Fewer than two-thirds of respondents in a participant survey commissioned by the CDM’s Executive Board reported that their projects were running under the scheme, while low CER prices and procedural costs were named as the largest operational barriers.
At its meeting last week, the CDM-EB heard the results of the survey carried out by the UNFCCC over the summer, which was conducted to gauge the lay of the land for participants in the scheme, which since 2005 has channelled more than $350 billion to GHG-cutting initiatives in developing nations.
The board took note of the results, and requested the UNFCCC conduct the survey on an annual basis and to analyse further the so-called dormant projects
Below are the key takeaways from the inaugural survey’s results:
– 6,080 emails were sent out to CDM project participants, but 20% bounced back due to the email addresses being invalid.
– Responses covering 709 projects or PoAs were received, but 29 were omitted due to contradictory answers. That left 600 projects and 80 PoAs, which respectively represents 7% and 28% of the total number that have been registered to date.
– 62% of participants said they were operating their projects with a CDM monitoring plan and 13% said they were operating without one.
– 6% said their projects had not been implemented, 4.4% said construction on the installations had not yet begun, while 2% said their projects had been abandoned or were completed but were not operational.
– 50% said low CER prices were a barrier for implementation or operation, while 28% said costs related to CDM procedures and requirements were hindering them.
– Other barriers identified were:
– Technical issues (12%)
– Access to upfront finance (11%)
– Uncertainty concerning CDM procedures and requirements (10%)
– Administrative barriers (6%)
– Access to knowledge (5%)
– Availability of third parties, for example project auditors (5%)
– Political issues (4%)
– Data availability (4%)
– 42% reported that they faced no barriers and that their projects were operational.
– 33% said they had an Emissions Reduction Purchase Agreement (ERPA) in place, while 46% said they did not, 4% said they were in the process of negotiating one, and 16% either did not answer or did not know/provided an inconsistent reply.
– When asked for the reasons why they had not requested an initial issuance of CERs, 55% of the respondents said low CER prices were a factor. (CER prices collapsed from over €20 in 2008 to around €0.50 currently due to low demand from the developed world coupled a sizeable rise in supply between 2011 and 2013.)
Other factors included:
– No buyers (24%)
– High MRV and issuance costs (20%)
– First monitoring period still ongoing (11%)
– MRV procedures and requirements too complicated (9%)
– GHG abatement activity not yet operational (9%)
– Technical issues with monitoring system/equipment (4%)
– Project not mitigating or participant not monitoring (3%)
– No need for issuance, as CDM registration was required for other reasons (1%)
– CDM-EB rejected monitoring report or issuance request (1%)
– When asked for reasons for registering under the CDM besides earning CERs, 35% said they did it to help secure additional finance, 24% said they are considering requesting CERs at some point, 14% said they did it to enhance their project’s credibility, and 6% said it helped with a land ownership issue.
OTHER REVENUE SOURCES
– When asked what other revenue sources the projects benefited from, 55% did not answer. Of the 45% that did:
– 46% named proceeds from electricity or heat sales
– 20% said savings from reduced fuel or fertilizer use
– 13% said low-interest loans
– 7% said a non-CDM carbon mechanism
– 5% said official development aid
– 4% said zero-to-low-interest credit
– and 20% did not know
– 19% of all respondents reported to be involved with another crediting mechanism. The most common were Gold Standard (35%) and VCS (26%). The other mechanisms all had 6% or less.
– 67% of the responses came from participants in Asia, 23% from Americas and 9% from Africa.
– The largest represented project type was wind at 22% of the responses, which is below sector’s 30% share of all CDM projects.
– 49% of the responses came from small-scale projects, which make up around 41% of all projects.
– 53% of the projects were part of an underlying facility. Of that number, 81% said the facility was operating, with the remaining 19% reporting that it was not.
Results of the survey can be seen here
By Mike Szabo – firstname.lastname@example.org