing countries to reduce emissions and achieve their sustainable-development goals. The process of applying the mechanism is, however, fraught with impediments. The limited capacity of developing countries to implement CDM projects is compounded by the differing concerns of CDM stakeholders and investors regarding the degree to which the mechanism can be expected to result in sustainable development. Moreover, the spirit of the CDM, as encapsulated in its mandate to promote sustainable development in host countries, could lead to policy options that run counter to letter of the law in terms of rules governing international investment. Below are examined barriers to the implementation of the CDM in South Africa, one of a few developing countries hosting pilot CDM projects with a focus on the disparity between stakeholder and investor views. While the stakeholders fear that CDM investment might fail to deliver the anticipated social benefits and only leave the country limited mitigation options, investors are apt to believe that the mechanism's financial benefits should be the stakeholders' primary interest and that their scepticism merely reveals that the state is not yet ready to host CDM projects. Thus, if the CDM mandate is to be pursued, the existing barriers must be factored into the mechanism's institutional framework.

URL: http://tyndall.webapp1.uea.ac.uk/publications/working_papers/wp42.pdf