CISDL Legal Working Paper Series on Climate Change Law and Policy CISDL Legal Working Paper Series on
Climate Change Law and Policy
CLEAN DEVELOPMENT MECHANISMS IMPLICATIONS
FOR THE KOREAN ELECTRICITY SECTOR AND
A PROPOSAL OF LESS STRICT APPROACH
Sangmin Shim






CLEAN DEVELOPMENT MECHANISMS
IMPLICATIONS FOR THE KOREAN
ELECTRICITY SECTOR AND A PROPOSAL
OF LESS STRICT APPROACH


A CISDL WORKING PAPER


Sangmin Shim



















The Centre for International Sustainable Development Law (CISDL) is a legal research centre,

based in the McGill University Faculty of Law, which works in cooperation with the Université
de

Montreal Faculty of Law, and the Université de Québec à Montreal. Its mission is to promote

sustainable societies and the protection of ecosystems by advancing the understanding,

development and implementation of international sustainable development law. CISDL is led by

two directors and eight lead counsel or research fellows, receives guidance from the three

Montreal-based treaty secretariats (the NAFTA Commission for Environmental Cooperation, the

UNEP Biodiversity Convention, and the Montreal Protocol multilateral fund), and has an

international council of sustainable development legal and policy experts, and a roster of

distinguished international advisors. A Sustainable Development Law International Jurists
Mandate

and the main CISDL Legal Research Agendas, of which climate change law is one,
were officially

launched at Sustainable Justice 2002: Implementing International Sustainable
Development Law

conference in Montreal, Canada, and CISDLs flagship publication, Weaving
the Rules of Our

Common Future was later launched at the World Summit for Sustainable
Development in

Johannesburg, South Africa.



This document is printed on recycled paper.


Contact Information:

CISDL Directors:

Marie-Claire C. Segger
Director, email: MCSegger@iisd.ca / marieclaire@cisdl.org
Ashfaq Khalfan
Director, email: AKhalfan@cisdl.org



Chair of the CISDL Board of Governors:

Hon. Judge Charles D. Gonthier

Faculty of Law, McGill University
3661 Peel Ave, Montreal
Quebec, Canada
Tel 001 514 398 6604
Fax 001 514 398 4659







CLEAN DEVELOPMENT MECHANISMS IMPLICATIONS
FOR THE KOREAN ELECTRICITY SECTOR AND A
PROPOSAL OF LESS STRICT APPROACH

A CISDL WORKING PAPER

1. Introduction

2. CDMs: A Friend of Developing Countries?

2.1 CDMs Potential to Address Development Concerns
2.2 Weakening Element: Additionality

3. Korean Electricity Sector in Climate Law Context

3.1 Policy Priorities in the Korean Electricity Sector
3.1.1 Stable and Economic Power Supply
3.1.2 Energy Security
3.2 Stalled Recent Restructuring Efforts
3.3 Implications for Climate Policy

4. CDMs Implications for the Korean Electricity Sector and a Proposed Less Strict
Approach

4.1 CDMs Potential Benefits for the Korean Electricity Sector
4.2 Proposal for a Flexible Approach on CDM Approval Process

5. Conclusion


















1. Introduction

With the coming into force of the Kyoto Protocol to the United Nations Framework Convention on
Climate Change,
1
many scholars and practitioners alike have hailed the enlivened Kyoto Protocol as
the most significant first step toward tackling climate change.
2
Expectations are high on the
environmental front, because Annex B countries
3
will intensify their efforts to reduce greenhouse
gas (GHG) emissions so that they may reach national emission reduction targets in the first
commitment period of 2007 through 2012. Although the United States decided not to ratify the
Kyoto Protocol in 2001
4
and has stayed outside the global climate regime thereafter,
5
it may be said
that the attempts to stabilize and reduce emissions of anthropogenic GHGs worldwide have firmly
taken root and become systemized.

