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The clean development mechanism in a world carbon market

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  • Thierry BRECHET
  • Yann MENIERE
  • Pierre PICARD

Abstract

This paper discusses the role of the Clean Development Mechanism (CDM) in the market for carbon quotas and countries' commitments to reduce their carbon emission levels. We show that the CDM contributes to an efficient funding of clean technology investments in least developed countries. However, the CDM is not neutral on the global level of carbon emissions as it entices countries to raise their emission caps. The CDM may also make inappropriate the inclusion of any country that takes no emission abatement commitment. It can even make inefficient a country's decision to commit to an emission target. The implications of the presence of non‐additional projects are also analyzed. Cet article analyse le rôle du Mécanisme pour un Dèveloppement Propre (MDP) dans un marché de quotas carbone et d'engagements des pays pour réduire leurs émissions de carbone. Nous montrons que le MDP contribue à un financement efficace dans des technologies propres dans les pays les moins développés. Cependant, le MDP n'est pas neutre sur le niveau global des émissions de carbone car il pousse les pays à relever leurs plafonds d'émission. Le MDP est également susceptible de rendre inappropriée l'inclusion dans le marché carbone d'un pays qui ne s'engagerait pas à des réductions contraignantes. Il peut même rendre inefficace la décision d'un pays de s'engager sur un plafond d'émission. Les implications de la présence éventuelle de projets non‐additionnels est également discutée.
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Suggested Citation

  • Thierry BRECHET & Yann MENIERE & Pierre PICARD, 2016. "The clean development mechanism in a world carbon market," LIDAM Reprints CORE 2870, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2870
    Note: In : Canadian Journal of Economics/Revue Canadienne d'Economique, 49(4), 1569-1598, 2016
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    1. Brechet, Thierry & Lussis, Benoit, 2006. "The contribution of the clean development mechanism to national climate policies," Journal of Policy Modeling, Elsevier, vol. 28(9), pages 981-994, December.
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    9. Carsten Helm & Stefan Pichler, 2015. "Climate Policy with Technology Transfers and Permit Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(1), pages 37-54, January.
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    Cited by:

    1. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2021. "Strategic Export Motives and Linking Emission Markets," CESifo Working Paper Series 8847, CESifo.

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    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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