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Explaining the differential distribution of Clean Development Mechanism projects across host countries

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  • Winkelman, Andrew G.
  • Moore, Michael R.

Abstract

The Clean Development Mechanism (CDM) of the Kyoto Protocol represents an opportunity to involve all developing countries in the effort to reduce greenhouse gas emissions while also promoting sustainable development. To date, however, the majority of CDM projects have gone to emerging markets such as China, India, Brazil, and Mexico, while very few least developed countries have hosted projects. This paper investigates the differential distribution of CDM activities across countries. We develop a conceptual model for project profitability, which helps to identify potential country-level determinants of CDM activity. These potential determinants are employed as explanatory variables in regression analysis to explain the actual distribution of projects. Human capital and greenhouse gas emission levels influenced which countries have hosted projects and the amount of certified emission reductions (CER) created. Countries that offered growing markets for CDM co-products, such as electricity, were more likely to be CDM hosts, while economies with higher carbon intensity levels had greater CER production. These findings work against the least developed countries and help to explain their lack of CDM activity.

Suggested Citation

  • Winkelman, Andrew G. & Moore, Michael R., 2011. "Explaining the differential distribution of Clean Development Mechanism projects across host countries," Energy Policy, Elsevier, vol. 39(3), pages 1132-1143, March.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1132-1143
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    1. Trotter, Ian Michael & da Cunha, Dênis Antônio & Féres, José Gustavo, 2015. "The relationships between CDM project characteristics and CER market prices," Ecological Economics, Elsevier, vol. 119(C), pages 158-167.
    2. Chirambo, Dumisani, 2018. "Towards the achievement of SDG 7 in sub-Saharan Africa: Creating synergies between Power Africa, Sustainable Energy for All and climate finance in-order to achieve universal energy access before 2030," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 600-608.
    3. Heleen de Coninck & Daniel Puig, 2015. "Assessing climate change mitigation technology interventions by international institutions," Climatic Change, Springer, vol. 131(3), pages 417-433, August.
    4. Kasai, Katsuya, 2012. "Factors Affecting the Distribution of CERs: A Cross-Sectional Empirical Analysis," MPRA Paper 52163, University Library of Munich, Germany, revised Jan 2013.
    5. Dumisani Chirambo, 2014. "The Climate Finance and Energy Investment Dilemma in Africa," Journal of Developing Societies, , vol. 30(4), pages 415-440, December.
    6. Koo, Bonsang, 2017. "Preparing hydropower projects for the post-Paris regime: An econometric analysis of the main drivers for registration in the Clean Development Mechanism," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 868-877.
    7. Bayer, Patrick & Marcoux, Christopher & Urpelainen, Johannes, 2013. "Leveraging private capital for climate mitigation: Evidence from the Clean Development Mechanism," Ecological Economics, Elsevier, vol. 96(C), pages 14-24.
    8. Kasai, Katsuya, 2011. "A Cross-Country Empirical Analysis of Determinants of Clean Development Mechanism (CDM) Projects," MPRA Paper 52160, University Library of Munich, Germany, revised Jan 2012.
    9. Sandrine Mathy & Odile Blanchard, 2016. "Proposal for a poverty-adaptation-mitigation window within the Green Climate Fund," Climate Policy, Taylor & Francis Journals, vol. 16(6), pages 752-767, August.
    10. Chirambo, Dumisani, 2016. "Addressing the renewable energy financing gap in Africa to promote universal energy access: Integrated renewable energy financing in Malawi," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 793-803.
    11. Giorgia Sforna, 2019. "Climate change and developing countries: from background actors to protagonists of climate negotiations," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 19(3), pages 273-295, June.
    12. Watts, David & Albornoz, Constanza & Watson, Andrea, 2015. "Clean Development Mechanism (CDM) after the first commitment period: Assessment of the world׳s portfolio and the role of Latin America," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1176-1189.
    13. Jin Guo & Hanqiao Yang, 2022. "CDMs’ effect on environmentally sensitive productivity: evidence from Chinese provinces," Letters in Spatial and Resource Sciences, Springer, vol. 15(3), pages 401-422, December.
    14. Koo, Bonsang, 2017. "Examining the impacts of Feed-in-Tariff and the Clean Development Mechanism on Korea's renewable energy projects through comparative investment analysis," Energy Policy, Elsevier, vol. 104(C), pages 144-154.
    15. Fumei He & Ke-Chiun Chang & Min Li & Xueping Li & Fangjhy Li, 2020. "Bootstrap ARDL Test on the Relationship among Trade, FDI, and CO 2 Emissions: Based on the Experience of BRICS Countries," Sustainability, MDPI, vol. 12(3), pages 1-23, February.
    16. Kasai, Katsuya, 2012. "How can LDCs benefit from the CDM?: A panel data analysis of determinants of CDM project hosting," MPRA Paper 52137, University Library of Munich, Germany, revised Dec 2012.
    17. Dumisani Chirambo, 2017. "Enhancing Climate Change Resilience Through Microfinance: Redefining the Climate Finance Paradigm to Promote Inclusive Growth in Africa," Journal of Developing Societies, , vol. 33(1), pages 150-173, March.
    18. Röttgers, Dirk & Grote, Ulrike, 2014. "Africa and the Clean Development Mechanism: What Determines Project Investments?," World Development, Elsevier, vol. 62(C), pages 201-212.
    19. Sawhney, Aparna & Rahul, M., 2014. "Examining the regional pattern of renewable energy CDM power projects in India," Energy Economics, Elsevier, vol. 42(C), pages 240-247.
    20. Mele, Antonio & Paglialunga, Elena & Sforna, Giorgia, 2021. "Climate cooperation from Kyoto to Paris: What can be learnt from the CDM experience?," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    21. Pauline Lacour & Jean-Christophe Simon, 2012. "Quelle intégration des pays en développement dans le régime climatique ? Le Mécanisme pour un Développement Propre en Asie," Post-Print halshs-00763231, HAL.
    22. Kim, Jung Eun & Popp, David & Prag, Andrew, 2013. "The Clean Development Mechanism and neglected environmental technologies," Energy Policy, Elsevier, vol. 55(C), pages 165-179.
    23. Igor Shishlov & Valentin Bellassen, 2012. "10 lessons from 10 years of the CDM," Working Papers hal-01151437, HAL.
    24. Cong, Ren & Lo, Alex Y. & Yu, Wei, 2021. "The distribution and regional determinants of nationally financed emissions-reduction projects in China," Energy Policy, Elsevier, vol. 152(C).
    25. Xie, Huiming & Shen, Manhong & Wang, Rui, 2014. "Determinants of clean development mechanism activity: Evidence from China," Energy Policy, Elsevier, vol. 67(C), pages 797-806.

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