Showing posts with label CDM. Show all posts
Showing posts with label CDM. Show all posts

October 3, 2011

A Practical Approach to Offset Permits in Post Kyoto Climate Policy

by Peter Heindl and Sebastian Voigt

- In this paper we analyse the possible demand and supply for offsets for the period from 2013 to 2020. The analysis is based on the assumptions that developed countries (Annex I) implement the emissions reduction pledges made after the 15th Conference of the Parties in Copenhagen ("Copenhagen Pledges"). Further we assume that international emissions trading will be continued after 2012.We calculate the potential annual demand for offset permits in Annex I countries based on the PACE model.

Heindl, Peter and Sebastian Voigt (2011). "A Practical Approach to Offset Permits in Post Kyoto Climate Policy." ZEW Discussion Paper No. 11-043, Jun 2011.

April 25, 2011

Contracting for Impure Public Goods: Carbon Offsets and Additionality

by Charles F. Mason and Andrew J. Plantinga

- Governments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important in the use of carbon offsets as part of climate change mitigation. Analyzing optimal contracts for forest carbon sequestration, an important offset category, we conduct a national-scale simulation using results from an econometric model of land-use change. The results indicate that for an increase in forest area of 50 million acres, annual government expenditures with optimal contracts are about $4 billion lower compared than under a uniform subsidy.

Mason, C.F. and A.J. Plantinga (2011). "Contracting for Impure Public Goods: Carbon Offsets and Additionality." FEEM Note di lavoro No. 2011.013, Mar 2011.

April 17, 2011

Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD

by Lee J. Alston and Krister Andersson

- The existing institutional design for REDD+ relies heavily on central government interventions in program countries. Analyzing new data on forest conservation outcomes, we identify several problems with this centralized approach to forest protection. We describe options for a more diversified policy approach that could reduce the full set of transaction costs and thereby improve the efficiency of the market-based approach for conservation.

Alston, L.J. and K. Andersson (2011). "Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD." NBER Working Paper No. 16756, Feb 2011.

February 6, 2011

Cities and Carbon Market Finance

by Christa Clapp, Alexia Leseur, Olivier Sartor, Gregory Briner and Jan Corfee-Morlot

- This paper reviews 10 in-depth case studies of urban projects proposed and operating within the realm of Joint Implementation (JI) and the Clean Development Mechanism (CDM) of the Kyoto Protocol. It explores the drivers of success for projects, examining in particular: types of projects that have been successful and their profitability; leadership and other roles of various actors in project initiation development and operation (i.e. local, regional and national governments as well as international, private sector or other non-governmental organisations); the role of local cobenefits; and project financial structure and risk management approaches.

Clapp, C., A. Leseur, O. Sartor, G. Briner and J. Corfee-Morlot (2010). "Cities and Carbon Market Finance. Taking Stock of Cities' Experience With Clean Development Mechanism (CDM) and Joint Implementation (JI)." OECD Environment Working Papers, No. 29, Nov 2010.

November 28, 2010

Keeping a Big Promise: Options for Baselines to Assess "New and Additional" Climate Finance

by Martin Stadelmann, J. Timmons Roberts and Axel Michaelowa

- All major climate policy agreements - the UN Framework Convention, the Kyoto Protocol and recently the Copenhagen Accord - have stated that climate finance for developing countries will be "new and additional". However, the term "new and additional" has never been properly defined. We explore eight different options for a baseline, and assess each according to several criteria: novelty to existing pledges, additionality to development assistance, environmental effectiveness, distributional consequences, and institutional and political feasibility.


Stadelmann, M., J.T. Roberts and A. Michaelowa (2010). "Keeping a Big Promise: Options for Baselines to Assess "New and Additional" Climate Finance." CIS Working Paper No. 66, 2010, Nov 2010.

Climate Business for Poverty Reduction? The Role of the World Bank

by Axel Michaelowa and Katharina Michaelowa

- Our econometric analysis of over 2000 projects registered until May 2010 under the Clean Development Mechanism (CDM) of the Kyoto Protocol allows us to compare the activities of the Bank with those of other, primarily private actors. The results indicate that hardly any of the CDM projects can be considered as strongly pro-poor. Nevertheless, in comparison to the rest of the CDM projects, the Bank’s portfolio shows a relatively clearer orientation towards poor countries. Within these countries, however, the Bank tends to implement those projects which are commercially most attractive.

Michaelowa, A. and K. Michaelowa (2010). "Climate Business for Poverty Reduction? The Role of the World Bank." CIS Working Paper No. 59, Aug 2010.

Old Wine in New Bottles? The Shift of Development Aid towards Renewable Energy and Energy Efficiency

by Axel Michaelowa and Katharina Michaelowa

- Since the UN Conference on Environment and Development in Rio 1992, bi- and multilateral donors stress that development assistance has increasingly been oriented towards climate friendly interventions. With respect to energy aid, this should lead to a substantial increase of projects related to renewable energy and energy efficiency. We use the new project-level aid (PLAID) database of over 750,000 aid activities for 21 OECD DAC donor countries to assess whether such a reorientation has indeed taken place.

