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The Clean Development Mechanism under the Kyoto Protocol and the `low-hanging fruits' issue

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  • BRECHET, Thierry
  • GERMAIN, Marc
  • VAN STEENBERGHE, Vincent

Abstract

The 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.

Suggested Citation

  • BRECHET, Thierry & GERMAIN, Marc & VAN STEENBERGHE, Vincent, 2004. "The Clean Development Mechanism under the Kyoto Protocol and the `low-hanging fruits' issue," CORE Discussion Papers 2004081, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2004081
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-2004.html
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    References listed on IDEAS

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    1. Adam Rose & Erwin Bulte & Henk Folmer, 1999. "Long-Run Implications for Developing Countries of Joint Implementation of Greenhouse Gas Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 19-31, July.
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    Cited by:

    1. 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).
    2. repec:spr:envpol:v:19:y:2017:i:3:d:10.1007_s10018-016-0175-0 is not listed on IDEAS
    3. Urvashi Narain & Klaas Veld, 2008. "The Clean Development Mechanism’s Low-hanging Fruit Problem: When Might it Arise, and How Might it be Solved?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(3), pages 445-465, July.
    4. M. Germain & A. Magnus & V. Steenberghe, 2007. "How to design and use the clean development mechanism under the Kyoto Protocol? A developing country perspective," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 13-30, September.
    5. 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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