CDM Pitfalls: The Facts

Before negotiators convened, Panama sent a signal to the carbon market world on how essential robust stakeholder consultation is. Following years of protest and controversy, Panama withdrew its approval from the Barro Blanco Clean Development Mechanism hydroelectric power project, effectively preventing it from issuing offset credits.

Barro Blanco, not only had little environmental integrity, but also serious social, environmental, and human rights consequences. ECO applauds the Panamanian decision but remains concerned for communities still affected by the ongoing “test flooding” of the reservoir.

The constant roars of airplanes overhead must be reminding negotiators of ICAO’s enthusiasm for international offsets. It is urgent that any market mechanisms learn from the Barro Blanco experience and incorporate a rights based holistic market design that moves beyond offsetting, ensures environmental integrity, genuinely furthers ambition, and works towards the Sustainable Development Goals.

ECO longs to believe that emphasis in the Paris Agreement and Article 6 on the need to respect human rights in climate action really will mean something on the ground. Specifically, this means clear guidance for local stakeholder consultation, safeguards in line with best practice among multilateral finance institutions, and a grievance process for when implementation goes wrong.