The clean development mechanism

Katrin Millock () and Hélène Ollivier ()
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Katrin Millock: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Hélène Ollivier: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: The Clean Development Mechanism is one of three flexible mechanisms included in the Kyoto Protocol. It enables Annex I countries to finance emission reductions in developing (non-Annex I) countries and use the credits thus obtained to meet their quantified emission reduction commitments under the Kyoto Protocol. The CDM had two objectives: to reduce the costs of compliance of the Annex I countries' emission reduction commitments, and to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the UNFCCC. The major part of certified emission reductions (CERs) comes from renewable energy investments, reduction of non-CO2 greenhouse gases (HFCs, PFCs and N2O), and energy efficiency projects. The geographical distribution of projects and emission reductions is concentrated in a few countries: China, India, Brazil, and Mexico. A substantial amount of CERs was created under the CDM, but the uneven geographical distribution of projects and the lack of consistent control of projects' contribution to sustainable development have been arguments to contend that the CDM did not fulfil its initial objectives. The restriction by the EU in 2013 to use CERs in the EU-ETS brought down prices and the market for CERs has not recovered since. The CDM was discontinued as of 30 June 2022 and requests for exemptions were considered on a case-specific basis. Nevertheless, the CDM has continued to function while parties are waiting for the flexible mechanisms created in the Paris Agreement of 2015 to become operational, in particular the Sustainable Development Mechanism of Article 6.4 which is similar to the CDM in its objectives.

Keywords: Clean Development Mechanism CDM; Kyoto Protocol; The Paris Agreement Crediting Mechanisms; Offsets; Additionality; Climate policy; Flexible mechanisms (search for similar items in EconPapers)
Date: 2025
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Published in Tommy Lundgren; Moriah Bostian; Shunsuke Managi. Encyclopedia of Energy, Natural Resource, and Environmental Economics, 1, Elsevier, pp.22-30, 2025, 9780080964522. ⟨10.1016/B978-0-323-91013-2.00017-4⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-04864877

DOI: 10.1016/B978-0-323-91013-2.00017-4

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