The Road to CDM

The workshop held on August 19 on “CDM Opportunities in the Philippines” jointly sponsored by ECCP and the Kreditanstalt fuer Wiederaufbau (KfW) of Germany was one of the first major private sector sponsored campaigns for the Clean Development Mechanism (CDM) in this country.

The surprisingly well-attended workshop brought together companies that were actually implementing CDM projects with those considering their own. KfW or the Reconstruction Credit Institute is a German government owned development bank that is one of Europe’s leading players in microfinancing. It has lately expanded into financing emissions trading.

For ECCP, the workshop was the appropriate venue to update Filipino business executives on CDM in Europe and to share the experiences of European companies in this new mechanism to fight climate change. Europe is the world’s largest environmental market for the trading of carbon credits.

Besides talking about the status of CDM in the Philippines, KfW executives also gave workshop participants a clearer understanding of carbon or emissions trading, a nascent industry whose value could reach Euro 1 trillion in 10 years from Euro 30 billion today.

More important, the workshop illustrated the growing ties between Europe and the Philippines in CDM, one of three mechanisms that enable developed countries or operators in developed countries to acquire greenhouse gas reduction credits. The other two mechanisms are Joint Implementation (JI) and International Emissions Trading (IET).

In CDM, a developed country can sponsor a greenhouse gas reduction project in a developing country (such as the Philippines) where the cost of greenhouse gas reduction project activities is usually much lower, but whose effect on the atmosphere is globally equivalent.

The developed country will receive Certified Emission Reductions (CERs) or carbon credits for meeting its emission reduction targets. On the other hand, the developing country benefits from capital investment, clean technology or sustainable development.