A draft COP/MOP decision has been under discussion since Thursday concerning the reform of the Clean Development Mechanism, based on the report of the CDM Executive Board and the plenary sessions. The matter was not decided in Poznan and was therefore postponed until Copenhagen. A key question in the reform of the CDM is whether or not Carbon Capture and Sequestration (CCS) technology should be made eligible under the CDM. The full complexity of this question was felt from the moment the parties took the floor during the meeting of the first contact group. A veritable dialogue of the deaf took place between the demands of Grenada and Saudi Arabia and the Executive Board. The question was, however, simple but crucial: “has the Executive Board adopted the findings of the second external consultants’ report on the implications of the inclusion of CCS in the CDM? Yes or no?”. A response was late in coming, but eventually clarified the process: the Executive Board remained divided and did not give an opinion, and the issue therefore fell entirely to the COP/MOP. But it will not be easy to arrive at a clear yes or a no in so little time. Indeed, the informal afternoon session under the AWG-KP clearly marked the opposition between the two conflicting options: the first is to not make CCS eligible under the CDM for the second commitment period; the second is to make it eligible, but requires the SBSTA to make its recommendations to the COP/MOP on the methods and procedures for including CCS, especially on aspects concerning the integrity of long-term storage, the conditions for MRV, the project boundary, the environmental impacts and matters of international law, responsibility, security, counterproductive side-effects or risk coverage.

Unsurprisingly, the most vulnerable developing countries, with Micronesia leading the way on behalf of AOSIS, declared themselves in favour of the first option. Some even supported Micronesia’s proposal to amend the text and to accompany the non-eligibility of CCS with all the aforementioned reservations. Once again unsurprisingly, some coal-using developed and emerging countries and oil-producing countries supported the second option. The gap is wide, and difficult to bridge. It directly reflects the differing conceptions of the very nature of the Clean Development Mechanism and, therefore, of what it could finance: is it advisable to include in this mechanism renewable technologies or those linked to energy efficiency in the same way as low-carbon solutions using fossil fuels? Beyond this debate, we can make several reflections on the advisability of including CCS in the CDM: the first is that the cost of CCS is such that it appears unlikely that the CER price will offset the price per tonne of CO2 linked to this technology (according to some estimations, at best 50 euros/tonne). However, this would be a means of freeing a new source of financing for projects in developing countries. Furthermore, the nature of developed and developing country commitments is still uncertain, as is, therefore, the role that will be given to market mechanisms in the post-2012 regime. This uncertainty regarding demand and the fact that CCS projects would be likely to generate large volumes of credits may raise problems of incentives for investing in a balanced portfolio of mitigation technologies in developing countries, and thereby reveal competition between technologies within CDM projects.