Clean Development Mechanism Host Countries Research Articles

Energy efficiency, carbon emission performance, and technology gaps: Evidence from CDM project investment

Measuring the energy conservation and carbon emission reduction potential proves the fundamental basis for stakeholders in the cooperation over Clean Development Mechanism (CDM) projects. This research adopts the meta-frontier non-radial directional distance function based on the Data Envelopment Analysis (DEA) window analysis to measure the total factor energy efficiency and carbon emission performance of leading countries involved in CDM projects during 1990–2015. This study employs the panel quantile regression to investigate the dynamic impact of CDM projects on different energy efficiency and carbon emission performance of CDM host countries. The results indicate that, first of all, the total factor energy efficiency and carbon emission performance of CDM host countries appear much lower than those of investment countries. Second, the technology gap of energy-use and carbon emissions reduction between CDM host and investment countries is significant. Finally, with the increase of total factor energy efficiency and carbon emission performance in CDM host countries, the impact of CDM projects on their energy efficiency is always negative, and that on their carbon emission performance gradually varies from positive to negative, meaning that CDM projects are not necessarily helpful to improve the energy efficiency and carbon emission performance in host countries.

Country variation of Clean Development Mechanism project registration time: an exploratory analysis by the Cox model

Clean Development Mechanism (CDM) is one of the flexibility climate mitigation schemes created under the Kyoto Protocol. The CDM project processing time can be used to indicate capacities of the CDM project proponents, as well as policy regulatory and implementation capacities of host country governments. It is of critical importance to identify and measure factors that greatly affect the competence in the emerging global carbon market. By using the Cox proportional hazards model of survival analysis approach, this study analyzes the processing timing differences among different countries in registering their CDM projects. The study investigates CDM projects that submitted to the CDM Executive Board for registration during the 2004-16 period. By focusing on the top CDM host countries of China, Brazil, India, and Mexico, it involves project type, scale, government supporting level, project submitting phase as covariates into the model. Empirical results indicate that survival analysis provides a novel approach to examine the CDM project processing time by incorporating censored time information into consideration, and the Cox model shows that countries vary in the time spending for project registration, with China averagely spending the shortest time in registration and India taking the longest time.

Allocating climate mitigation finance: a comparative analysis of five major green donors

ABSTRACTA mitigation finance allocation framework (global needs, recipients’ performance, recipients’ needs and donors’ interests) is introduced as a way to identify determinants according to which individual donors allocate climate mitigation finance across developing countries. A two-part model was used to analyse a three-dimensional Rio Marker panel data set (donor-recipient-time), representing 5 green donors and 180 developing countries in the time period 1998–2010. Overall, while the determinants that the donors used to allocate mitigation finance across countries are heterogeneous, their responses to global needs are almost homogenous. Developing countries with large carbon sinks and good institutional performance tend to be the main destination for major green donors’ mitigation finance. Unsurprisingly, as with environmental aid, and aid more broadly, Japan and France’s allocation of mitigation finance is influenced by their geopolitical interests, which may divert it from its principal objective of mitigating greenhouse gas emissions. One new finding is Japan, Germany, France and Norway’s emerging interest in allocating mitigation finance to their Clean Development Mechanism (CDM) host countries, where they may seek to catalyse their private companies’ investment in green projects but risk overcrowding CDM host countries and promoting global inequality.

Has the Clean Development Mechanism assisted sustainable development?

AbstractOne of the dual objectives of the Clean Development Mechanism (CDM) of the Kyoto Protocol is to assist host countries in achieving sustainable development. With various CDM indicators for 58 CDM host countries over the period 2005‐2010, this paper empirically assesses whether CDM project development fulfils its sustainable development objective. Using a unique dynamic panel data method based on the long‐differenced model, this research provides convincing evidence that CDM projects contribute to sustainable development in host countries. It sheds light on the role of the CDM in the process of global sustainability with clear policy implications for developing countries and those embracing market instruments.

Is the Clean Development Mechanism effective for emission reductions?

The UNFCCC COP 17 Durban conference confirmed the need to reach an all-party-inclusive global climate agreement by 2015 as the successor of the Kyoto Protocol. Although this Durban ‘road map’ is promising, the international negotiation process for reaching such a deal is bound to be filled with great challenges, given the wide divide between developed and developing nations. Against this background, comprehensive evaluations of the effectiveness of Kyoto market-based mechanisms such as the Clean Development Mechanism (CDM) in terms of mitigating human-induced climate change are urgently needed. Such information is required to assess how the world's collective actions against climate change should proceed after Kyoto. This paper studies whether CDM is achieving its objective of emission reductions in the host countries. Here we empirically investigate the impacts of CDM projects on CO2 emission reductions for 60 CDM host countries over the period 2005–2010, using a newly developed econometric method for dynamic panel data models associated with the X-differencing procedure. Our results provide evidence in support of a decline in CO2 emissions in CDM host countries. We conclude that the international community should continue its support towards low carbon development in developing countries via CDM projects.

