Differentiation Under the CDM: Options and Challenges

The Bali Action Plan of 2007 has launched a process to arrive at an international post-2012 climate agreement in Copenhagen in December 2009. Since then, various studies have examined CDM reform with a view to improving its governance, or to expand its scope beyond a project basis. Yet analyses of options for differentiation under the CDM, in order to improve its sectoral and/or regional distribution, are still largely missing. This chapter approaches the question of differentiation in the context of the CDM from a legal and political perspective. It provides an overview of possible differentiation options, focusing on differentiation between Parties and project types. It examines the legal basis for differentiation, discusses options for follow-up decision-making, and hints at the potential implications of differentiation options for various actors in the CDM. This chapter concludes that although the legal challenges for differentiation are relatively easy to address, the political challenges may be more difficult to overcome. This chapter ends with suggestions on how the discussion on differentiation under the CDM could move forward.