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Energy substitution, transport infrastructure and energy efficiency under the clean development mechanism - Will the baseline make a difference?

Panel: Panel 6: Energy Efficiency Under Joint Implementation & The Clean Development Mechanism

Authors:
Cécile Blanco, International Research Centre in Agricultural Sciences for Development (CIRAD)
Anna Engleryd, International Centre for Research on Environment and Development (CIRED)
Sandrine Mathy, International Centre for Research on Environment and Development (CIRED)

Abstract

The double objective of the Clean Development Mechanism, CDM, is (1) to ease a sustainable development of developing countries, and at the same time, (2) to open a margin of flexibility for industrialised countries seeking to fulfil their emission reduction commitments. A number of project types in line with these two objectives can be imagined. A fundamental condition for eligibility is that the projects result in an environmental additionality compared to a situation without the project, i.e. additional emission reductions compared to a pre-determined baseline.

This baseline thus serves to determine the emission reduction credits resulting from a specific project and, depending on the level of remuneration of these credits, influences the economic profitability of the project. The setting of this baseline is therefore crucial for the concerned actors' interest to engage in different CDM projects. Upon this depends the potential for the CDM to function as a catalyst making implementation of otherwise unprofitable emission reduction projects possible.

This paper discusses the importance of how the baseline is set for the economic feasibility of three possible CDM projects concerning; (1) energy substitution, (2) urban transport, and (3) end-use energy efficiency. A comparative case study serves to illustrate the attributable emission reductions and the economic feasibility of different projects under different baseline assumptions, and the importance of the baseline setting for the mix of project types under the CDM.

Paper

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