Project cost comparison under the clean development mechanism to inform investment selection by industrialized countries

Abstract

This is the first study that comprehensively evaluates and compares the average costs of six types of 4061 registered clean development mechanism (CDM) projects. The projects were conducted from 2005 to 2014 by industrialized countries investing in host countries that had various technology and income levels. Specifically, this study compares the average costs of emission reduction for each type of project; projects were used by industrialized countries to achieve specific emission reductions commitments. The lowest average cost per ton of reduced emissions found in renewable energy projects, fuel switch projects, supply-side energy efficiency improvements, and demand-side energy efficiency improvements, all of which were effectively reduced emissions by less than 1 million tons in host countries with high technology levels and upper-medium income levels. The average cost for the other two project types, methane reduction and methane avoidance, showed that these projects were more effective at reducing emissions by more than 50 million tons in host countries with upper-middle technology levels and upper-medium income levels. These lowest average costs for different project types can guide project selection by industrialized countries seeking the lowest total emission reduction costs. Selection of CDM project investments by industrialized countries should account not only for the technology and income levels of host countries but also for the amounts by which industrialized countries have committed to reducing their emissions.