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Dysfunctional Delegation: Why the Design of the Clean Development Mechanism’s Supervisory System is Fundamentally Flawed

Lund, Emma LU (2010) In Climate Policy 10(3). p.277-288
Abstract
The supervisory system of the Kyoto Protocol’s Clean Development Mechanism (CDM) has been heavily criticized for not being able to guarantee the additionality of projects. Since neither the sellers nor the buyers of emission reduction credits in the CDM have an interest in the emissions reductions per se, but simply the right to them, a credible supervisory system is necessary to uphold the mechanism’s integrity. In the CDM, the on-the-ground supervision of projects has been delegated to the Designated Operational Entities (DOEs), which are private companies accredited by the CDM Executive Board (EB) to perform this task. But, as the DOEs are selected and paid by the project developers themselves, they have an economic incentive to let... (More)
The supervisory system of the Kyoto Protocol’s Clean Development Mechanism (CDM) has been heavily criticized for not being able to guarantee the additionality of projects. Since neither the sellers nor the buyers of emission reduction credits in the CDM have an interest in the emissions reductions per se, but simply the right to them, a credible supervisory system is necessary to uphold the mechanism’s integrity. In the CDM, the on-the-ground supervision of projects has been delegated to the Designated Operational Entities (DOEs), which are private companies accredited by the CDM Executive Board (EB) to perform this task. But, as the DOEs are selected and paid by the project developers themselves, they have an economic incentive to let projects through to gain a favourable reputation among clients. Taking its starting point in delegation theory, this article argues that the supervisory system of the CDM is fundamentally flawed, since its design is incompatible with basic theoretical insights from this literature. It concludes that a thorough reform of the CDM’s supervisory system is needed in order to increase its credibility. First, the EB should select and pay the DOEs. Second, the current rules for determining additionality should be replaced so as to reduce the arbitrariness of decisions. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
CDM Executive Board (EB), additionality, Clean Development Mechanism (CDM), designated operational entities (DOE), delegation, post-2012 negotiations
in
Climate Policy
volume
10
issue
3
pages
277 - 288
publisher
Taylor & Francis
external identifiers
  • wos:000279751800003
  • scopus:77957652279
ISSN
1469-3062
DOI
10.3763/cpol.2009.0031
project
ClimateColl - Effektiv klimatsamverkan för ren utveckling
BECC
language
English
LU publication?
yes
id
bb7d39a2-8c4f-4d68-8b66-1180bf6e8433 (old id 1627826)
date added to LUP
2010-07-09 11:34:53
date last changed
2018-06-24 03:23:11
@article{bb7d39a2-8c4f-4d68-8b66-1180bf6e8433,
  abstract     = {The supervisory system of the Kyoto Protocol’s Clean Development Mechanism (CDM) has been heavily criticized for not being able to guarantee the additionality of projects. Since neither the sellers nor the buyers of emission reduction credits in the CDM have an interest in the emissions reductions per se, but simply the right to them, a credible supervisory system is necessary to uphold the mechanism’s integrity. In the CDM, the on-the-ground supervision of projects has been delegated to the Designated Operational Entities (DOEs), which are private companies accredited by the CDM Executive Board (EB) to perform this task. But, as the DOEs are selected and paid by the project developers themselves, they have an economic incentive to let projects through to gain a favourable reputation among clients. Taking its starting point in delegation theory, this article argues that the supervisory system of the CDM is fundamentally flawed, since its design is incompatible with basic theoretical insights from this literature. It concludes that a thorough reform of the CDM’s supervisory system is needed in order to increase its credibility. First, the EB should select and pay the DOEs. Second, the current rules for determining additionality should be replaced so as to reduce the arbitrariness of decisions.},
  author       = {Lund, Emma},
  issn         = {1469-3062},
  keyword      = {CDM Executive Board (EB),additionality,Clean Development Mechanism (CDM),designated operational entities (DOE),delegation,post-2012 negotiations},
  language     = {eng},
  number       = {3},
  pages        = {277--288},
  publisher    = {Taylor & Francis},
  series       = {Climate Policy},
  title        = {Dysfunctional Delegation: Why the Design of the Clean Development Mechanism’s Supervisory System is Fundamentally Flawed},
  url          = {http://dx.doi.org/10.3763/cpol.2009.0031},
  volume       = {10},
  year         = {2010},
}