How Do Clean Development Mechanism Projects Contribute to Sustainable Development in China: An Assessment of the Performance of the CDM in China
| Date | 01 March 2011 |
| Author |
41 ELR 10260 ENVIRONMENTAL LAW REPORTER 3-2011
How Do Clean
Development
Mechanism Projects
Contribute to
Sustainable
Development in
China: An
Assessment of the
Performance of the
CDM in China
by Xiaoyi Jiang
Xiaoyi Jiang holds a Ph.D. in Environmental Law
from the University of Western Sydney School of Law,
Australia. She currently works at Wuhan University
China Institute of Boundary Study, China.
e Clean Development Mechanism under the Kyoto
Protocol has been in place in China for several years,
and today, China exists as the global center of CDM
project development. Although the CDM has brought
and is expected to bring considerable benets to China,
its limited and in some cases negative impacts may
aect China’s sustainable development in the long
run. Moreover, as the rst Kyoto period is set to expire
in 2012, the climate legal regime and the CDM are
likely to be changed. e limitations of the CDM in
promoting sustainable development in China beyond
2012 could be addressed by setting up clear sustain-
able development standards, eective management of
the CDM, and legal strategies for emission reductions.
Global warming has been described as one of the
greatest challenges for the 21st century.1 e inter-
national community has been working together to
combat global warming through the 1992 United Nations
Framework Convention on Climate Change (UNFCCC)
and its innovative 1997 Kyoto Protocol. e Kyoto Proto-
col, for the rst time, set legally binding Quantied Emis-
sions Limitation and Reduction Objectives (QELROs) for
industrialized countries’ (Annex I Parties) anthropogenic
emission by source, and removal by sinks, of greenhouse
gases (GHGs) during the commitment period 2008-2012.2
However, the most innovative aspect of the Protocol may
in fact not be these strict commitments, but the introduc-
tion of the three market-based mechanisms.
e Clean Development Mechanism (CDM), which is
the object of this study, is a exibility mechanism dened
in Article 12 of the Kyoto Protocol designed to help Annex
I countries achieve their emission reductions targets within
the Kyoto Protocol. As the only one among the three
Kyoto mechanisms open to Contracting Parties classied
as industrialized countries and developing countries, the
CDM allows industrialized countries to achieve a portion
of the required emission reductions through providing
nancial assistance or clean technology transfer in emis-
sion-abatement projects undertaken in countries without
emission targets, while the latter may dene the conditions
in which these projects take place. It was designed with
the dual aim of helping developing countries in achieving
sustainable development and of assisting industrialized
countries in achieving compliance with their GHG emis-
sion reductions.
Operational since the beginning of 2006, the CDM has
been widely carried out. To date, over 2,000 CDM projects
have been registered and Certied Emission Reductions
(CERs) amounting to more than 2.7 billion tons of carbon
dioxide (CO2) equivalent are anticipated to be produced in
the rst commitment period of the Kyoto Protocol, 2008-
2012.3 China, in particular, with its large carbon emission
potential and favorable investment environment, has dom-
inated the CDM and has become the largest beneciary.
1. K W ., U N D P-
, H D R 2007/08: F C
C: H S D W (2007), available at
http://hdr.undp.org/en/reports/global/hdr2007-2008.
2. Removal by sinks means removing carbon dioxide (CO 2) from the at-
mosphere, which could include the sequestering of carbon by land use,
land-use change, or forestry (LULUCF). According to the Kyoto Proto-
col, industrialized countries (Annex I Parties) are assigned legally binding
reduction targets for GHG emissions by an average of 5.2% below 1990
levels during the rst commitment period (2008-2012), while developing
countries (non-Annex I Parties), whose paramount task at the present stage
is economic development and poverty eradication, are free of legally binding
emissions obligations during this period.
3. UNFCCC website, http://cdm.unfccc.int/about/index.html (last visited
Feb. 3, 2011).
Copyright © 2011 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
3-2011 NEWS & ANALYSIS 41 ELR 10261
With the booming of CDM projects, the issue of how
the CDM contributes to sustainable development in devel-
oping countries has become a hotly debated topic world-
wide. A main conclusion made by the relevant literature
reveals that there is growing concern that a signicant part
of the CDM credits does not reect real emission reduc-
tions, and that the mechanism is inadequate to assist devel-
oping countries in their transition toward a low-carbon
economy.4 In spite of the overwhelming criticism on the
potential aws of the CDM to contribute to sustainable
development in developing countries, there is a dearth of
literature that seriously or thoroughly explores the sustain-
able development issues of the CDM from China’s perspec-
tive. Accordingly, this study intends to address this gap
and contribute to the current discussion by exploring the
application of the concept of sustainable development in
terms of the CDM in the context of China.