Absorptive Capacity in Technological Learning in Clean Development Mechanism Projects

Abstract: Technology transfer in Clean Development Mechanism (CDM) projects of the Kyoto Protocol has become one of the important issues addressed both in policy agenda and by academic scholars. In many CDM project host countries, technology transfer is among the key provisions of sustainable development objectives of the CDM projects. This study is an effort to investigate CDM projects' related technology transfer process from the organizational learning perspective. The prerequisite for successful technology transfer and organizational technological learning is to foster technological capabilities (TC) of an organization. In this study we used data from our survey of the CDM project host organizations in four largest CDM host countries India, Brazil, Mexico and China. We assessed TC building progress and studied various characteristics of the organizations. The present paper focuses on absorptive capacity related determinants of technological capability building in the CDM projects. Absorptive capacity is a multidimensional concept thus we investigated the effect of the dimensions such as prior knowledge, personnel qualification, and training efforts. A strong positive association was established between prior knowledge and TC building; and less for qualification variable. Besides we proved a curvilinear relationship between prior knowledge and TC building outcomes.

An econometric analysis of sub-national Clean Development Mechanism performance in China

The objective of this research is to conduct a quantitative analysis of China’s sub-national Clean Development Mechanism (CDM) performance as a case study of unbalanced CDM performance within a CDM host country. Key results are as follows: First, investment climate is the most decisive factor, which can explain about 48 % (adjusted R-squared) of China’s sub-national CDM performance at significance level 0.1 %. Second, general economic and investment conditions have a collective determination effect, which together explain about 50 % (adjusted R-squared) of sub-nationall CDM performance. Third, when compared with previous research in which the economic and investment conditions explain about 55 % (adjusted R-squared) of unbalanced CDM performance on the international level, it becomes clear that the impact of the economic and investment conditions on China’s sub-national unbalanced CDM performance resembles the unbalanced performance at the international level. Hence, we conclude that the sub-national unbalanced CDM performance in China is similar to that of the international level, and is influenced by similar determining factors. This finding casts doubt on the previous policy suggestion to fix the geographically unbalanced CDM performance simply by national discrimination, such as by revoking CDM eligibility of an entire host country. Consequently, a more tailored approach is advisable to manage that eligibility on the sub-national level. This is a more precise response to geographically unbalanced CDM performance and is less likely to discourage participation of the dominant CDM host countries in international climate mitigation.

Assessing China's discriminative tax on Clean Development Mechanism projects. Does China's tax have so many functions?

In the practice of the Kyoto Protocol's Clean Development Mechanism (CDM), many CDM host countries heavily rely on high Global Warming Potential (GWP) Greenhouse Gas (GHG) projects. Among them, China might be unique in that it imposes a discriminative tax on projects dealing with high GWP GHGs. The Chinese government takes 65% of the carbon credits from HFC-23 (trifluoromethane) projects, 30% from N2O (nitrous oxide) projects, but only 2% from other types of projects. Previous studies have expected that this tax has multiple effects: rent-seeking effect, a deterrent effect on the HFC-23 and N2O projects, a channelling effect that switches the investment from HFC-23 and N2O projects to other types of projects, and a market distortion effect. However, with the positive analysis and empirical evidence, the present study shows that this tax only has rent-seeking effect, thus China's discriminative tax has been over read.

The correlated factors of the uneven performances of the CDM host countries

The Kyoto Protocol’s Clean Development Mechanism (CDM) has experienced a rapid growth. Up to 2010, 2763 projects have been registered, standing for about 433 million ton CO2 equivalent (CO2-eq.) of annual carbon credits. However, the performances of CDM host countries are remarkably unbalanced. Previous literature suggested that economic and investment conditions, energy intensity, energy structure, the share of annual carbon credits from high global warming potential (GWP) green house gas (GHG), capacity and institutional buildings of domestic CDM governance can play important roles in promoting CDM. This quantitative analysis shows that domestic economic and investment conditions are the most decisive factors determining the performance of the CDM host countries. Additionally, the influence of carbon intensity of energy consumption is relatively modest, and energy intensity of GDP as well as the share of annual carbon credits from high GWP GHG is less significant. Moreover, several leading CDM countries are not as successful as they seem to be, when the influences of their vast territories, distinguished economic and investment conditions are excluded. Therefore, to simply transplant the CDM governances of these countries can hardly guarantee that other countries will boost their carbon credit outputs.

The Clean Development Mechanism and Low Carbon Development: A Panel Data Analysis

The Clean Development Mechanism (CDM) of Kyoto Protocol, designed for the industrialized countries to earn emission credits by investing in greenhouse gas (GHG) emission reduction projects in developing countries, shall contribute to emission reductions and sustainable development in the host countries. However, whether the CDM is achieving its dual goals has been questionable. This research empirically investigates the long-run impacts of CDM projects on CO₂ emission reductions for 80 eligible CDM host countries over 1993-2009. By allowing for considerable heterogeneity across countries, this research provides evidence in support of a decline in CO₂ emissions associated with CDM projects. It serves to encourage developing countries to effectively develop CDM projects towards low carbon development.

