At the 16th Conference of Parties (COP 16) to the United Nations Framework Convention on Climate Change, parties agreed to establish a loan scheme to support the CDM in host countries with fewer than 10 registered projects and now, this is in its operational phase. More recently, the European Union Emissions Trading System (EU ETS), the world’s biggest buyer of certified emission reductions (CERs) of CDM, has announced that after 2013 the only credits eligible for compliance for Phase III of its emission trading scheme from 2013 up to 2020 will be sourced from least developed countries (LDCs) as well as from third countries with concluded agreements. In a similarly motivated development, the World Bank has also announced in COP17, its plan to launch a new fund called the Carbon Initiative for Development (Ci-Dev) that aims to provide LDCs with financial and capacity-building opportunities for better access to CDM projects.

For LDCs, these are extremely promising developments, however, it is equally surprising to note that CDM has not succeeded in the environment of most low income countries. What could be the best plausible explanation for this poor performance of LDC in carbon finance?

The above is an extract from a speech delivered by Keshav Das, Carbon Finance Advisor at SNV Netherlands Development Organisation in the plenary session (June 1, 2012) of the Carbon Expo 2012, organised by the World Bank and International Emissions Trading Association.

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