The Cost Structure of the Clean Development Mechanism

This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distrib...

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Main Authors:	Rahman, Shaikh M., Larson, Donald F., Dinar, Ariel
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABATEMENT COSTS ABATEMENT TECHNOLOGY AFFORESTATION AGGREGATE LEVEL AIR AIR POLLUTION ALTERNATIVE METHODS AMOUNT OF EMISSIONS ANIMAL WASTE ANTHROPOGENIC GREENHOUSE ANTHROPOGENIC GREENHOUSE GAS APPROACH ATMOSPHERE BASELINE EMISSIONS BIOGAS CALCULATION CAPITAL COST CAPITAL COST DATA CAPITAL COSTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CARBON CARBON CAP CARBON DIOXIDE CARBON EMISSIONS CARBON MARKET CEMENT CERTIFIED EMISSION REDUCTION CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATIC CHANGE CO2 COAL COAL MINE COST OF PRODUCTION COSTS OF ABATEMENT DEVELOPMENT ECONOMICS DISCOUNT FACTOR DRIVING ECOLOGICAL ECONOMICS ECONOMICS OF CLIMATE CHANGE ECONOMIES OF SCALE ELASTICITIES ELASTICITY ELECTRIC POWER ELECTRICITY ELECTRICITY GENERATING ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SALES ELECTRICITY TARIFF ELECTRICITY TARIFFS EMISSION ABATEMENT EMISSION CONTROL EMISSION PERMITS EMISSION RATES EMISSION REDUCTION EMISSION REDUCTION CREDIT EMISSION REDUCTION TARGETS EMISSION TRADING EMISSIONS EMISSIONS ABATEMENT EMISSIONS REDUCTION EMISSIONS REDUCTIONS ENERGY EFFICIENCY ENVIRONMENTAL ECONOMICS ENVIRONMENTAL REGULATION FIXED COSTS FOREST FORESTRY FORESTRY PROJECTS FOSSIL FOSSIL FUEL FRAMEWORK CONVENTION ON CLIMATE CHANGE FUEL SWITCHING GENERATING CAPACITY GENERATION CAPACITY GHG GHGS GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GAS MITIGATION GREENHOUSE GASES HFCS HOURS OF OPERATION INTEREST RATE INTERNATIONAL ENERGY AGENCY INVESTMENT DECISIONS LAND ECONOMICS LANDFILL LANDFILL GAS LEVELS OF EMISSIONS LOWER COSTS MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL COST OF ABATEMENT METHANE MITIGATION POTENTIAL N2O NET COST NITROGEN NITROUS OXIDE NUCLEAR ENERGY PFCS PIPELINE POLICY IMPLICATIONS POLLUTANTS POLLUTION LEVELS POLLUTION LOAD PORTFOLIO POWER GENERATION POWER GENERATION CAPACITY POWER SECTOR PRESENT COST PRESENT VALUE RENEWABLE ENERGY RENEWABLE ENERGY PROJECTS RENEWABLE RESOURCE RESOURCE ECONOMICS SO2 SOLAR POWER SUBSTITUTION SULFUR SULFUR EMISSIONS SUPPLY SIDE SUSTAINABLE DEVELOPMENT TOTAL COST TOTAL COSTS TOTAL EMISSIONS TRADABLE EMISSION TRANSACTION COSTS TRANSPORT TRANSPORT PROJECTS TRANSPORTATION TRANSPORTATION PROJECTS TRUE UNCERTAINTIES UNEP VARIABLE COST WASTEWATER TREATMENT WATER POLLUTION WATER QUALITY WATER TREATMENT WIND WIND FARM
Online Access:	http://documents.worldbank.org/curated/en/2012/11/16952290/cost-structure-clean-development-mechanism http://hdl.handle.net/10986/19929

