Abstract
Carbon credit projects generate carbon credits by abating greenhouse gas emissions. Carbon credits can then be traded on carbon markets or immobilized in order to compensate for caused emissions. The Clean Development Mechanism (CDM) and Verified Carbon Standard (VCS), as the two most important carbon credit mechanisms, are investigated and compared regarding the success of projects. We define success as the fulfilling of the ex-ante emission abatement estimation and apply regression analyses to explain its variation on a project level by technology, location, scale, duration and participation. The results are discussed in detail on technology level for wind power, energy efficiency, hydro power as well as biomass projects and are compared with regard to CDM and VCS. Our main results indicate that large scale projects often compensate for their under-performance due to economies of time. Furthermore, the duration of projects, their location and structure of participants have significant influence on the success of the projects. The sign of the coefficients of explanatory variables are broadly in line with intuition and related literature, although, due to data availability, they are not always highly significant statistically.
Highlights
Carbon credit trading regimes put a cost-efficient price on carbon emissions and foster investments in clean and low carbon technologies
We investigate 200 Clean Development Mechanism (CDM) projects with German participation and 303 Verified Carbon Standard (VCS) projects hosted in India, which have been issuing Certified Emission Reduction (CER) and Verified Carbon Units (VCU), respectively, up to the end of 2014
Location-wise, the host region Africa is disadvantageous compared to Asia in the case of CDM energy efficiency projects, whereas, it is beneficial for CDM hydro power projects, there are off-setting effects
Summary
Carbon credit trading regimes put a cost-efficient price on carbon emissions and foster investments in clean and low carbon technologies. Carbon credit projects generate carbon credits by abating greenhouse gas (GHG) emissions. Carbon credits can be traded on the carbon market or be immobilized in order to compensate for caused emissions. This can take place in a mandatory or voluntary framework. There are diverse regimes of mandatory emission trading schemes, such as the Oregon Carbon Dioxide Standard and Regional Greenhouse Gas Initiative in the USA or the European Union Emission Trading Scheme (EU ETS), which is accountable for “over three quarters of international carbon trading” According to ([4], p. 23), this would “become the largest carbon pricing initiative in the world, passing the EU
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