Does the CDM contribute to sustainable development? Evidence from the AIJ Pilot Phase

The purpose of the Activities Implemented Jointly (AIJ) programme is to foster the transfer of technology for global warming abatement from developed to developing countries. Projects should not only reduce greenhouse gases, but also contribute to the sustainable development goals of host countries. However, given the lack of consensus regarding the definition and measurement of sustainable development, it is difficult to gauge to what extent the AIJ phase has been useful for developing countries. In this paper, we adopt a macro perspective and analyse the real-life data of 210 projects with respect to equity and financial issues related to sustainable development in the broad sense. We focus only on three aspects (financial additionality, credit sharing and geographical distribution) and conclude that the performance of the AIJ programs was in general fairly poor. Because the AIJ experience prepares the grounds and is fundamental for the design of two project-based mechanisms from the Kyoto Protocol (JI and CDM), these failures must be overcome and strong sustainable development criteria must be set for each project.