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

  • Winkelman, Andrew G.
  • Moore, Michael R.
Registered author(s):

    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.

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    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 39 (2011)
    Issue (Month): 3 (March)
    Pages: 1132-1143

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    Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1132-1143
    Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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    1. Krey, Matthias, 2005. "Transaction costs of unilateral CDM projects in India-results from an empirical survey," Energy Policy, Elsevier, vol. 33(18), pages 2385-2397, December.
    2. Dechezleprêtre, Antoine & Glachant, Matthieu & Ménière, Yann, 2009. "Technology transfer by CDM projects: A comparison of Brazil, China, India and Mexico," Energy Policy, Elsevier, vol. 37(2), pages 703-711, February.
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    4. Zhang, ZhongXiang, 2004. "Towards an effective implementation of clean development mechanism projects in China," MPRA Paper 13147, University Library of Munich, Germany, revised Jul 2005.
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    6. Seres, Stephen & Haites, Erik & Murphy, Kevin, 2009. "Analysis of technology transfer in CDM projects: An update," Energy Policy, Elsevier, vol. 37(11), pages 4919-4926, November.
    7. Chakrabarti, Avik, 2001. "The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-113.
    8. Steven Globerman & Daniel M Shapiro, 1999. "The Impact of Government Policies on Foreign Direct Investment: The Canadian Experience," Journal of International Business Studies, Palgrave Macmillan, vol. 30(3), pages 513-532, September.
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    10. Olsen, Karen Holm & Fenhann, Jørgen, 2008. "Sustainable development benefits of clean development mechanism projects: A new methodology for sustainability assessment based on text analysis of the project design documents submitted for validatio," Energy Policy, Elsevier, vol. 36(8), pages 2773-2784, August.
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    12. van der Gaast, Wytze & Begg, Katherine & Flamos, Alexandros, 2009. "Promoting sustainable energy technology transfers to developing countries through the CDM," Applied Energy, Elsevier, vol. 86(2), pages 230-236, February.
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    15. Samuel Fankhauser & Lucia Lavric, 2003. "The investment climate for climate investment: Joint Implementation in transition countries," Working Papers 77, European Bank for Reconstruction and Development, Office of the Chief Economist.
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