CDM in the MENA Region

What is CDM?

The Clean Development Mechanism (CDM) is one of the three market-based mechanisms that were established during the Kyoto protocol in 1997 to help participant countries meet their emission targets. The main concept behind the CDM was to encourage developed countries to fund emission reduction projects in developing countries, also serving to achieve sustainable development. The projects would then generate Certified Emission Reduction (CER) units which may be used in emission trading. The CER units can be used by developed countries to contribute to their emission reduction targets under the Kyoto Protocol. One CER unit is equivalent to the reduction of one metric ton of CO2 emissions.

There have been many criticisms about the effectiveness of CDM in reducing green house gases (GHG). One of the strongest arguments is that by design, CDM transfers emissions from one region to another instead of eliminating them. Registering CDM projects also entails high transaction costs, making investment in small scale projects not feasible. Some critics claim CDM would be more effective if it solely concentrated on GHG abatement, instead of having the two goals of promoting sustainable development and GHG reduction.

Another essential drawback of CDM projects is the difficulty in demonstrating “additionality” for each project. A project is considered additional if it can be shown that it was only possible to implement through the CDM financing scheme. In other words, the project was not intended to be carried out anyway. Proving a project is dependent on a certain type of fund is difficult and this obstacle may have limited many projects while increasing the overall transactions costs. Critics also claim that several projects were already running before they were CDM-approved and this indicates that carbon credits are not a prerequisite for these types of projects.

Despite these shortcomings, 7,217 projects around the world were registered at the United Nations Framework Convention on Climate Change (UNFCCC) CDM Registry[1]. The figure below summarizes the total registered CDM projects by region.

Figure 1: Distribution of registered projects by UN region and sub-region, 2013

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Source: http://cdm.unfccc.int/Statistics/Public/files/201308/proj_reg_bySubregion.pdf

CDM Status in the Arab World

It is no surprise that Asia, the most populous continent, has the highest number of registered CDM projects. However, the Arab regions of North Africa and West Asia, consisting of around 4.5% of the world population, have registered with the UNFCCC only 74 CDM projects, i.e. only 1% of the total number of registered projects. So why did Arab countries fail to benefit from this opportunity to contribute to climate change mitigation?

Despite contributing only 5.29% of global GHG emissions (1.53 billion metric tons of CO2, compared to a total amount of 28.9)[2], Arab countries emission rate is more than double that of their total contribution to the world GDP: 2.5% of 73.24 trillion US$[3]. In addition, and due to rapid development, especially in the Gulf Cooperation Council (GCC) countries, carbon emissions between 1990 and 2007 have increased three times faster in the Middle East than the world average[4]. The table below shows the CO2 emissions per capita, GDP, population and total CO2 emissions for each Arab country in 2009.

Table 1: CO2 Emissions, GDP and Population for Arab Countries in the Middle East, 2009

Country CO2 Emissions per Capita (ton/capita)[5] GDP (US$ billion)[6] Population (million)[7] Total CO2 Emissions
(billion tons)
[8]
Algeria 3.3 138.12 36.38 0.120
Bahrain 20.3 19.32 1.19 0.024
Egypt 2.8 188.98 76.78 0.215
Iraq 3.6 111.66 30.16 0.109
Jordan 3.8 23.82 5.92 0.022
Kuwait 28.1 105.91 2.85 0.080
Lebanon 4.9 34.65 4.25 0.021
Libya 10.5 63.36 5.96 0.063
Morocco 1.6 90.91 31.28 0.050
Oman 15.4 46.87 2.66 0.041
Qatar 45 97.58 1.56 0.070
Saudi Arabia 16.2 376.69 26.80 0.434
Sudan 0.3 52.64 34.85 0.010
Syria 3.1 53.93 21.03 0.065
Tunisia 2.4 43.61 10.44 0.025
UAE 20.3 270.33 7.72 0.157
Yemen 1.1 24.58 22.23 0.024
Total 4.75 1,742.97 322.06 1.531

The table shows that countries from the GCC are amongst the world’s highest CO2 per capita emitters, particularly Qatar and Kuwait. However, the average CO2 per capita for the entire region (using total CO2 emissions and the population of the Arab world) is much lower, at 4.75 tons per person. Nevertheless, and as mentioned earlier, the region has failed to contribute to emission reduction in proportion to their contribution to GHG into the atmosphere. The countries managed to register only 1% of the total CDM projects worldwide, with an estimated 109 million CERs to be generated by these projects (compared to a global total of 7,456 million CERs, i.e. 1.5%).

