Examining the regional pattern of renewable energy CDM power projects in India

Abstract

India is one of the leading host countries of Clean Development Mechanism (CDM) projects, but these projects have been concentrated within ten states of the country. While the skewed distribution of CDM projects across countries is well recognized, little attention has been given to the skewed distribution of CDM projects within a country like India. We examine the different factors that account for the regional distribution of renewable energy based CDM power projects in India using state-specific and renewable form-specific explanatory variables including natural potential, economic conditions, and government policies. We find that state implementation of fiscal incentive measures and CDM benefit-sharing were the most significant factors in locating these projects within the states, apart from natural renewable potential. In the top ten states, controlling for the government incentives and subsidies, the pre-installed renewable power capacity was also a significant factor. State financial incentives and CDM benefit clause were also found to be the most significant factor in the generation of certified emission reductions from CDM projects. Unfortunately states with relatively higher natural potential lost out on the additional product gains through CERs, and an important aspect of the CDM approach seems to have been missed in India — that of promoting development in other regions of the country which had natural potential.