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The clean development mechanism in a globalized carbon market

Author

Listed:
  • Thierry Bréchet

    (CORE and Louvain School of Management, Université catholique de Louvain)

  • Yann Ménière

    (CERNA, Ecole des Mines de Paris)

  • Pierre M. Picard

    (CREA, University of Luxembourg (Luxembourg), and CORE, Université catholique de Louvain (Belgium).)

Abstract

This paper discusses the role of the Clean DevelopmentMechanisms (CDM) on the market for carbon quotas and countries' 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. How- ever, 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 inap- propriate the inclusion of any country that makes no emission target commit- ment in the climate change protocol (like the Kyoto protocole). It can even make inefficient a country's decision to commit to an emission target.

Suggested Citation

  • Thierry Bréchet & Yann Ménière & Pierre M. Picard, 2011. "The clean development mechanism in a globalized carbon market," DEM Discussion Paper Series 11-12, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:11-12
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    References listed on IDEAS

    as
    1. Millock, Katrin, 2002. "Technology transfers in the Clean Development Mechanism: an incentives issue," Environment and Development Economics, Cambridge University Press, vol. 7(3), pages 449-466, July.
    2. 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.
    3. 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.
    4. 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.
    5. Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
    6. 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.
    7. 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.
    8. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Citations

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    Cited by:

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    2. 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.
    3. 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.
    4. Thierry Bréchet & Carmen Camacho & Vladimir M. Veliov, 2012. "Adaptive Model-Predictive Climate Policies in a Multi-Country Setting," Documents de travail du Centre d'Economie de la Sorbonne 12029, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Nora, Vladyslav & Uno, Hiroshi, 2014. "Saddle functions and robust sets of equilibria," Journal of Economic Theory, Elsevier, vol. 150(C), pages 866-877.
    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. Strand, Jon, 2016. "Mitigation incentives with climate finance and treaty options," Energy Economics, Elsevier, vol. 57(C), pages 166-174.
    9. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2021. "Strategic Export Motives and Linking Emission Markets," CESifo Working Paper Series 8847, CESifo.
    10. Jon Strand, 2019. "Combining Carbon Taxation and Offset Payments: A New Approach to Climate Policy in Low-Income Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 949-960, November.

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    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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