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The Clean Development Mechanism in a Global Carbon Market

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  • Thierry Brechet
  • Yann Meniere
  • Pierre M. Picard

Abstract

This paper discusses the role of the Clean Development Mechanism (CDM) on the market for carbon quotas and countriesÕ commitments to reduce their carbon emission levels. We show that the CDM contributes to an efficient funding of clean technology investments in least developed countries. However, the CDM is not neutral on the global level of carbon emissions as it entices countries to raise their emission caps. The CDM may also make inappropriate the inclusion of any country that takes no emission abatement commitment. It can even make inefficient a countryÕs decision to commit to an emission target.

Suggested Citation

  • Thierry Brechet & Yann Meniere & Pierre M. Picard, 2012. "The Clean Development Mechanism in a Global Carbon Market," CEEES Paper Series CE3S-06/12, European University at St. Petersburg, Department of Economics.
  • Handle: RePEc:eus:ce3swp:0612
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    References listed on IDEAS

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    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, Fall.
    2. Brechet, Thierry & Lussis, Benoit, 2006. "The contribution of the clean development mechanism to national climate policies," Journal of Policy Modeling, Elsevier, vol. 28(9), pages 981-994, December.
    3. Fankhauser, Samuel & Martin, Nat, 2010. "The economics of the CDM levy: Revenue potential, tax incidence and distortionary effects," Energy Policy, Elsevier, vol. 38(1), pages 357-363, January.
    4. Schneider, Malte & Holzer, Andreas & Hoffmann, Volker H., 2008. "Understanding the CDM's contribution to technology transfer," Energy Policy, Elsevier, vol. 36(8), pages 2920-2928, August.
    5. Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
    6. Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203.
    7. Millock, Katrin, 2002. "Technology transfers in the Clean Development Mechanism: an incentives issue," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 449-466, July.
    8. Michaelowa, Axel & Jotzo, Frank, 2005. "Transaction costs, institutional rigidities and the size of the clean development mechanism," Energy Policy, Elsevier, vol. 33(4), pages 511-523, March.
    9. Jean-Marc Burniaux & Jean Château & Rob Dellink & Romain Duval & Stéphanie Jamet, 2009. "The Economics of Climate Change Mitigation: How to Build the Necessary Global Action in a Cost-Effective Manner," OECD Economics Department Working Papers 701, OECD Publishing.
    10. 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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    Cited by:

    1. Strand, Jon, 2016. "Mitigation incentives with climate finance and treaty options," Energy Economics, Elsevier, vol. 57(C), pages 166-174.
    2. Thierry Bréchet & Carmen Camacho & Vladimir M. Veliov, 2012. "Adaptive Model-Predictive Climate Policies in a Multi-Country Setting," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00718659, HAL.
    3. Thomas Baudin & David de la Croix & Paula E. Gobbi, 2015. "Fertility and Childlessness in the United States," American Economic Review, American Economic Association, vol. 105(6), pages 1852-1882, June.
    4. Nora, Vladyslav & Uno, Hiroshi, 2014. "Saddle functions and robust sets of equilibria," Journal of Economic Theory, Elsevier, vol. 150(C), pages 866-877.
    5. Knut Rosendahl & Jon Strand, 2015. "Emissions Trading with Offset Markets and Free Quota Allocations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 243-271, June.
    6. Venkatachalam ANBUMOZHI, 2015. "Low Carbon Green Growth in Asia: What is the Scope for Regional Cooperation?," Working Papers DP-2015-29, Economic Research Institute for ASEAN and East Asia (ERIA).
    7. Strand, Jon, 2013. "Strategic climate policy with offsets and incomplete abatement: Carbon taxes versus cap-and-trade," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 202-218.
    8. 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.

    More about this item

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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