In addition, as the rst phase of the Kyoto Protocol
is set to expire in 2012, the international climate change
regime will likely be changed in the post-2012 period.
China, as a major GHG emitter and developing country,
will play an indispensible and crucial role in combating
global warming in the post-2012 period. It is expected to
take on more reduction responsibilities, and thus will be
under considerable pressure to reduce carbon emissions
without undermining its economic development. Against
this background, in spite of the Chinese dominance in
the CDM, the CDM has become one of the most signi-
cant subjects under the post-2012 negotiations, due to the
current questions about its performance. Any decision to
maintain the CDM in its current form within a post-2012
climate agreement has to be considered with great care.5
erefore, it is important to discuss how the CDM could
assist in promoting sustainable development and meet the
challenge of climate change in the post-2012 period by
analyzing its prospects.
Based on the above introduction, this Article aims to
explore how the CDM contributes to sustainable develop-
ment in China. Part One discusses sustainable develop-
ment and its application in the CDM. e potential aws
of the CDM to contribute to sustainable development are
critically analyzed, based on the concept of sustainable
4. Joëlle de Sépibus, e Environmental Integrity of the CDM Mech-
anism—A Legal Analysis of Its Institutional and Procedural Shortcomings,
Working Paper No. 2009/24, NCCR Trade Regulation (2009), available at
http://82.220.2.60/images/stories/research/header_ip6/environmental%20
integrity%20CDM.pdf; Michael Wara & David G. Victor, A Realistic Pol-
icy on International Carbon Osets, Program on Energy and Sustainable
Development Working Paper 74, Stanford Univ. (April 2008); L
S, I CDM F I E S-
D O A E CDM O-
I (2007).
5. Sépibus, e Environmental Integrity of the CDM Mechanism, supra
note 4.
development and the CDM project cycle. Part Two assesses
the performance of the CDM on promoting sustainable
development in China based on the introduction to Chi-
na’s national circumstances and critique of policy and legal
initiative undertaken by the Chinese government to ensure
sustainable development of projects. Part ree focuses on
the CDM in the post-2012 period. e last part draws a
conclusion and puts forward suggestions on how to deal
with the limitations of the CDM in promoting sustainable
development in China.
I. Sustainable Development and Its
Implication in the CDM
A. The Basic Concept of Sustainable Development
and the CDM
e term sustainable development originally came from
the World Commission on Environment and Development
1987 Brundtland Report: Our Common Future, which
addresses the problem of conicts between environment
and development goals. e most frequently quoted con-
cept of sustainable development is “the development which
meets the needs of the present without compromising the
ability of future generations to meet their own needs.”6
Sustainable development has been established as a sig-
nicant principle in international environmental law.
Article 3(4) of the UNFCCC clearly set out that “[t]he
Parties have a right to, and should promote sustainable
development.”7 e CDM is also designed with sustainable
development in mind—GHG reductions projects must
assist in promoting sustainable development and bring
about emission reductions. In spite of the fact that CDM
projects have been implemented with the object of sustain-
able development for many years, there are no international
protocols that assess the sustainable development benets
achieved through the CDM. According to Decision 17/
CP.7 for Article 12 of the Kyoto Protocol, “it is the host
Party’s prerogative to conrm whether a clean develop-
ment mechanism project activity assists it in achieving sus-
tainable development.”8 However, the U.N. 2005 World
Summit Outcome Document refers to the “interdependent
and mutually reinforcing pillars” of sustainable develop-
6. R W C E
D: O C F (1987).
7. United Nations Framework Convention on Climate Change (UNFCCC),
May 29, 1992, U.N. Doc. A/AC.237/18 (1992), reprinted in 31 I.L.M. 849
(1992) (available in ELR S. 50343).
8. Modalities and Procedures for a Clean Development Mechanism as dened
in Article 12 of the Kyoto Protocol, Kyoto Protocol to the United Nations
Framework Convention on Climate Change, Dec. 10, 1997, U.N. Doc.
FCCC/CP/197/L. 7/Add. 1, art. 3.1 & Annex B, reprinted in 37 I.L.M. 22
(1998).
Copyright © 2011 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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