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Transaction costs of the Kyoto mechanisms

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  • Michaelowa, Axel
  • Stronzik, Marcus

Abstract

Transaction costs will reduce the attractiveness of the Kyoto Mechanisms compared to domestic abatement options. Especially the project-based mechanisms CDM and JI are likely to entail considerable costs of baseline development, verification and certification. The AIJ pilot phase and the PCF programme give indications about the level of these costs. Under current estimates of world market prices for greenhouse gas emission permits, projects with annual emission reductions of less than 50,000 t CO2 equivalent are unlikely to be viable; for micro projects transaction costs can reach several hundred € per t CO2 equivalent. Thus the Marrakesh Accord rule to have special rules for small scale CDM projects makes sense, even if the thresholds chosen advantage certain project types; projects below 1000 t CO2 equivalent per year should get further exemptions. An alternative solution with no risk for the environmental credibility of the projects would be to subsidise baseline setting and charge lower, subsidised fees for small projects for the different steps of the CDM/second track JI project cycle.

Suggested Citation

  • Michaelowa, Axel & Stronzik, Marcus, 2002. "Transaction costs of the Kyoto mechanisms," HWWA Discussion Papers 175, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26284
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    Citations

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    Cited by:

    1. Mitsutsune Yamaguchi, 2005. "CDM potential in the power-generation and energy-intensive industries of China," Climate Policy, Taylor & Francis Journals, vol. 5(2), pages 167-184, March.
    2. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," Working Papers hal-00866433, HAL.
    3. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," CIRED Working Papers hal-00866433, HAL.
    4. Ryuji Matsuhashi & Yutaka Momobayashi & Hisashi Ishitani, 2002. "Feasibility study on a CDM project utilizing photovoltaic systems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(2), pages 105-119, June.
    5. Alfred Endres & Cornelia Ohl, 2005. "Kyoto, Europe?—An Economic Evaluation of the European Emission Trading Directive," European Journal of Law and Economics, Springer, vol. 19(1), pages 17-39, January.
    6. Ryuji Matsuhashi & Yutaka Momobayashi & Hisashi Ishitani, 2002. "Feasibility study on a CDM project utilizing photovoltaic systems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(2), pages 105-119, June.
    7. Greiner, Sandra & Michaelowa, Axel, 2003. "Defining Investment Additionality for CDM projects--practical approaches," Energy Policy, Elsevier, vol. 31(10), pages 1007-1015, August.
    8. Djanibekov, Utkur & Khamzina, Asia & Djanibekov, Nodir & Lamers, John P.A., 2012. "How attractive are short-term CDM forestations in arid regions? The case of irrigated croplands in Uzbekistan," Forest Policy and Economics, Elsevier, vol. 21(C), pages 108-117.
    9. Wang, Zhi, 2003. "WTO Accession, "Greater China" Free Trade Area and Economic Integration across the Taiwan Strait," Conference papers 331126, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Axel Michaelowa, 2002. "Book review," Climate Policy, Taylor & Francis Journals, vol. 2(4), pages 395-396, December.
    11. Khalil, Helioui & Cohen, Claude & Salem Szklo, Alexandre, 2006. "How to use the clean development mechanism in the residential sector? The case of Brazilian refrigerators," Energy Policy, Elsevier, vol. 34(15), pages 2150-2160, October.
    12. Frank Jotzo & Axel Michaelowa, 2002. "Estimating the CDM market under the Marrakech Accords," Climate Policy, Taylor & Francis Journals, vol. 2(2-3), pages 179-196, September.

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