Sector-Wide Activities: UNDP's Approach
While the CDM has operated to date on a project-by-project basis, it is increasingly recognized that there is a need to move towards programmatic approaches within the CDM, and to draw linkages between the CDM and the next generation of scaled-up mitigation instruments. MDG Carbon takes a bottom-up approach of promoting developing countries’ direct experience in the CDM as a building block in the design and implementation of new scaled-up mitigation activities.
The figure below illustrates the continuum of current and evolving carbon market and climate finance mechanisms and shows how existing standards, oversight frameworks and experience of the CDM can be used in the design of next generation instruments.
On the left-hand side of the figure, the CDM has traditionally involved discrete project activities. The CDM PoA modality takes a step forward in achieving scale by allowing multiple methodologies and technologies to be combined under the same programme. The CDM’s standardised baseline modality is likely to act as a key link to next generation approaches. This modality further reduces complexity and transaction costs by standardising additionality demonstration, establishment of data sets, collection procedures and indicators and values. Standardised baselines can be developed for a whole sector, country-wide and allow for a broad applicability – in CDM projects as well as build the basis of MRV measures for Nationally Appropriate Mitigation Actions (NAMAs) or New Market Mechanisms (NMMs).
The right hand side of the figure represents new scaled-up mitigation instruments. Sector wide approaches may include NAMAs or NMMs, amongst other possible designs. While a sector-wide approach can conceivably take many different forms, one configuration may involve combining (i) policy measures, for example the implementation of a liberalized domestic energy market, with (ii) standardised quantification and monitoring approaches, or financial transfers based on emission reductions. At the end of the continuum, there is also the opportunity to establish emission trading schemes in developing countries, covering installations in one or more domestic sectors.