IDEAS home Printed from https://ideas.repec.org/p/ags/hwwadp/26243.html
   My bibliography  Save this paper

Development Aid and the CDM - How to Interpret "Financial Additionality"

Author

Listed:
  • Dutschke, Michael
  • Michaelowa, Axel

Abstract

International climate negotiations have specified that projects under the Clean Development Mechanism (CDM) should not lead to a "diversion" of official development assistance (ODA). It is however unchallenged that ODA can be used in capacity building for the CDM. Diversion can be interpreted in financial, sectoral and regional terms. There are possibilities to use ODA benchmarks to define diversion such as the UN 0.7% target but they are unlikely to be politically acceptable. On the project level, three main options exist but none of them is perfect. The value of emissions credits (CERs) could be deducted from ODA. This however leads to a long-term pressure on the ODA level. Differentiating an ODA-financed baseline project and a "piggyback" CDM option is likely to be arbitrary in many circumstances. Even if CERs do not accrue for the ODA share of the investment, still private CDM projects are crowded out due to the subsidising of CDM projects.

Suggested Citation

  • Dutschke, Michael & Michaelowa, Axel, 2003. "Development Aid and the CDM - How to Interpret "Financial Additionality"," Discussion Paper Series 26243, Hamburg Institute of International Economics.
    • Handle: RePEc:ags:hwwadp:26243
    DOI: 10.22004/ag.econ.26243
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/26243/files/dp030228.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.26243?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dutschke, Michael & Michaelowa, Axel, 1997. "Joint Implementation as Development Policy - The Case of Costa Rica," Discussion Paper Series 26337, Hamburg Institute of International Economics.
    2. Greiner, Sandra & Michaelowa, Axel, 2003. "Defining Investment Additionality for CDM projects--practical approaches," Energy Policy, Elsevier, vol. 31(10), pages 1007-1015, August.
    3. Halsnaes, Kirsten, 2002. "Market potential for Kyoto mechanisms--estimation of global market potential for co-operative greenhouse gas emission reduction policies," Energy Policy, Elsevier, vol. 30(1), pages 13-32, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sven Bode, 2005. "Tenders: an option for developing countries to support renewable energies under the CDM," Climate Policy, Taylor & Francis Journals, vol. 5(2), pages 221-228, March.
    2. Silayan, Alan, 2005. "Equitable Distribution of CDM Projects Among Developing Countries," Report Series 26098, Hamburg Institute of International Economics.
    3. Rubbelke, Dirk T.G. & Rive, Nathan, 2008. "Effects of the CDM on Poverty Eradication and Global Climate Protection," Climate Change Modelling and Policy Working Papers 46650, Fondazione Eni Enrico Mattei (FEEM).
    4. Silayan, Alan, 2005. "Equitable distribution of CDM projects among developing countries," HWWA Reports 255, Hamburg Institute of International Economics (HWWA).
    5. Nathan Rive & Dirk Rübbelke, 2010. "International environmental policy and poverty alleviation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 515-543, September.
    6. Ashish Aggarwal, 2014. "How sustainable are forestry clean development mechanism projects?—A review of the selected projects from India," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(1), pages 73-91, January.
    7. Michaelowa, Axel & Umamaheswaran, K., 2006. "Additionality and Sustainable Development Issues Regarding CDM Projects in Energy Efficiency Sector," HWWA Discussion Papers 346, Hamburg Institute of International Economics (HWWA).
    8. Jusen Asuka & Kenji Takeuchi, 2004. "Additionality reconsidered: lax criteria may not benefit developing countries," Climate Policy, Taylor & Francis Journals, vol. 4(2), pages 177-192, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dutschke, Michael & Michaelowa, Axel, 2003. "Development Aid and the CDM - How to interpret "Financial Additionality"," HWWA Discussion Papers 228, Hamburg Institute of International Economics (HWWA).
    2. Shunli Wang & Henri L.F. de Groot & Peter Nijkamp & Erik T. Verhoef, 2009. "Global and Regional Impacts of the Clean Development Mechanism," Tinbergen Institute Discussion Papers 09-045/3, Tinbergen Institute.
    3. Strand, Jon, 2011. "Carbon offsets with endogenous environmental policy," Energy Economics, Elsevier, vol. 33(2), pages 371-378, March.
    4. Erickson, Peter & Lazarus, Michael & Spalding-Fecher, Randall, 2014. "Net climate change mitigation of the Clean Development Mechanism," Energy Policy, Elsevier, vol. 72(C), pages 146-154.
    5. Georgiou, P. & Tourkolias, C. & Diakoulaki, D., 2008. "A roadmap for selecting host countries of wind energy projects in the framework of the clean development mechanism," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(3), pages 712-731, April.
    6. U. Kalpagam & Karimullah, 2007. "India's Business Prospects in the Global Emissions Market," Global Business Review, International Management Institute, vol. 8(2), pages 237-250, December.
    7. 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.
    8. Axel Michaelowa & John O’brien, 2006. "Domestic UNFCCC Kyoto Protocol Mechanisms Project Supply Coordination Through Tendering – Lessons from the New Zealand Experience," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 11(3), pages 711-722, May.
    9. Rousse, Olivier, 2008. "Environmental and economic benefits resulting from citizens' participation in CO2 emissions trading: An efficient alternative solution to the voluntary compensation of CO2 emissions," Energy Policy, Elsevier, vol. 36(1), pages 388-397, January.
    10. Sabine Aresin, 2015. "Reduced Allowability and the Allocation of Emission Abatement," Working Papers tax-mpg-rps-2015-12, Max Planck Institute for Tax Law and Public Finance.
    11. 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.
    12. Singh, Inderjeet & Michaelowa, Axel, 2004. "Indian Urban Building Sector: CDM Potential through Engergy Efficiency in Electricity Consumption," HWWA Discussion Papers 289, Hamburg Institute of International Economics (HWWA).
    13. Sirohi, Smita & Michaelowa, Axel, 2004. "CDM Potential of Dairy Sector in India," Discussion Paper Series 26281, Hamburg Institute of International Economics.
    14. Muller-Pelzer, Felicia, 2004. "The Clean Development Mechanism," Report Series 26122, Hamburg Institute of International Economics.
    15. Park, Taeil & Kim, Changyoon & Kim, Hyoungkwan, 2014. "A real option-based model to valuate CDM projects under uncertain energy policies for emission trading," Applied Energy, Elsevier, vol. 131(C), pages 288-296.
    16. Meunier Guy & Ponssard Jean-Pierre, 2017. "Financing innovative green projects with asymmetric information and costly public funds," Working Papers 2017-55, Center for Research in Economics and Statistics.
    17. Strand, Jon & Rosendahl, Knut Einar, 2012. "Global emissions effects of CDM projects with relative baselines," Resource and Energy Economics, Elsevier, vol. 34(4), pages 533-548.
    18. Levihn, Fabian, 2016. "On the problem of optimizing through least cost per unit, when costs are negative: Implications for cost curves and the definition of economic efficiency," Energy, Elsevier, vol. 114(C), pages 1155-1163.
    19. Graeber, Bernhard & Spalding-Fecher, Randall & Gonah, Brian, 2005. "Optimising trans-national power generation and transmission investments: a Southern African example," Energy Policy, Elsevier, vol. 33(18), pages 2337-2349, December.
    20. Vasa, Alexander & Neuhoff, Karsten, 2011. "The Role of CDM Post-2012," EconStor Research Reports 65871, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    Environmental Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:hwwadp:26243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/hwwaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.