CLEAN DEVELOPMENT MECHANISM IN A POST-KYOTO FRAMEWORK

Abstract

The Clean Development Mechanism (CDM) is a Greenhouse Gas (GHG) offset mechanism which is a part of the Kyoto Protocol. It allows developed countries to reduce GHGs in developing countries. Since the marginal cost of GHG reduction is lower in developing countries, this mechanism contributes to effective GHG reduction for developed countries. At the same time, according to the Kyoto Protocol, it should assist sustainable development in developing countries. However, many argue that this potential win-win mechanism is not working effectively, and will need some improvement after Kyoto expires. Given GHG emissions from developed countries will surpass those from developing countries around 2015, it is important for CDM not only to retain an offset scheme, but to also assist in decarbonization of developing countries. In this project, current CDM projects which have already been registered or rejected by the United Nations Framework Convention on Climate Change (UNFCCC) as of January 4th, 2010 are examined by using linear and logistical regression models to detect significant factors with respect to successful registration, project duration, project scale and project efficiency. Each analysis is conducted for all CDM projects and for Japanese CDM projects. The results from the models show CDM projects with particular characteristics (sector, host countries, validator) are less risky in terms of investment. This means research and development for CDM schemes are beneficial for improvement of GHG reduction in developing countries. However, it is still difficult to assess how much each CDM project contributes to the sustainable development of a given host country.