The International Emissions Trading Association (IETA) has indicated that it welcomes the decision by the Executive Board of the Clean Development Mechanism to temporarily extend CDM operations past the end of 2020. This means that projects can continue to operate while negotiators complete the rulebook for Article 6 of the Paris Climate Agreement and decide on the future of the CDM at COP26 in Glasgow next year.
Dirk Forrister, President and CEO of IETA said, “The decision offers a lifeline to CDM offset projects around the world.” In addition he said, “It brings a degree of clarity that will enable the continued flow of finance to greenhouse gas reduction projects in the world’s largest crediting system.”
IETA and other business observer groups have called repeatedly on UNFCCC negotiators to resolve CDM transition issues as part of the decisions on a rulebook for trading provisions of the Paris Climate Agreement.
But Article 6 negotiations stalled at COP25 in Madrid last year, adding pressure for resolution at COP26 in Glasgow this year.
However, the postponement of COP26 due to the Covid-19 pandemic left international negotiators with no opportunity to resolve the issue before the end of the second commitment period under the Kyoto Protocol on December 31, 2020.
A dispute arose when three CDM Executive Board members asked for a review of the issue as part of their consideration of requests for extensions of crediting periods for several operating projects. This review process exacerbated uncertainties on the future of the CDM.
The dispute threatened the continuation of operating projects and Programmes of Activities (PoAs), which could have led to project suspensions and investment cancellations worth tens of millions of dollars across the public and private sectors.
IETA, together with several other stakeholders, urged the CDM Executive Board to provide clarity on this issue and to take the necessary interim measures to ensure that, at a minimum, CDM projects and PoAs can continue to operate and issue CERs until a decision is taken on the issue at COP26.
The decision by the Board means that cleanenergy projects in developing and emerging economies can continue to earn UN-sanctioned offsets by reducing emissions after the Kyoto Protocol’s commitment period ends on 31 December, pending a formal decision at COP26.
While the temporary fix is not perfect, as it still leaves uncertainty until a decision is taken at COP26, it probably is the best outcome we could have hoped for, considering the limits of CDM EB powers and the current challenges, said Stefano De Clara, IETA’s director of international policy.
“We want to thank the CDM EB Chair, EB members and the Secretariat for their hard work on this issue and we want to congratulate them on this outcome”.