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Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania

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  • Benjamin T. Wood
  • Susannah M. Sallu
  • Jouni Paavola

Abstract

Policy documents and academic literature suggest that Clean Development Mechanism (CDM) finance could complement traditional ‘energy access’ (EA) funding in developing countries, including the Least Developed Countries (LDCs). Yet these propositions have not been empirically tested. This study helps fill this gap by examining constraints to CDM project passage through five stages of an idealized project development cycle (PDC) in Tanzania, and their implications for the ability of the CDM to contribute to financing energy access in LDCs. Twenty-five semi-structured interviews and documentary material were analysed using an analytical framework developed for systematic investigation of constraints. Institutional constraints such as the under-performance of Tanzania's Designated National Authority were the most often mentioned obstacles for project development. Yet non-institutional constraints such as limited energy sector mitigation potential, indigenous skill shortages, and low carbon market prices also hinder project development. Institutional constraints buttress, rather than supersede, pre-existing non-institutional constraints, and together they prevent energy projects from completing the PDC and accessing CDM finance. The number and severity of constraints suggest that the situation is unlikely to change rapidly, and that the CDM sustains and exacerbates existing global inequalities. Since traditional energy access funding is insufficient to address these inequalities, new funding and policy mechanisms are required. Policy relevance The CDM fails to fill the EA financing gap in Tanzania. This is also true for other LDCs where comparable project development challenges prevail. The CDM therefore appears to sustain uneven development patterns overlooking those most in need. Claims about its potential to enhance EA are misplaced, and the situation is unlikely to change rapidly. CDM and carbon market projects more widely will have limited ability to help financing EA in LDCs, even if the institutional setting within which they are implemented were reformed in the future. Yet traditional energy funding will be inadequate on its own. The debate over extending the CDM post-2017, when the second Kyoto Protocol commitment period expires, should be informed by honest appraisal of its merits and defects. Policy makers should revisit lessons provided by this article and wider research to help ensure that new EA mechanisms are not hampered by constraints and can benefit those most in need.

Suggested Citation

  • Benjamin T. Wood & Susannah M. Sallu & Jouni Paavola, 2016. "Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania," Climate Policy, Taylor & Francis Journals, vol. 16(4), pages 456-473, May.
    • Handle: RePEc:taf:tcpoxx:v:16:y:2016:i:4:p:456-473
    DOI: 10.1080/14693062.2015.1027166
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    References listed on IDEAS

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    1. Alexandre Kossoy & Pierre Guigon, "undated". "State and Trends of the Carbon Market 2012," World Bank Publications - Reports 13336, The World Bank Group.
    2. Giorgio Gualberti & Morgan Bazilian & Erik Haites & Maria da Graça Carvalho, 2012. "Development Finance for Universal Energy Access," Working Papers 2012.12, Fondazione Eni Enrico Mattei.
    3. repec:wbk:wboper:13335 is not listed on IDEAS
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    Cited by:

    1. Benjamin T. Wood & Lindsay C. Stringer & Andrew J. Dougill & Claire H. Quinn, 2018. "Socially Just Triple-Wins? A Framework for Evaluating the Social Justice Implications of Climate Compatible Development," Sustainability, MDPI, vol. 10(1), pages 1-20, January.
    2. Ba, Feng & Liu, Jinlong & Zhu, Ting & Liu, Yonggong & Zhao, Jiacheng, 2020. "CDM forest carbon sequestration projects in western China: An analysis using actor-centered power theory," Forest Policy and Economics, Elsevier, vol. 115(C).
    3. Juan Wu & Fangmiao Hou & Wenjing Yu, 2021. "The Effect of Carbon Sink Plantation Projects on Local Economic Growth: An Empirical Analysis of County-Level Panel Data from Guangdong Province," Sustainability, MDPI, vol. 13(24), pages 1-19, December.
    4. Thapa, Samir & Morrison, Mark & Parton, Kevin A, 2021. "Willingness to pay for domestic biogas plants and distributing carbon revenues to influence their purchase: A case study in Nepal," Energy Policy, Elsevier, vol. 158(C).

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