Companies that develop CDM methods "should be compensated"

Companies that develop CDM methods "should be compensated"
Published: 01 December 2004

Companies that develop methodologies used to approve emissions reduction projects under the Clean Development Mechanism should be compensated for their work.

So said Ian Emsley, environment policy manager at Anglo-American. He told a conference held by Euromoney in London: “Methodologies are a public good. When they are funded privately, they should be treated as such,” Emsley said. “Regulators should consider ways in which private project developers benefit from the work they do on methodologies, for example by waving the administrative fee” charged by the CDM executive board.

Emsley’s remarks echo a survey conducted by the International Emissions Trading Association (IETA) which cited transactions costs as one of the “very negative” factors on CDM project developers’ decisions. Transaction costs are, to some extent, a function of the lengthy approval process.

Anglo-American had spent $47,000 to $270,000 on getting the projects developed, excluding management time, developing four projects among its assets in South Africa and Brazil. “We face a first-mover disadvantage,” Emsley said, because of having to develop a methodology and gain approval by the CDM executive board. Anglo-American has assets in both developed and developing countries. Not only does it face carbon liabilities, for example in the EU, but plenty of opportunity for emissions reduction projects among its own assets. (Point Carbon report).