The Clean Development Mechanism and low carbon development: A panel data analysis

The Clean Development Mechanism (CDM) of Kyoto Protocol, designed for the industrialized countries to earn emission credits by investing in greenhouse gas (GHG) emission reduction projects in developing countries, shall contribute to emission reductions and sustainable development in the host countries. However, whether the CDM is achieving its dual goals has been questionable. This research empirically investigates the long-run impacts of CDM projects on CO2 emission reductions for 80 eligible CDM host countries over 1993–2009. By allowing for considerable heterogeneity across countries, this research provides evidence in support of a decline in CO2 emissions associated with CDM projects. It serves to encourage developing countries to effectively develop CDM projects towards low carbon development.

Certified emission reductions weights for improved CDM projects

AbstractAs currently designed and implemented, the Clean Development Mechanism (CDM) under the Kyoto Protocol is a market mechanism that creates ‘offset’ credits, named CERs (certified emission reductions). These credits are issued to Annex I Parties that invest in projects both reducing emissions and contributing to sustainable development in developing countries. This paper explores how CER weights could be used to reform and improve this mechanism. On the one hand, weights strictly lower than 1, or discount factors, would improve the environmental effectiveness of the CDM, enhancing global greenhouse gas emission mitigation while addressing the additionality concern. On the other hand, weights higher than 1, or multiplication factors, could increase the competitiveness of project types and/or host countries currently underrepresented in the CDM pipeline. This paper concentrates on stimulating investment from developed nations to less developed countries and aims at reducing the disparity between the three main CDM host countries (Brazil, India and China) and less developed nations. Based on statistical data published by the United Nations Framework Convention on Climate Change, our analysis then considers different policies, estimates their impacts, and shows how a sensible mix of discounting and multiplication could lead to a more equitable geographical distribution of CDM projects and possibly create atmospheric benefits. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.

The impact of discounting emission credits on the competitiveness of different CDM host countries

Discounting the value of emission credits has been proposed as a possible approach for addressing some of the shortcomings of the Clean Development Mechanism (CDM). It could be used to compensate for non-additional CDM projects; to increase the incentive for advanced developing countries to move from the CDM to own mitigation commitments; and to improve the competitiveness of less developed countries as hosts for CDM projects. We assess the impact of discounting on the distribution of CDM projects in host countries, with a special focus on Least Developed Countries (LDCs). CDM-specific abatement cost curves are built for 4 regions: China, India, other advanced Asian countries and LDCs. Abatement costs are estimated using the information provided in the project documentation of 108 projects from 17 subtypes in 16 host countries. Abatement potentials are derived from the current CDM pipeline for each region. For LDCs, we additionally include an optimistic potential estimation by adding to the current pipeline the potential found by a World Bank study for LDCs in Sub-Saharan Africa. We then assess the effect of two emission credit discounting schemes on these abatement cost curves. Credit discounting is differentiated by host countries, based on an index composed of per capita GDP and per capita emissions. In the first scheme, it only affects the most advanced CDM host countries; in the second one it also affects China. We find that discounting has an impact on the competitiveness of individual CDM host countries in the carbon market, as it affects their abatement cost curves. It could become an instrument for incentivising advanced developing countries to leave the CDM and engage in other farther-reaching climate-related commitments, as a result of the resulting emission credit cost increases. However, even with discounting, LDCs remain unimportant in terms of abatement potential if the financial, technical and institutional barriers to CDM development in these countries are not overcome.

Measuring host country risk in CDM and JI projects: a composite indicator

What are the risks associated with Clean Development Mechanism (CDM) and Joint Implementation (JI) projects and how do these risks vary between countries? A composite indicator is presented for guiding procurement decisions in the carbon market and representing host country risks in emissions trading models. The indicator contains variables from a broad range of sources measuring the institutional environment for the Kyoto mechanisms, the regulatory environment, and the economic environment. Based on the indicator scores for 143 countries, rankings are produced for CDM and JI host countries. The host country risks of investing in JI projects are lowest in New Zealand, Denmark and Sweden. At the top of the CDM ranking are India, China, Mexico, Brazil and Chile. These results are similar to other rankings for CDM host countries, but not for JI host countries. This is due to the fact that—unlike other rankings—the mitigation potential is not taken into account.

Measuring host country risk in CDM and JI projects: a composite indicator

What are the risks associated with Clean Development Mechanism (CDM) and Joint Implementation (JI) projects and how do these risks vary between countries? A composite indicator is presented for guiding procurement decisions in the carbon market and representing host country risks in emissions trading models. The indicator contains variables from a broad range of sources measuring the institutional environment for the Kyoto mechanisms, the regulatory environment, and the economic environment. Based on the indicator scores for 143 countries, rankings are produced for CDM and JI host countries. The host country risks of investing in JI projects are lowest in New Zealand, Denmark and Sweden. At the top of the CDM ranking are India, China, Mexico, Brazil and Chile. These results are similar to other rankings for CDM host countries, but not for JI host countries. This is due to the fact that—unlike other rankings—the mitigation potential is not taken into account.