Axel Michaelowa and Katharina Michaelowa (2010). "Old Wine in New Bottles? The Shift of Development Aid towards Renewable Energy and Energy Efficiency." CIS Working Paper No. 58, Jul 2010.

October 24, 2010

Beyond Copenhagen: A Realistic Climate Policy in a Fragmented World

by Carlo Carraro and Emanuele Massetti

- We propose a realistic approach to climate policy based on the Copenhagen Agreement to reduce Greenhouse Gases (GHGs) emissions. We assess by how much the non-binding, although official, commitments to reduce emissions made in Copenhagen will affect the level of world GHGs emissions in 2020. We are not interested in estimating the gap between the expected level of emissions and what would be needed to achieve the 2°C target. Nor do we attempt to calculate the 2100 temperature level implied by the Copenhagen pledges. We believe these two exercises are subject to high uncertainty and would not improve the current state of negotiations. Rather, we take stock of the present politically achievable level of commitment and suggest an effective way to push forward the climate policy agenda.

Carraro, C. and E. Massetti (2010). "Beyond Copenhagen: A Realistic Climate Policy in a Fragmented World." FEEM Note di Lavoro No. 136.2010, Oct 2010.

October 10, 2010

Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World

by Gilbert E. Metcalf, David Weisbach

- The authors discuss linkage of various types of trading systems. Their goal is to identify opportunities for constructive linkage and policy choices that might limit or hinder linkage. They argue that the basic approach of existing emission-reduction-credit systems, especially the Clean Development Mechanism (CDM), can be extended to create linkage opportunities among diverse emission control systems while eliminating some of the problems in the CDM. Moreover, while emission-reduction-credit systems are designed to work with cap and trade, the authors describe how they might complement tax and certain regulatory systems, as well.

Metcalf, G.E. and D. Weisbach (2010). "Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World." Discussion Paper 2010-38, Harvard Project on International Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School, Jul 2010.

September 12, 2010

The Economics of Carbon Offsets

by James B. Bushnell

- Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The current regulatory focus on additionality tends to paint all these problems with a broad brush without proper consideration of the context or their implications.

Bushnell, J.B. (2010). "The Economics of Carbon Offsets." NBER Working Paper No. 16305, Aug 2010.

June 8, 2010

State and Trends of the Carbon Market 2010

by Alexandre Kossoy and Philippe Ambrosi

- The State and Trends of the Carbon Market 2010, released by the World Bank at Carbon Expo in Cologne analyzes data from the trading of European Union Allowances (EUAs) and secondary Kyoto offsets under the European Union Emissions Trading Scheme (EU ETS). It also evaluates transactions under the Kyoto markets: Certified Emission Reductions (CERs), Emission Reduction Units (ERUs), and Assigned Amount Units (AAUs), as well as data from voluntary markets.

Kossoy, A. and P. Ambrosi (2010). "State and Trends of the Carbon Market 2010." The World Bank, May 2010.

Towards a More Standardized Approach to Baselines and Additionality Under the CDM

by Daisuke Hayashi, Nicolas Müller, Sven Feige and Axel Michaelowa

- The Clean Development Mechanism (CDM) has been a success in both the number of projects and the amount of emission reductions it has mobilised. On the other hand, an increasing number of stakeholders are calling for a reform of the CDM for further improvement of the mechanism. Of particular concern is the cumbersome procedure of baseline setting and additionality testing. The baseline defines the emission level that would have existed under a business-as-usual (BAU) scenario, while a project is additional if it would not have happened in the absence of the revenue from sales of Certified Emission Reductions (CERs). In order to operationalise these concepts, complex methodologies and procedures have been introduced to the CDM.

Hayashi, D., N. Müller, S. Feige and A. Michaelowa (2010). "Towards a More Standardized Approach to Baselines and Additionality Under the CDM." Perspectives Climate Change, May 2010.

May 10, 2010

Carbon Offsets with Endogenous Environmental Policy

by Jon Strand

- In this note, the potential to affect the availability of future Clean Development Mechanism projects is shown to distort environmental and energy policies of Clean Development Mechanism host countries in two ways. Measures to reduce use of fossil energy are weakened. Because this weakens private sector incentives to switch to lower-carbon technology through Clean Development Mechanism projects, host governments then also find it attractive to subsidize this switch, in order to maximize the country’s advantage from the Clean Development Mechanism.

Strand, J. (2010). "Carbon Offsets with Endogenous Environmental Policy." World Bank Policy Research Working Paper, no. WPS 5296, May 2010.

