Urban CDM-Based Approach: Urban Carbon Financing

Abstract

This chapter takes a look at Urban CDM-based financing and carbon financing banking system as a carbon governance approach. It compares the theoretical underpinnings, methods, tools, and market opportunities between the conventional CDM and an innovative urban-based CDM methodology. The testing of selected Urban CDM principles has shown the possibility of very significant and commercially viable opportunities for GHG reduction at the city-scale. However, numerous barriers are currently hindering the adoption of the Urban CDM, many of which have to be scientifically evidenced according to the new CDM rules and regulations. To facilitate the introduction and implementation of an Urban CDM frameworks, Urban CDM methodologies, and tools, climate smart city activities could include not only technical additionalities but also non-technical additionalities such as policies and planning related to large climate change mitigation and adaptation potential. New market mechanisms including voluntary carbon markets discussed in the Paris Climate Change Agreement and emission trading system (ETS) shall be further explored for Urban CDM and to sell or trade carbon emission rights (CERs) derived from climate smart city activities. Carbon banking system is one option for Urban CDM which enables GHG emissions reduction to be compensated in the form of green cards. This system has been recognized by the World Bank and NYU Wagner and Center for an Urban Future as an urban innovation initiative.