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Performance of renewable energy technologies under the CDM

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  • MALTE SCHNEIDER
  • TOBIAS S. SCHMIDT
  • VOLKER H. HOFFMANN

Abstract

While many different greenhouse gas (GHG) mitigation technologies can be implemented under the Clean Development Mechanism (CDM), renewable energy technologies (RETs), in particular, are often viewed as one of the key solutions for achieving the CDM's goals: host-country sustainable development and cost-efficient emissions reductions. However, the viability of emission reduction projects like RETs is technology- and country-specific. To improve the CDM with respect to the diffusion of RETs, it is crucial to understand the factors that ultimately drive or hinder investments in these technologies. This study develops a methodology based on project-level, regional and global variables that can systematically assess the financial and environmental performance of CDM projects in different country contexts. We quantitatively show how six RETs (PV, wind, hydro, biomass, sewage, landfill) are impacted differently by the CDM and how this impact depends on regional conditions. While sewage and landfill are strongly affected independently of their location; wind, hydro and biomass projects experience small to medium impacts through the carbon price, and strongly depend on regional conditions. PV depends more on regional conditions than on the carbon price but is always unprofitable. Furthermore, we determine the carbon prices necessary to push these six RETs to profitability under various regional conditions. Based on these results, we derive policy recommendations to advance the interplay between international and domestic climate policy to further incentivize GHG emission reductions from RETs.

Suggested Citation

  • Malte Schneider & Tobias S. Schmidt & Volker H. Hoffmann, 2010. "Performance of renewable energy technologies under the CDM," Climate Policy, Taylor & Francis Journals, vol. 10(1), pages 17-37, January.
    • Handle: RePEc:taf:tcpoxx:v:10:y:2010:i:1:p:17-37
    DOI: 10.3763/cpol.2008.0580
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    References listed on IDEAS

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    1. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2008," World Bank Publications - Reports 13405, The World Bank Group.
    2. Jane Ellis & Sami Kamel, 2007. "Overcoming Barriers to Clean Development Mechanism Projects," OECD Papers, OECD Publishing, vol. 7(1), pages 1-50.
    3. repec:wbk:wboper:13404 is not listed on IDEAS
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    1. Trotter, Ian Michael & da Cunha, Dênis Antônio & Féres, José Gustavo, 2015. "The relationships between CDM project characteristics and CER market prices," Ecological Economics, Elsevier, vol. 119(C), pages 158-167.
    2. Tian Tang & David Popp, 2014. "The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects," NBER Working Papers 19921, National Bureau of Economic Research, Inc.
    3. Tian Tang & David Popp, 2014. "The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects," CESifo Working Paper Series 4705, CESifo.
    4. Bodas Freitas, Isabel Maria & Dantas, Eva & Iizuka, Michiko, 2012. "The Kyoto mechanisms and the diffusion of renewable energy technologies in the BRICS," Energy Policy, Elsevier, vol. 42(C), pages 118-128.
    5. Strupeit, Lars & Neij, Lena, 2017. "Cost dynamics in the deployment of photovoltaics: Insights from the German market for building-sited systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 948-960.
    6. Tobias Schmidt & Sandeep Dabur, 2014. "Explaining the diffusion of biogas in India: a new functional approach considering national borders and technology transfer," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(2), pages 171-199, April.
    7. Kirkman, Grant A. & Seres, Stephen & Haites, Erik, 2013. "Renewable energy: Comparison of CDM and Annex I projects," Energy Policy, Elsevier, vol. 63(C), pages 995-1001.
    8. Elie, Luc & Granier, Caroline & Rigot, Sandra, 2021. "The different types of renewable energy finance: A Bibliometric analysis," Energy Economics, Elsevier, vol. 93(C).

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