The graph below presents estimated number of CERs generated from CDM projects implemented by each country (if any). Many of the projects are ongoing and are scheduled to be complete within the next ten years.

Figure 2: Estimated number of CERs generated from CDM projects by country until 2020

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Source: UNFCCC

There are many factors that could have contributed to the low number of projects. Host country attractiveness was evaluated for CDM projects in a paper called “Host Country Attractiveness for CDM non-sink projects” by Martina Jung and published n 2006[9]. Jung bases her analysis on emission reduction potential, institutional CDM capacity, and general investment climate. Table 2 summarizes the results of this study for Arab countries and the number of expected CERs.

Table 2: Host Country Attractiveness and Expected CERS

Country CDM Capacity Mitigation Potential Investment Climate Expected CERs
Sudan Low Low Bad
Iraq Low Low Bad
Bahrain Low Low Good
Kuwait Low Low Good 380,933
Lebanon Low Low Bad 645,417
Syria Low Low Bad  2,245,474
Libya Low Low Bad 3,625,230
Saudi Arabia Low High Low 4,600,428
Oman Low Low Good 4,651,500
Algeria Low Low Bad 6,408,080
UAE Low Low Good 7,506,097
Jordan Medium/High Low Very Good 7,938,299
Tunisia Low Low Good 9,972,718
Morocco Medium/High Low Bad 13,119,455
Qatar Low Low Good 17,497,543
Egypt Medium/High Low Bad 30,934,986

 

The majority of Arab countries in the MENA region seem to suffer from low institutional CDM capacity (determined using three indicators: Kyoto ratification, CDM authority installed and existence of a national strategy) and low mitigation potential. Investment climate does not seem to have a direct impact on the overall status of CDM projects. With the exception of Kuwait and Bahrain, the countries with the lowest expected CERs scored low on the three indicators. The five countries with the most expected CERs scored well in at least one indicator (CDM capacity or investment climate).

Potential for the Future

The low mitigation potential in the region limits the number of CERs that could be issued in total. However, with an Arab population of over 300 million, there is still massive potential for small scale projects (which may be clustered to increase feasibility), particularly energy efficiency schemes for households. Other opportunities for emissions reduction include renewable energy (wind, solar, hydro, geothermal), public transportation and fuel switch projects.

The fact that most countries have a low institutional CDM capacity indicates that there has been insufficient political weight driving CDM projects. With a delay in reaching a global climate change agreement, Arab countries have an opportunity to remove institutional barriers and introduce policy measures for emission reduction schemes. These include mainstreaming climate mitigation into national development plans, creating or enhancing existing National Designated Authority (NDA) for CDM and other climate policy initiatives, identifying sectors with the highest potential for emissions reduction, and identifying projects or programs where joint collaboration between countries can increase feasibility. Joint efforts to enhance transfer of knowhow and share past experiences between the countries should also be encouraged.

If adopted, these steps could place the region at an advantage once a global agreement has been reached, and avoid underperforming the climate change mitigation potential and the national sustainable development goals.

 

 

[1] http://cdm.unfccc.int/

[2] International Energy Agency, “CO2 highlights,” http://www.iea.org/publications/freepublications/publication/CO2emissionfromfuelcombustionHIGHLIGHTS.pdf accessed on 04/09/2013

[3] Earth Policy Institute, “Gross World Product,” http://www.earth-policy.org/datacenter/xls/book_wote_ch1_4.xls accessed on 9/192013

[4] “Middle East: Talking about Climate Change;” http://www.irinnews.org/report/96905/middle-east-talking-about-climate-change accessed 03/09/2013

[5] The World Bank, “CO2 emissions (metric tons per capita),” http://data.worldbank.org/indicator/EN.ATM.CO2E.PC accessed on 19/09/2013

[6] The World Bank, “GDP (current US$),” http://data.worldbank.org/indicator/NY.GDP.MKTP.CD accessed on 9/19/2013

[7] The World Bank, “Population” http://data.worldbank.org/indicator/SP.POP.TOTL accessed on 9/19/2013

[8] The total CO2 emissions was calculated by multiplying the CO2 per capita by the population

[9] Jung, Martina. “Host Country Attractiveness for CDM Non-sink Projects” Energy Policy34.15 (2006): 2173-184. Print. http://www.econstor.eu/bitstream/10419/19284/1/312.pdf

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