Suppressed demand in the clean development mechanism: Conceptual and practical issues

One of the challenges of applying greenhouse gas emission accounting approaches in poor communities is that the current consumption of many household services (e.g. heating and cooking, lighting and potable water) may not reflect the real demand for those services. This could be the result of lack of infrastructure, lack of natural resources or poverty, particularly the high costs of these services relative to household incomes. The situation of 'suppressed demand' creates a problem for setting emissions baselines against which to compare project performance, and has negatively affected CDM project development in Africa, Least Developed Countries and other regions with very few CDM projects. Ironically, although new large-scale power plants do not have to show that they actually displace other plants (existing or new), many small-scale energy projects can only claim credit for displacing historical (very low level) emissions from households. While the CDM rules are evolving to consider suppressed demand, much more can be done to catalyse investment in these types of climate change mitigation projects in poor communities. Furthermore, making progress will require significant expert and stakeholder input to ensure that simplification is balanced with maintaining overall environmental integrity.