The Clean Development Mechanism (CDM) : analysing the financial viability of potential CDM projects, and assessing associated sustainable development impacts for South Africa

• Main Author: Oganne, Galonkge
• Other Authors: Davidson, Ogunlade R
• Format: Dissertation
• Language: English
• Published: University of Cape Town 2014
• Subjects: Applied Sciences
• Online Access: http://hdl.handle.net/11427/6927

Bibliography: leaves 85-91. === A growing concern regarding the limitation inherent in the 1992 United Nations Framework Convention on Climate Change (UNFCCC) for encouraging prompt global action on climate change has been key in vitalising climate change negotiations. The UNFCCC process has triggered further negotiations and related international forums on climate change that eventually led to the birth of the Kyoto Protocol in 1997. This outcome represents a legally enforceable strategy for reinforcing the UNFCCC. Being among the first key climate change regime milestones, the Kyoto Protocol was adopted to enable a working environment for international co-operation against the threat of climate change to humanity. To this end, incorporates carbon emissions reduction instruments known as 'flexibility mechanisms' to achieve the overall objective of “... stabilisation of greenhouse gas concentrations in the atmosphere ...” (UNFCCC 1992). Of the four climate change mitigation implementation instruments (or mechanisms), the Clean Development Mechanism (CDM) stands out as the only one relevant for the developing world. The thesis investigates the potential for the CDM to both protect and promote the indigenous development policy objectives of the Southern project-host countries in the context of a new paradigm of sustainable development The CDM would support local capacity building and provide a tool for enabling technology reception in the South; and would set up a unique arrangement by which the Northern parties will have access to more cost-effective avenues in fulfilling their climate commitments than pursuing domestic measures. The core of the rationale behind the thesis stems from a need for expanding the insight into how the CDM will achieve its primary purpose of enhancing sustainable development for developing country-based participants. Austin et al (1999) reviewed this question for three other developing countries (Le. Brazil, China and India), in an effort to enhance the insight into measuring sustainable development outcomes arising from the CDM. The thesis employs a South African socio-economic development context for investigation. The thesis also assesses how supporting CDM-driven activities will be worthwhile, from an economic standpoint, for potential project investors or developers in developing countries. The thesis investigates the investment (or financial) performance of CDM projects by comparing the impact, on a project's Internal Rate of Return (IRR), of incorporating an associated carbon investment component within a conventional project investment framework. For this, it focuses on four of the country's potential energy sector climate mitigation projects as case studies for its investigation.