The Clean Development Mechanism under the Kyoto Protocol and the `low-hanging fruits' issue
AbstractThe Kyoto Protocol has introduced the so-called Clean Development Mechanism (CDM) under which industrialized countries are allowed to fulfill part of their obligations through the use of emission credits generated by emission reduction projects undertaken in developing countries. Developing countries have been reluctant to participate in the CDM, fearing that the CDM will use up most of their cheap abatement options (the "low-hanging fruits" problem). In this paper we show that developing countries should in general participate in the CDM, unless the credit prices are relatively low. Moreover, these countries always gain by participating in the CDM when banking of credits is allowed. Nevertheless, three effects that are likely to limit the extent of such a participation are identified. A case-study (South Africa) reveals that these effects may play a significant role.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2004081.
Date of creation: 00 Dec 2004
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- Adam Rose & Erwin Bulte & Henk Folmer, 1999. "Long-Run Implications for Developing Countries of Joint Implementation of Greenhouse Gas Mitigation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(1), pages 19-31, July.
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- Marc, GERMAIN & Alphonse, MAGNUS & Vincent, VAN STEENBERGHE, 2005.
"Should developing countries participate in the Clean Development Mechanism under the Kyoto Protocol ? The low-hanging fruits and baseline issues,"
Discussion Papers (ECON - DÃ©partement des Sciences Economiques)
2005022, Université catholique de Louvain, Département des Sciences Economiques.
- GERMAIN, Marc & MAGNUS, Alphonse & VAN STEENBERGHE, Vincent, 2005. "Should developing countries participate in the Clean Development Mechanism under the Kyoto Protocol ? The low-hanging fruits and baseline issues," CORE Discussion Papers 2005023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Yang, Ming & Nguyen, François & De T'Serclaes, Philippine & Buchner, Barbara, 2010. "Wind farm investment risks under uncertain CDM benefit in China," Energy Policy, Elsevier, vol. 38(3), pages 1436-1447, March.
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