The additionality criterion for identifying clean development mechanism projects under the Kyoto Protocol

The clean development mechanism (CDM) under the Kyoto Protocol (KP) is envisioned as a vehicle to encourage developing countries to participate in greenhouse gas (GHG) mitigation efforts. However, a number of issues related to the CDM are yet to be resolved. One such issue is related to the additionality criterion for identifying the CDM projects. This paper argues that while an application of purely economic additionality criterion is essential to ensure the real and long-term mitigation of global GHG emissions, it could also limit the scope of the CDM as an effective vehicle for GHG mitigation. It would therefore be desirable, under some conditions, to include in the CDM the GHG mitigation projects that are economically attractive but are not implemented due to lack of capital resources. The paper also highlights the need for applying the additionality criterion for assessing candidate CDM projects, especially in the power sector, on the basis of their effects on overall “program” or sectoral level GHG mitigation.