Improving the clean development mechanism with sustainability-rating and rewarding system

Abstract

As the world contemplates a post-Kyoto Protocol climate change policy architecture, some key observations of the clean development mechanism (CDM) remind us that climate change policies should be linked more closely to the promotion of sustainability. A sustainability-rated CDM (SR-CDM) is proposed in this paper; it applies the gold standard as a way of assessing the sustainability value of projects with respect to the millennium development goals. These values can be converted into sustainability credits that can qualify project host countries and Annex 1 investing parties for sustainability assistance funds; these funds can be used for developing projects that further promote sustainability. To encourage fund-providers to contribute to these funds, a portion of the certified emission reductions and voluntary emission reductions generated by the projects will be rewarded to these fund-providers. The overall objective of SR-CDM is to promote local and global emission reduction, technology transfer, sustainability and renewable energy/energy efficiency by providing explicit incentives to all key parties involved in the CDM project development and financing. Copyright © 2010 Inderscience Enterprises Ltd.