Participation in a CDM activity is possible only if the host country is party to the Kyoto Protocol. By February 2002, 47 parties had ratified the Protocol. However, projects initiated prior to ratification are likely to be allowed to be registered under the CDM after ratification.
Establish a National Authority for CDM
Countries need to designate a National Authority for the CDM in
order to participate. This may, or may not, be the Focal Point for the
Climate Convention. The National Authority should be situated so that
it can effectively coordinate the agencies responsible for setting sustainability
policies, environmental and investment regulations, and the organisations
involved in CDM project development. It should provide:
- Clear guidelines on priority areas for projects, and on national project
approval criteria;
- Efficient and transparent procedures for processing project applications;
- Procedures for registering and monitoring in-country project activities,
including the assessment of local sustainability benefits and costs;
- Procedures for authorising verification organisations that validate
and certify CDM projects;
- Clear guidelines on the selection, consultation and monitoring processes
that are required of projects;
- Support in managing the risks associated with the national CDM portfolio,
for example by establishing reserve stocks of carbon credits that could
be used as an insurance measure in the event of failure of certain projects;
- Information about project and financial opportunities to in-country project developers.
Clearly defined sustainable development objectives will greatly assist the development of CDM projects because developers and investors will be able to seek project opportunities that are consistent with these objectives. Why is sustainable development important and what is it about? Clear policies and control systems also make project planning and design much easier.
Countries that have policies in place on climate change issues, and specifically on the CDM, are more likely to be able to promote CDM projects that meet with broader national or regional objectives. The development of CDM projects in the land use sector will be influenced by a number of policies, including those related to forestry and agriculture, land tenure, land use planning, sustainable development, trade, investment, rural energy, etc. Better CDM projects may result if these policies are both coherent with each other and informed by the CDM rules.
Prospective investors, host country institutions or local NGOs may all be involved in identifying opportunities for CDM projects. This is likely to become an on-going process informed by national priorities and strategies for land use and by improved understanding of the carbon flows in the rural sector. It is worth noting that potential investors in CDM project development and host country institutions are likely to have rather different perspectives on potential projects. For investors, the priority will be to identify projects that give a good return with manageable risk. For host countries, the objective will likely be to achieve wider development objectives by making effective use of their carbon assets.
Examples of the practical questions that local stakeholders and host country institutions should ask are:
- What scale and type of afforestation will best fit with the pattern
of local farming?
- Will land tied up in forestry affect an area's food security?
- Where might afforestation reduce water availability?
- How will forestry schemes affect the demand for labour at certain
times?
- Which types of investment could improve local skills and capacities?
- Will management for increased carbon storage reduce income from timber?
Promote investment into land use CDM projects
Realisation of CDM benefits will depend on successful sales of
carbon credits and attraction of foreign investors. The following activities,
with government leadership, can foster CDM investment to meet a country's
priorities:
- Identify promising project types, assessing their potential in terms
of carbon flows and associated social, economic and environmental impacts;
- Develop baselines for these project types, which can be used by project
developers in the future;
- Establish the rules and conditions for investment into the project
types selected;
- Establish the requirements for development of CDM projects, including
sustainable development objectives;
- Link conditions for CDM investments with the country's regulations
and incentives for foreign direct investment and trading;
- Prepare a CDM programme, or investment plan, containing all or some
of the points above;
- Establish a clear focal point for foreign investors to find out about
CDM opportunities;
- Offer information about CDM opportunities in the country, through participation in trade fairs, exhibitions, and websites of national institutions.
Infrastructure and capacity for project implementation should be in place for projects to be practicable and cost-effective. In the case of the land-use sector this may include local NGOs, credit agencies, research institutes, nurseries, technical foresters, extension officers or land use experts. The strength of such capacity may be important in selecting priority activities and geographical areas for project development. In many cases capacity may not be adequate, but could be built up in preparation for the CDM. International funding mechanisms will be available for capacity building alongside the CDM.
While projects should be based on national and local development priorities, host country institutions should also develop a good understanding of the carbon flows under different land uses, so that they can determine the technical potential of various CDM options. While there is no specific requirement within the Kyoto Protocol for CDM project data to be cross-referenced to national emissions data, some link between them will help to improve the quality of both project and national scale datasets.
A key issue for the security of carbon credits generated from any project is the question of who owns the emission reduction. National laws regarding property ownership will need to be reviewed to determine how project developers can make an unencumbered claim to ownership. In cases where land, crops and trees are owned by a single individual or company this may be relatively simple to demonstrate. However, in situations where such rights are separated, as on national, communal or tenanted land, or where certain groups have customary or statutory rights of access, there may be various legal complexities to resolve.