May 4, 2010

Renewable Energy Investment and the Clean Development Mechanism

by Kirill Zavodov

- This paper uses transaction and index data to empirically examine price formation in, and equilibrium characteristics of, the primary CDM market. Results point to the preemptive behaviour among intermediaries (carbon firms), and inefficiencies in information transmission between secondary and primary markets (potentially due to the limits of arbitrage). Since the primary carbon market is unstable and is prone to rational and irrational oscillations, the CDM, in its current form, is not a reliable policy tool for long-term renewable energy sector development plans.

Zavodov, K. (2010). "Renewable Energy Investment and the Clean Development Mechanism." University of Cambridge, Mar 2010.

May 2, 2010

Climate Change Mitigation in Advanced Developing Countries: Empirical Analysis of the Low-Hanging Fruit Issue in the Current CDM

by Paula Castro

- Under the Kyoto Protocol, developing countries can voluntarily participate in climate change mitigation through the Clean Development Mechanism (CDM), where emission reduction credits from projects in developing countries are bought by industrialized countries to meet their own commitments. Before its
implementation, developing-country experts opposed the CDM, arguing that it would sell off their countries’ cheapest emission reduction options and force them to invest in more expensive measures to meet their future reduction targets. This paper analyzes this "low-hanging fruit" argument empirically.

Castro, P. (2010). "Climate Change Mitigation in Advanced Developing Countries: Empirical Analysis of the Low-Hanging Fruit Issue in the Current CDM." CIS Working Paper No 54, Mar 2010.

Who Hosts the Clean Development Mechanism? Determinants of CDM Project Distribution

by Florens Flues

- The econometric analysis of CDM project distribution finds that economic development and growth, fossil fuel, and renewable energy generation, as well as links to developed countries and institutional quality positively affect the number of projects hosted. Furthermore, more advanced developing countries pursue a higher share of projects without any direct involvement from developed countries.

Flues, F. (2010). "Who Hosts the Clean Development Mechanism? Determinants of CDM Project Distribution." CIS Working Paper No 53, Mar 2010.

April 18, 2010

International Greenhouse Gas Offsets Under the Clean Air Act

by Nathan Richardson

- Offsets, and in particular international offsets, have been advanced as an important tool in climate policy, capable of significantly reducing the costs of emissions reductions. As attention turns to the existing Clean Air Act as a potential vehicle for general reduction of greenhouse gas emissions, an important question is whether regulation under the statute is compatible with international offsets. This paper analyzes the regulatory programs under the Clean Air Act that are the most likely candidates for greenhouse gas regulation and concludes that many of them are legally incompatible with international offsets.

Richardson, N. (2010). "International Greenhouse Gas Offsets Under the Clean Air Act." RFF Discussion Paper 10-24, Apr 2010.

March 21, 2010

Will the Clean Development Mechanism Mobilize Anticipated Levels of Mitigation?

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

- 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.

Rahman, S.M., A. Dinar and D.F. Larson (2010). "Will the Clean Development Mechanism Mobilize Anticipated Levels of Mitigation?" World Bank Policy Research working paper no. WPS 5239, Mar 2010.

February 14, 2010

Does Global Climate Policy Promote Low-Carbon Cities? Lessons learnt from the CDM

by Maike Sippel and Axel Michaelowa

- An increasing proportion of greenhouse gas emissions is produced in urban areas in industrializing and developing countries. Recent research shows that per capita emissions in cities like Bangkok, Cape Town or Shanghai have already reached the level of cities like London, New York or Toronto. Based upon a survey of projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol, we find that only about 1% of CDM projects have been submitted by municipalities, mostly in the waste management sector. This low participation is probably due to a lack of technical know how to develop CDM projects and an absence of motivation due to the long project cycle and the limited "visibility" of the projects for the electorate.

Sippel, M. and A. Michaelowa (2009). "Does Global Climate Policy Promote Low-Carbon Cities? Lessons learnt from the CDM." ETH Zurich CIS Working Paper No 49, 2009.

February 8, 2010

Climate Policy Design with Correlated Uncertainties in Offset Supply and Abatement Cost

by Harrison Fell, Dallas Burtraw, Richard D. Morgenstern and Karen L. Palmer

- This paper presents a model that incorporates both uncertainties in the supply of offsets and in abatement costs. Using numerical methods we solve the model under a variety of parameter settings, including a system that includes allowance price controls. We find that as uncertainty in offsets and uncertainty in abatement costs become more negatively correlated, expected abatement plus offset purchase costs increase, as does the variability in allowance prices and emissions from the regulated sector. Imposing an allowance price collar that limits the upper and lower cost substantially mitigates cost increases as well as the variability in prices and emissions, while roughly maintaining expected environmental outcomes.

Fell, H., D. Burtraw, R.D. Morgenstern and K.L. Palmer (2010). "Climate Policy Design with Correlated Uncertainties in Offset Supply and Abatement Cost." RFF Discussion Paper 10-01, Jan 2010.