Lawrence Berkeley National Laboratory

This paper addresses the political acceptability and workability of CDM by and in developing countries. At COP-3 in Kyoto in 1997, the general position among developing countries changed from strong rejection of joint implementation to acceptance of CDM. The outgrowth of CDM from a proposal from Brazil to establish a Clean Development Fund gave developing countries a sense of ownership of the idea. More importantly, establishing support for sustainable development as a main goal for CDM overcame the resistance of many developing countries to accept a carbon trading mechanism. The official acceptance of CDM is not a guarantee of continued acceptance, however. Many developing countries expect CDM to facilitate a substantial transfer of technology and other resources to support economic growth. There is concern that Annex I countries may shift official development assistance into CDM in order to gain carbon credits, and that development priorities could suffer as a result. Some fear that private investments could be skewed toward projects that yield carbon credits.Developing country governments are wary regarding the strong role of the private sector envisioned for CDM. Increasing the awareness and capacity of the private sector in developing countries to initiate and implement CDM projects needs to be a high priority. While private sector partnerships will be the main vehicle for resource transfer in CDM, developing country governments want to play a strong role in overseeing and guiding the process so that it best serves their development goals. Most countries feel that establishment of criteria for sustainable development should be left to individual countries. A key issue is how CDM can best support the strengthening of local capacity to sustain and replicate projects that serve both climate change mitigation and sustainable development objectives.There is support among developing countries for commencing CDM as soon as possible. Since official commencement must await the entry into force of the Kyoto Protocol, many developing countries support the establishment of an Interim Phase starting in 2000, with possible retroactive crediting once the Protocol enters into force.