The Kyoto Protocol provides for several elements of flexibility to help Annex I countries reduce
GHG emissions at least cost. Among what are called the flexibility mechanisms, the Clean
Development Mechanism (CDM)
6
cuts an interesting figure compared to other flexibility
arrangements. It is because, while the other two flexibility mechanisms, namely Joint
Implementation (JI)
7
and Emissions Trading (ET),
8
are allowed only for Annex I countries and
enterprises, the CDM is designed to also benefit non-Annex I countries, most of which are still in
pressing need of development and with relatively little focus on environmental protection. If the
benefits that CDMs would generate for developing countries were substantial enough, it could
effectively evolve into a valuable method to encourage developing countries to join in the search for
climate-friendly development.


1
Kyoto Protocol to the United Nations Framework Convention on Climate Change, Dec. 10, 1997, 37 I.L.M.
22 (entered into force Feb. 16, 2005) [hereinafter Kyoto Protocol].
2
See, e.g., Cory C. Miller, Developments in Climate Change in 2004: Three Cheers for Russia, 9 C
OLO
.

J.

I
NT L
E
NVTL
.

L.

&

P
OL Y
Y.B.

143, 152 (2004); Chester Brown, The Kyoto Protocol Enters into Force, ASIL Insight, Feb.
2005, available at http://www.asil.org/insights/2005/03/insights050301.html (last visited Dec. 22, 2005).
3
Annex B countries are a group of countries that are listed in the Annex B of the Kyoto Protocol, which specifies the
quantified emission limitation or reduction commitments for each listed country. As of January 18, 2006, 34 out
of the 38 Annex B countries are bound by the Kyoto Protocol. Countries that are Annex B parties but have not
agreed to be bound by the Kyoto Protocol are Australia, Croatia, Monaco and the United States. See Kyoto Protocol
Status of Ratification,
available at
http://unfccc.int/files/essential_background/kyoto_protocol/application/pdf/kpstats.pdf
(last modified Jan. 18, 2006)
4
See,
e.g., Letter from President Bush to Hagel, Helms, Craig, and Roberts, at
http://whitehouse.gov/news/releases/2001/03/20010314.html
(Mar. 13, 2001).
5
Rather than complying with the mandatory GHG emission reductions contemplated by the Kyoto Protocol, the
United States have instead formulated a three-prong approach, centering around reduction of GHG intensity,
investment in science and technology, and bilateral and multilateral cooperation with a view to designing a different
scheme to fight climate change. See, e.g., U.S. Taking Concrete Actions on Climate Change, Official Says, at
http://usinfo.state.gov/gi/Archive/2003/Dec/05-635331.html
(last visited Jan. 19, 2006); Harlan L. Watson,
Statement to the First Meeting of the Plenary, at
http://usinfo.state.gov/gi/Archive/2004/Dec/06-395931.html
(Dec.
6, 2004); U.S. "Moving Forward" in Commitment to Slowing Climate Change, at
http://usinfo.state.gov/gi/Archive/2005/Nov/30-276900.html
(last visited Jan. 19, 2006).
6
Kyoto Protocol, supra note 1, art. 12.
7
Kyoto Protocol, supra note 1, art. 6.
TP
8
Kyoto Protocol, supra note 1, art. 17.
5
It must be taken into account, however, that the potentials of the CDM could often be frustrated by a
variety of factors constraining its proper functioning. Much of such frustration may come from the
inherent design defects within the CDM itself, while attention should also be paid to the hosting
countries policy concerns as well as institutional settings that altogether might adversely affect the
value of the CDM. Confronted with such possibilities of underperformance, developing countries
will likely be hesitant in hosting CDM activities within their territories that could restrain their
policy choices while bringing few benefits in exchange. If it is clear that under the current
circumstances the CDM would not assist developing countries in actively pursuing reductions of
GHG emissions, then an interesting question would be what measures could be taken to make CDMs
more attractive to these countries, while the CDMs potential climate benefits would be preserved.
Meanwhile, be