Responsibility for Environmental Integrity of the CDM Judicial Review of EB Decisions

1. Responsibility for Environmental Integrity of the CDMJudicial Review of EB Decisions Climate Change and its Challenges to the International Legal System BIICL Annual Conference, London, 17 October 2008 Dr. juris Christina Voigt post doctoral Research Fellow University of Oslo, Department of Public and International Law

2. 1. Sketching out the Problem2. Judicial Review Mechanism3. Conclusions

3. 1.1 The Importance of the CDM • Art. 12 Kyoto Protocol, Offset mechanism • ‘Put a prize on carbon’ in un-capped countries • Mobilized and channelled significant investment flows into the developing world • The only (!) instrument so far to bridge the North-South gap • Remains important post-2012 option

4. 1.2 Environmental ’Disintegrity’ • The CDM is not functioning well… (Wara & Victor, 2008) • Environmental Integrity?: • “environmental integrity is to be achieved through sound modalities, rules and guidelines for the mechanisms, sound and strong principles and rules governing land use, land use change and forestry activities, and a strong compliance regime.” (FCCC/KP/CMP/2005/8/Add.1) • Problem Areas: • Questionable additionality of many projects • Detrimental environmental and social side-effects

5. 1.3 Core of the Problem • Checks and Balances? • Asymmetric interest in successful projects: project developers, Host Governments, Annex I Governments/Buyers, DOEs(?) • Environmental Integrity: Sole Responsibility of the EB • No judiciary to check the legality of EB decision-making • How to strike a balance between environmental integrity of CDM projects and economic efficiency? • Discretion of the EB? • Non-additional projects increase global emissions

6. 2. Judicial Review • Why? • What? • Where? • How?

7. 2.1 Why Review of EB Decisions? • EB is independent, highest executive organ of the CDM, responsible for its functioning (effectively and environmentally) • Not a new idea (academia, threats from investors) • The rules (on environmental integrity, additionality) are fine/developing… • …but some decisions should not have been taken • Not (only) systemic fault, but exercise of the mechanism (e.g. complexity, expertise, information deficit, institutional bottlenecks) • Introducing the ’Rule of Law’: due process, stakeholder participation, access to justice

8. 2.2 What? • What are Executive Board decisions?: • Different kinds of decisions: • Regulatory • Administrative • Accepted as de facto legally binding (by KP Parties and private legal entities) • Direct effect on non-state actors • Project developers • But also: stakeholders, local communities, other participants of the Global Carbon Market

9. 2.2 What? (ctd.) • Review of: • Consistency between Rules and Decisions • Ensure that the EB acts in accordance with its own operational policies, rules and procedures when registering projects and issuing CERs (incl. supervision of DOEs validation and verification processes) and accreditation of DOEs • Determination of decisions ultra vires • P: Imprecise, broad rules, discretion (‘judge-made law’, law/politics) • Consistency between Decisions • Qualification of EB Members • Bias, Conflict of Interests, Corruption • Facts: scientific, technological or financial basis

10. 2.3 Where?: Alternatives • Internal Review • Internal Review Panel and (possibly) Appeal Mechanism (Streck & Lin, 2008) (Binding decisions, Sanctions) • Internal Inspection Panel (Recommendations/Report) • Independent Standing Expert Committee • External Review • Independent International Judicial Body • e.g. Arbitral Tribunal (PCA) • Ombudsman • Intergovernmental Commission • National Review • Review in National (Administrative) Courts (Meijer, 2007) • P: Incoherence, fragmentation, diverging interpretations

11. 2.4 How?: Procedural Requirements • Invocation/ Right to complain?: • ’Injured’/ ’Aggrieved’ Parties: • Private investors, project developers (Meijer, 2007 and Streck& Lin, 2008) • P: Which private (investment) rights? (Werksman, 2008) • Other ’vested’ Interests in the CDM: • in ’additionality’: other market participants (Annex I Governments (erga omnes partes), other Host Governments, ’Green Investment Funds’ • in ’wider environmental and social integrity’: stakeholders, people, who live in the project area (or represent people who do, e.g. NGOs) and are likely to be affected adversely by project activities

12. 3. Conclusions • Discontent between project developers (feel the system is too strict) and environmental groups (consider it too lax) • EB is the last instance, ‘final say’ • Safety check necessary (Review Mechanism) • Rule of law: Due process, Access to Justice • Pre-empt redress sought in national courts

13. 3. Conclusions • Broadening competence for Invocation: • Development in PIL (toward actio popularis?, Climate protection as global community interest) • Reflect the changing nature of the international society and role of non-State actors • No additional bureaucratic level to the CDM process • Neutrality: Review of claims of environmental ‘disintegrity’ and investor claims (private commercial interests)

14. 3. Conclusions • Possibility for holding accountable can trigger move toward greater accountability • Institutional changes: payment via UN system, also for DOEs, full-time employed EB members, experienced staff • Regulatory changes: programmatic/sectoral CDM, larger but less projects, monitoring etc. • Greater accountability increases credibility and legitimacy