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Rent extraction with a type-by-type scheme: An instrument to incorporate sustainable development into the CDM

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  • Liu, Xuemei

Abstract

Although the CDM is supposed to assist developing countries in achieving sustainable development, sustainable development is not incorporated into the market aspect of the CDM. By participating in the CDM, developing countries may end up losing all cheap emissions reduction possibilities, while obtaining little sustainability benefits. This paper proposes rent extraction with a type-by-type scheme as an instrument to incorporate sustainable development into the CDM. The rent extraction with a type-by-type scheme makes it possible for the CDM host country government to discourage the low-cost projects that have little sustainability benefits, and to extract more rent from the projects that are developed. The main challenge of implementing this instrument is the uncertainty of the opportunity cost, but the host country government can adjust the scheme for the uncertainty to achieve its goal. Therefore, the type-by-type scheme will better assist the host country in achieving sustainable development than a single-rate scheme.

Suggested Citation

  • Liu, Xuemei, 2008. "Rent extraction with a type-by-type scheme: An instrument to incorporate sustainable development into the CDM," Energy Policy, Elsevier, vol. 36(6), pages 1873-1878, June.
    • Handle: RePEc:eee:enepol:v:36:y:2008:i:6:p:1873-1878
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    Cited by:

    1. Nicole Grunewald & Inmaculada Martínez-Zarzoso, 2009. "Driving Factors of Carbon Dioxide Emissions and the Impact from Kyoto Protocol," Ibero America Institute for Econ. Research (IAI) Discussion Papers 190, Ibero-America Institute for Economic Research.
    2. Uddin, Noim & Blommerde, Mascha & Taplin, Ros & Laurence, David, 2015. "Sustainable development outcomes of coal mine methane clean development mechanism Projects in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 1-9.
    3. Tek Maraseni & Kathryn Reardon-Smith, 2019. "Meeting National Emissions Reduction Obligations: A Case Study of Australia," Energies, MDPI, vol. 12(3), pages 1-13, January.
    4. Suzi Kerr & Adam Millard-Ball, 2012. "Cooperation To Reduce Developing Country Emissions," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-30.
    5. Liu, Xuemei, 2010. "Extracting the resource rent from the CDM projects: Can the Chinese Government do better?," Energy Policy, Elsevier, vol. 38(2), pages 1004-1009, February.
    6. Maraseni, Tek Narayan, 2013. "Selecting a CDM investor in China: A critical analysis," Energy Policy, Elsevier, vol. 53(C), pages 484-489.

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