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Will the clean development mechanism mobilize anticipated levels of mitigation ?


  • Rahman, Shaikh M.
  • Dinar, Ariel
  • Larson, Donald F.


Under the Kyoto Protocol, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism. Yet Clean Development Mechanism investments have so far failed to reach many of the high-potential sectors identified by the Intergovernmental Panel on Climate Change. This raises doubts about whether the Clean Development Mechanism can generate an adequate supply of credits from the limited areas where it has proved successful. This paper examines the current trajectory of mitigation projects entering the Clean Development Mechanism pipeline and projects it forward under the assumption that the diffusion of the Clean Development Mechanism will follow a path similar to other innovations. Projections are then compared with pre-Clean Development Mechanism predictions of the mechanism’s potential market size to discern whether limits on the types of projects entering the pipeline have limited the expected supply of certified emission reductions. Parameter tests suggest that this is not the case and that currently identified Clean Development Mechanism investments will generate offsets in excess of early model predictions. In particular, under favorable circumstances, the mechanism is on track to deliver an average annual flow of roughly 700 million certified emission reductions by the close of 2012 and nearly to 1,100 million certified emission reductions by 2020.

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  • Rahman, Shaikh M. & Dinar, Ariel & Larson, Donald F., 2010. "Will the clean development mechanism mobilize anticipated levels of mitigation ?," Policy Research Working Paper Series 5239, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5239

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    References listed on IDEAS

    1. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    2. Marco Terrones & Enrique G. Mendoza, 2008. "An Anatomy of Credit Booms; Evidence From Macro Aggregates and Micro Data," IMF Working Papers 08/226, International Monetary Fund.
    3. Marius Brulhart & Michael Thorpe, 2000. "Intra-industry trade and adjustment in Malaysia: puzzling evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(11), pages 729-733.
    4. Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
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    Cited by:

    1. Cassimon, Danny & Prowse, Martin & Essers, Dennis, 2011. "Financing the Clean Development Mechanism through debt-for-efficiency swaps? Case study evidence from a Uruguayan wind farm project," IOB Working Papers 2011.06, Universiteit Antwerpen, Institute of Development Policy (IOB).
    2. World Bank, 2010. "10 Years of Experience in Carbon Finance : Insights from Working with the Kyoto Mechanisms," World Bank Other Operational Studies 2873, The World Bank.
    3. Suzi Kerr & Adam Millard-Ball, 2012. "Cooperation to Reduce Developing Country Emissions," Working Papers 12_03, Motu Economic and Public Policy Research.

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    Climate Change Mitigation and Green House Gases; Climate Change Economics; ICT Policy and Strategies; Energy Production and Transportation; Carbon Policy and Trading;

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