REQUISITOS DE ORGANIZACIÓN

In light of the second research question, it is essential to focus on the potential issues of the CDM to improve performance so that Bangladesh can utilise it to reduce risks and harm arising from climate change and focus on development. As a host country, Bangladesh has achieved very little success in accumulating CDM benefits. It is also facing a number of issues and challenges, which are impeding the performance of CDM in the country. One reason is that it lacks institutional

380 _{Sinha, above n 361.} 381 _Ibid.

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mechanisms to submit emission reduction projects to the UNFCCC in producing CER. The Waste Concern, an NGO in Bangladesh, has identified six key problems.382

4.7.1 Political Factors

Like other Asian countries, Bangladesh is also facing high risks from political factors. The impact of such political factors has been seen as high on its CDM performance. The following CDM volume risk matrix shows the impact of political factors in Asian countries.383

Table 4.4: CDM market statistics (adapted from UNEP database)

According to the above matrix, Bangladesh is one of those Asian countries that not only have a high level of political risk but also have a high volume of executable opportunities for CDM projects. Other Asian countries- China, Indonesia, Vietnam and Sri Lanka- are in the same category. However, China has a dominant position in CDMs in the Asian region, despite potential political risk. The Nairobi Framework also mentioned that the core problems of poor and corrupt governance in many developing countries is presenting unacceptably high political risks and sovereign risk to foreign investments.384 If Bangladesh considers political factors its

382 _{Sinha, above n 361.}

383 _{Kheng Lian Koh, Lin Heng Lye and Jolene Lin, Crucial Issues In Climate Change And The Kyoto Protocol}

(World Scientific, 2010).

384 _{Promode Kant, Taking CDM beyond China and India, (Institute of Green Economy working paper, 2010),}

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major challenge, then it must learn from China, which is one of the leading countries in the carbon market while having similar levels of opportunity and risk.

4.7.2 Lack of Awareness

A lack of awareness of CDM opportunities has been found to be one the biggest issues in Bangladesh. There are many people and businesses in developing countries who lack of awareness of climate change and its mechanisms, being more aware of poverty reduction and job creation measures. COP 7 in Marrakesh focused on strengthening capacity building in developing countries. In this context, the role of government, in enhancing the CDM awareness is very important. In this respect, Bangladesh can take lessons from India. India’s Climate Change Centre carries out research on climate change, including the CDM, and works towards raising awareness on climate change and the CDM by organising issue-based events, discussions and policy dialogues, contributing articles in newsletters and journals, and providing consultancy services to the Indian business sector in developing and designing climate change mitigation projects.385

4.7.3 Bureaucratic Procedural Issues

Another important issue is the bureaucratic procedures involved in the whole CDM life cycle. The level of formality in the CDM process is also responsible for this issue. Every project has to pass through all stages of the institutional framework and complete all required documentation and approvals from authorities. This lengthy and bureaucratic process may be frustrating and complex for the parties. Here again, the role of government is foremost, as it can take action to make the process smooth and easy for parties. Bangladesh can learn from India and Vietnam, which recognise institutional capacity as a performance influencer and suggested the need to establish a separate fund for building institutional capacity.386

385 _{Kalipada Chatterjee, Paper on Education, Training and Public Awareness on Climate Change (Climate}

Change Centre, 2002), <https://unfccc.int/sites/default/files/chatterj.pdf>.

386 _{Hitomi Kimura, Ancha Srinivasan and Keisuke Iyadomi, ‘Chapter 4: Clean Development Mechanism’ in}

Srinivasan Ancha (ed), Asian Aspirations for Climate Regime beyond 2012 (Institute for Global Environmental Strategies, 2012).

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4.7.4 Lack of Baseline Data

In modern project management, data has a vital role, providing a baseline to all phases of planning, resource allocation, implementation and performance management. The problem in Bangladesh is that, due to lack of an institutional infrastructure, data is not available in the required quantity and format. In a CDM project, the scope of required data can range from the project details, party’s details, relevant institutions, community details (project area, population, society, resources and infrastructure) and other information, which is often required in project planning and project implementation. The GoB is attempting to new address the issue of data availability with the support of NGOs and external parties, who are providing data for CDM and relevant purposes.

4.7.5 Bargaining Power

It has been found that Bangladesh is also lacking in bargaining power in the CDM market. For example, when Bangladesh has sold carbon credits to the World Bank, it has received only €9 per credit, which could have been higher were Bangladesh in a better position in the CDM market.387 The primary reason is that Bangladesh has relatively few CDM projects, which has lowered its bargaining power. In addition, the country does not have any price cap and floor system. China is obtaining better prices for its CDM programmes because of its dominant position in the global and Asian CDM market.388

4.7.6 High Transactional Cost

The success of CDM is dependent on its cost effectiveness, the key reason for developed countries to sponsor sustainable development projects in developing countries. If the transaction cost of CDM investment in Bangladesh is high, it would definitely not be an attractive option for developed countries. Sponsoring countries will go for the cheaper option, which means their choice of CDM project will be another developing country such as Sri

387 _{Roy, above n 379.}

388 _{Ecosystem Marketplace, China Successfully Uses Market Mechanism For Sustainable Development -}

Ecosystem Marketplace (Ecosystem Marketplace, 2017),

<http://www.ecosystemmarketplace.com/articles/china-successfully-uses-market-br-mechanism-for-sustainable- development/>.

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Lanka, Pakistan, India or China. Evidence suggests that the high transactional cost of CDM projects in Bangladesh is a major issue.

4.7.7 Lack of Financial Resources

For CDM projects themselves, Bangladesh’s lack of financial resources is not a big challenge, because the financial resources are provided by sponsors (Annex A) countries. However, lack of financial resources can have an indirect impact by limiting capacity and infrastructure; due to lack of financial resources, the CDM-related institutions in Bangladesh are not able to enhance infrastructural capacity, which affects the overall performance of CDM in Bangladesh.

4.7.8 Corruption

Like other countries, Bangladesh suffers from the problem of corruption, as discussed in Chapter 3. According to Transparency International (TI), the level of bribery in Bangladesh equates to almost 13.4% of the national budget and 2.4% of GDP.389 Regarding climate change investment and project implementation, there have been allegations of corruption, money- grabbing and mismanagement of projects in the Ministry of Water Resources in Bangladesh. This could be one reason why Bangladesh has not achieved the hoped-for benefits of the CDM.

4.7.9 Lack of Technological Resources

Being a developing nation, Bangladesh is also faced with a lack of technological resources, which is affecting the performance of CDM. For example, the unavailability of energy-efficient management systems for buildings will likely reduce the CDM investment opportunities in this area, as this technology is not yet available in Bangladesh.

4.7.10 Lack of Robust Institutional Infrastructure

Although Bangladesh has put in place CDM institutional structures, this is limited to the basic structure as per the guidelines of UNFCCC and does not include any special features. While China’s CDM infrastructure also uses the basic UNFCCC guidelines, it is augmented by characteristics such as the involvement of heavy-hitting government ministries (very important), and the involvement of provisional and local-level Development Reform

389 _{M. Zakir Hossain Khan, Mahfuzul Haque and Mohua Rouf, An Assessment Of Climate Finance Governance}

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Commissions (DRCs) and CDM service centres. These specialised features are absent in the CDM model of Bangladesh. This can be overcome by reforming the institutional framework of the CDM in the country.