On 19 December 2009, the UNFCCC summit in Copenhagen drew up the Copenhagen Accord. The poor outcome of this summit was extensively covered in international media. However, while all eyes were set on whether Heads of State will be able to flash out an international agreement, also the CDM Reform was on the agenda.

Main highlights of the decision relate to the contentious issues of the inclusion of CCS in the CDM, the inclusion of “forests in exhaustion (FiE)” as CDM project activities and the development of standardized baselines. These contentious issues will now be addressed under the Subsidiary Body for Scientific and Technological Advice (SBSTA) in June 2010 (although there was no timeline decided for FiE). Admitted observer organizations can submit comments to the development of standardized baselines until 22 March 2010 to the UNFCCC secretariat. Parties are invited to do so for the inclusion of CCS in CDM.

When it comes to governance, there was a large number of positive amendments in the previous text versions which unfortunately got wiped out in the last hours. However, some remaining paragraphs go in the right direction, for example: “The Board must now take into account input from relevant international organizations”.

A future appeal procedure could also open new opportunities for civil society. However, the text reads now “stakeholders directly involved, defined in a conservative manner” and will certainly be a barrier. In the best case scenario, this will involve stakeholders that have submitted comments to a project in the public commenting period. In that case, (a) DOEs can be challenged that do not take due account of comments submitted and (b) decisions about projects can be challenged. Whether already registered projects can be subject to such an appeal process has yet to be determined.

You can dowload the official decision here. For more information about further highlights, see below.

In the course of 2010, the CDM Executive Board will meet several times (in February, March, May, July, September, November, December) to eslaborate the requests of this decision. The CDM Executive Board supervises the CDM, under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP) and is fully accountable to the CMP.

Governance in relation to civil society:
• The Board must now take into account input from relevant international organizations and Parties involved in addition to project participants and the designated operational entities in its decision-making process;
• And enhance its communications with project participants and stakeholders, including through the establishment of modalities and procedures for direct communication between the Executive Board and project participants in relation to individual projects

Perverse policy incentives:
• The Board must take fully into account, in its work and in the work of its support structure, the laws, regulations, policies, standards and guidelines that apply in the host countries, and in case of need seek inputs from DOEs of the host countries;
• Ensure that its rules and guidelines related to the introduction or implementation of the policies do not create perverse incentives for emission reduction efforts; The Board must moreover consolidate, clarify and revise, as appropriate, its guidance on the treatment of national policies;
• It stays within the prerogative of the host country to decide on the design and implementation of policies to promote or give competitive advantage to low greenhouse gas emitting fuels or technologies

Code of Conduct
• Curricula vitae of Executive Board members, statements on conflicts of interest and details of any past and current professional affiliations of members must be published on the UNFCCC CDM website;

Accreditation of designated operational entities (DOEs)
• The Board must develop and apply a system for continuous monitoring of the performance of DOEs and a system to improve the performance of these entities
• Improve access to information on the performance of DOEs, including through improved reporting on performance, capacity and accessibility of services of these entities;
• Promote improved levels of training for auditors involved in validating and verifying activities;
• Adopt a procedure for DOEs to provide the secretariat with information on the number of project activities under validation or verification per qualified auditor, and the time frames and average fees for the validation and verification of CDM project activities hosted in developing countries, divided by region;

Baseline and monitoring methodologies and additionality
• CDM Executive Board to further work on:
o Further development of guidelines for demonstration and assessment of barriers and of standardized methods to calculate financial parameters;
o Development of guidance for project participants on the use of first-of-its-kind barrier and the assessment of common practice, including the definition of the applicable region, similar technologies and thresholds for penetration rates;
o Establishment of simplified modalities for demonstrating additionality for project activities up to 5 megawatts that employ renewable energy as their primary technology and for energy efficiency project activities that aim to achieve energy savings at a scale of no more than 20 gigawatt hours per year;
o Development of guidance for the treatment of feed-in tariffs in the additionality analysis for renewable energy project activities;
• SBSTA (Subsidiary Body for Scientific and Technological Advice) to:
o Recommend modalities and procedures for the development of standardized baselines that are broadly applicable, while providing for a high level of environmental integrity and taking into account specific national circumstances, and to forward a draft decision on this matter COP-16/MOP-6; Parties, intergovernmental organizations and admitted observer organizations are invited to make submissions to the secretariat, by 22 March 2010, on their views on this matter. These submissions will be considered at the 32nd SBSTA meeting in June.
o Assess the implications of the recommendation regarding forests in exhaustion
o Continue to work on the possible inclusion of CCS in CDM with a view to COP-16/MOP-6 adopting a decision on this matter. Parties are invited to submissions to the secretariat, by 22 March 2010, to be discussed at the 32nd SBSTA meeting in June. In particular the following issues should be addressed:
(a) Non-permanence, including long-term permanence;
(b) Measuring, reporting and verification;
(c) Environmental impacts;
(d) Project activity boundaries;
(e) International law;
(f) Liability;
(g) The potential for perverse outcomes;
(h) Safety;
(i) Insurance coverage and compensation for damages caused due to seepage or leakage;

Appeal process
• Following consultation with stakeholders, procedures for considering appeals that are brought by stakeholders directly involved, defined in a conservative manner, in the design, approval or implementation of CDM project activities or proposed CDM project activities, in relation to:
(a) Situations where a DOE may not have performed its duties in accordance with the rules or requirements of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol and/or the Executive Board;
(b) Rulings taken by or under the authority of the Executive Board in accordance with the procedures referred to above regarding the rejection or alteration of requests for registration or issuance;

Sustainable Development
• DNAs are now encouraged to publish the criteria they use in assessing the contribution of project activities to sustainable development;

Countries with fewer than 10 registered CDM project activities
• Payment of the registration fee should be deferred until after the first issuance
• The EB should further:
o Developing top-down methodologies that are particularly suited for application in these countries in accordance with principles and guidelines to be established by the Executive Board;
o Introducing a requirement that designated operational entities indicate the work they are undertaking on projects originated in these countries as part of their annual activity reports and ensure that this item be included in the subsequent synthesis report presented by the secretariat to the Executive Board for appropriate follow-up;
• Financial resources from the interest on the principal of the Trust Fund for the Clean Development Mechanism should be accrued, as well as any voluntary contributions from donors, in order to provide loans to be repaid starting from the first issuance of CERs, to support the following activities:
o To cover the costs of the development of project design documents;
o To cover the costs of validation and the first verification for these project activities;

o The Board should recommend guidelines and modalities for operationalizing the activities outlined above for consideration by COP-16/MOP-6.