The Clean Development Mechanism (CDM) has established itself as an important instrument in assisting developing countries to transition to low-carbon, climate resilient economies. In particular, the CDM’s Programme of Activities (PoA) modality has opened the door to reducing transaction costs through aggregation, and to implementing activities in developing countries with low emission reduction potential, many of which could previously not benefit from carbon finance.
Going forward, the opportunity is for the CDM and carbon finance to move to mitigation actions at scale, and to draw linkages with next generation instruments such as Nationally Appropriate Mitigation Actions (NAMAs) and New Market Mechanisms (NMMs). In this regard, the CDM’s PoA and Standardised Baseline (SB) modalities can act as an important starting point for sector-wide activities. Developing countries can gain bottom-up, direct experience with PoAs and SBLs that can then serve as building blocks in developing the NAMAs and NMMs of the future.