B. Theoretical Objections: Missing the Forest for the Fruit Trees?
Objections to allowing Annex I countries to receive credits for projects undertaken in developing countries
come from many sectors, including developing states, NGO’s, and environmentalists. The first major objection is that Annex I countries would use CDM
projects to avoid making changes in technology or energy usage patterns at home. As a related objection, some fear that the reduced pressure on developing countries to implement
new technology would lead to a reduction in clean technology development. These assertions however are unfounded. At best, technology transfer would only achieve about
25% of the industrialized countries’ near term emissions commitments. Therefore, Annex I countries would have continued incentives to reduce emissions at home and
develop new technologies. These fears can also be assuaged by limiting, in the treaty, the percentage of emissions
reductions that can be achieved through the CDM.
The second objection to CDM is that developed countries would take the "low hanging fruit" by implementing all of the low cost abatement measures in a developing country first, leaving the developing countries with only high cost options. Even if they were left with only high cost options, developing countries "would still be better off than if they had to bear the costs of all reductions alone." Furthermore, many of the lower cost options could not be adequately implemented by the developing countries. These options are often "time sensitive and require early identification and investment." The "low hanging fruit" argument also lacks strength because developed countries will always engage in low cost projects at home first. If a project at home and a project abroad will cost the same for a unit of abatement, a firm will undertake the project at home because of the increased transactions costs and risks involved in working abroad. Thus, Annex I countries will only pick the "low hanging fruit" when developing countries lack the resources to do so themselves. Because of the global effects of climate change, it is better that the fruit gets picked by one country than not picked at all. This made implicit in treaty by not allowing projects unless domestic projects at the same unit cost of reduction has been exhausted. Additionally, if the developing countries eventually agree to quantified emissions reductions, the cost of remaining options may also be considered when setting a quota.
Developing countries also object to the CDM on the basis that these projects are a device to subvert national sovereignty by forcing the policies of developed countries on a developing country. While several countries may adhere to this view, many others welcome projects as a way build an efficient infrastructure.
For the reasons discussed above, the objections repeatedly raised to CDM are not compelling. However, the implementation barriers that CDM faces are a far greater challenge to the viability of technology transfer under the Kyoto Protocol.