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The Clean Development Mechanism

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  • Müller-Pelzer, Felicia

Abstract

This paper explores chosen CDM methodologies for methane recovery and electricity generation regarding their additionality assessment. First, a brief outline of the historical evolution will be given and the three flexibility mechanisms (the Emission Trading, the Joint Implementation and the Clean Development Mechanism) will be defined. Against this background, the paper will illustrate the working of the CDM, discuss the additionality concept, show limitations of the additionality assessment and explain the impact of the baseline setting. Second, chosen methodologies will be compared and explored with the aim to identify problems of implementation. In order to make the analysis understandable, a first section explains how the methodologies were chosen. This section is then followed by a brief description of the underlying project activities. Subsequently, the author will oppose and discuss the different paths taken by the methodologies. In doing so, contradictions will be identified. Some methodologies go further than others. Some are very general in their approach and others are very project specific. These findings reveal the potential for further generalization and simplification of the methodologies. In addition, the comprehensive evaluation makes it possible to draw conclusions about the outcome of the methodologies and to identify problems with implementing the ultimate objective of the United Nations Framework Convention [UNFCCC (1992), Article 2]. The main problem lays in the information asymmetry. But inaccuracies in quantitative and qualitative assessments also affect the outcome of the methodologies. Further, a distortion of the results can be provoked by an inadequate setting of the boundaries, an inaccurate leakage assessment and related uncertainties. Finally, the emission reductions can only be estimated correctly if an appropriate method is chosen to calculate the emission reductions. Moreover, alternative proceedings to the present UNFCCC methodology approach and their possible impact on the CDM will be briefly discussed. Based on these results, the author will make suggestions on how to proceed in the future, especially how to coordinate and consolidate the methodologies. A simplified approach will be recommended to guarantee an effective additionality assessment and an efficient structure.

Suggested Citation

  • Müller-Pelzer, Felicia, 2004. "The Clean Development Mechanism," HWWA Reports 244, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwware:26122
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    1. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
    2. Greiner, Sandra & Michaelowa, Axel, 2003. "Defining Investment Additionality for CDM projects--practical approaches," Energy Policy, Elsevier, vol. 31(10), pages 1007-1015, August.
    3. Coase, R H, 1992. "The Institutional Structure of Production," American Economic Review, American Economic Association, vol. 82(4), pages 713-719, September.
    4. Geres, Roland & Michaelowa, Axel, 2002. "A qualitative method to consider leakage effects from CDM and JI projects," Energy Policy, Elsevier, vol. 30(6), pages 461-463, May.
    5. Rentz, Henning, 1998. "Joint implementation and the question of `additionality'--a proposal for a pragmatic approach to identify possible joint implementation projects," Energy Policy, Elsevier, vol. 26(4), pages 275-279, March.
    6. Shrestha, Ram M. & Timilsina, Govinda R., 2002. "The additionality criterion for identifying clean development mechanism projects under the Kyoto Protocol," Energy Policy, Elsevier, vol. 30(1), pages 73-79, January.
    7. Frank Jotzo & Axel Michaelowa, 2002. "Estimating the CDM market under the Marrakech Accords," Climate Policy, Taylor & Francis Journals, vol. 2(2-3), pages 179-196, September.
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