Abstract
Most carbon abatement projects under the Kyoto Protocol's Clean Development Mechanism (CDM) have been implemented in rapidly industrializing countries, notably China and India. To support small carbon abatement projects and to promote decarbonization in the least developed countries, the Programme of Activities (PoA) modality was introduced. Are the determinants of project implementation different under the PoA from those of conventional CDM projects? To answer this question, we conduct a statistical analysis of the global distribution of CDM projects and PoAs during the years 2007–2012. In regard to country size, large countries clearly dominate both the CDM and PoA, suggesting that the PoA may do only little to facilitate project implementation in small countries. However, the number of PoAs has a strong negative association with a country's corruption level, while the importance of corruption for the CDM is much smaller. Moreover, per capita income has no effect on PoA implementation, while high wealth levels have a weak positive effect on CDM projects. Thus, the PoA modality seems to promote sustainable development in poor countries that have exceeded a certain threshold of good governance. In this regard, PoAs are directing carbon credits to new areas, as many had initially hoped.
Highlights
The Kyoto Protocol’s Clean Development Mechanism (CDM) is a flexibility mechanism that allows industrialized countries to substitute credits from carbon abatement projects in developing countries for domestic emissions reductions
Scholars have noted that the observable bias against the least developed countries (LDCs) is related to a lack of institutional capacity, which means that the cost of CDM project implementation outside large economies is high (Michaelowa and Jotzo, 2005; Okubo and Michaelowa, 2010; Castro and Michaelowa, 2011; Buen, 2013)
Are Programme of Activities (PoA) less dependent on economic size and dynamism than conventional CDM projects? We find that population is an excellent predictor of both CDM and PoA implementation
Summary
The Kyoto Protocol’s Clean Development Mechanism (CDM) is a flexibility mechanism that allows industrialized countries to substitute credits from carbon abatement projects in developing countries for domestic emissions reductions. By reducing transaction costs and easing demands on institutional capacity, the PoA is intended to facilitate access to revenue from previously unprofitable carbon projects in host countries more generally, but LDCs in particular. In this sense, the PoA could help carbon abatement projects contribute to sustainable development more broadly. The PoA, similar to conventional CDM, seems to reward large developing countries, it holds promise for supporting sustainable development and encouraging good governance, if perhaps only on the margin
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