Sectoral Crediting Mechanisms for Greenhouse Gas Mitigation

International climate policy makers face two issues: how to accelerate the deployment of technologies that advance sustainable development in developing countries and how to make the process of developing emission reduction credits under the Clean Development Mechanism (CDM) more economically efficient and environmentally effective. Previous AIXG papers have explored issues relating to broadening the project-based approach of the CDM to a sectoral crediting mechanism (SCM) beyond 2012. This report builds on those efforts and focuses on sector-wide baselines, design and institutional issues, and questions relating to governance. It then analyses and compares various designs in terms of environmental effectiveness, economic efficiency, administrative cost/feasibility, and competitiveness concerns.