id	okr-10986-19929
recordtype	oai_dc
spelling	okr-10986-199292021-04-23T14:03:52Z The Cost Structure of the Clean Development Mechanism Rahman, Shaikh M. Larson, Donald F. Dinar, Ariel ABATEMENT COSTS ABATEMENT TECHNOLOGY AFFORESTATION AGGREGATE LEVEL AIR AIR POLLUTION ALTERNATIVE METHODS AMOUNT OF EMISSIONS ANIMAL WASTE ANTHROPOGENIC GREENHOUSE ANTHROPOGENIC GREENHOUSE GAS APPROACH ATMOSPHERE BASELINE EMISSIONS BIOGAS CALCULATION CAPITAL COST CAPITAL COST DATA CAPITAL COSTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CARBON CARBON CAP CARBON DIOXIDE CARBON EMISSIONS CARBON MARKET CEMENT CERTIFIED EMISSION REDUCTION CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATIC CHANGE CO2 COAL COAL MINE COST OF PRODUCTION COSTS OF ABATEMENT DEVELOPMENT ECONOMICS DISCOUNT FACTOR DRIVING ECOLOGICAL ECONOMICS ECONOMICS OF CLIMATE CHANGE ECONOMIES OF SCALE ELASTICITIES ELASTICITY ELECTRIC POWER ELECTRICITY ELECTRICITY GENERATING ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SALES ELECTRICITY TARIFF ELECTRICITY TARIFFS EMISSION ABATEMENT EMISSION CONTROL EMISSION PERMITS EMISSION RATES EMISSION REDUCTION EMISSION REDUCTION CREDIT EMISSION REDUCTION TARGETS EMISSION TRADING EMISSIONS EMISSIONS ABATEMENT EMISSIONS REDUCTION EMISSIONS REDUCTIONS ENERGY EFFICIENCY ENVIRONMENTAL ECONOMICS ENVIRONMENTAL REGULATION FIXED COSTS FOREST FORESTRY FORESTRY PROJECTS FOSSIL FOSSIL FUEL FRAMEWORK CONVENTION ON CLIMATE CHANGE FUEL SWITCHING GENERATING CAPACITY GENERATION CAPACITY GHG GHGS GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GAS MITIGATION GREENHOUSE GASES HFCS HOURS OF OPERATION INTEREST RATE INTERNATIONAL ENERGY AGENCY INVESTMENT DECISIONS LAND ECONOMICS LANDFILL LANDFILL GAS LEVELS OF EMISSIONS LOWER COSTS MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL COST OF ABATEMENT METHANE MITIGATION POTENTIAL N2O NET COST NITROGEN NITROUS OXIDE NUCLEAR ENERGY PFCS PIPELINE POLICY IMPLICATIONS POLLUTANTS POLLUTION LEVELS POLLUTION LOAD PORTFOLIO POWER GENERATION POWER GENERATION CAPACITY POWER SECTOR PRESENT COST PRESENT VALUE RENEWABLE ENERGY RENEWABLE ENERGY PROJECTS RENEWABLE RESOURCE RESOURCE ECONOMICS SO2 SOLAR POWER SUBSTITUTION SULFUR SULFUR EMISSIONS SUPPLY SIDE SUSTAINABLE DEVELOPMENT TOTAL COST TOTAL COSTS TOTAL EMISSIONS TRADABLE EMISSION TRANSACTION COSTS TRANSPORT TRANSPORT PROJECTS TRANSPORTATION TRANSPORTATION PROJECTS TRUE UNCERTAINTIES UNEP VARIABLE COST WASTEWATER TREATMENT WATER POLLUTION WATER QUALITY WATER TREATMENT WIND WIND FARM This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time. 2014-09-02T18:54:03Z 2014-09-02T18:54:03Z 2012-11 http://documents.worldbank.org/curated/en/2012/11/16952290/cost-structure-clean-development-mechanism http://hdl.handle.net/10986/19929 English en_US Policy Research Working Paper;No. 6262 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABATEMENT COSTS ABATEMENT TECHNOLOGY AFFORESTATION AGGREGATE LEVEL AIR AIR POLLUTION ALTERNATIVE METHODS AMOUNT OF EMISSIONS ANIMAL WASTE ANTHROPOGENIC GREENHOUSE ANTHROPOGENIC GREENHOUSE GAS APPROACH ATMOSPHERE BASELINE EMISSIONS BIOGAS CALCULATION CAPITAL COST CAPITAL COST DATA CAPITAL COSTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CARBON CARBON CAP CARBON DIOXIDE CARBON EMISSIONS CARBON MARKET CEMENT CERTIFIED EMISSION REDUCTION CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATIC CHANGE CO2 COAL COAL MINE COST OF PRODUCTION COSTS OF ABATEMENT DEVELOPMENT ECONOMICS DISCOUNT FACTOR DRIVING ECOLOGICAL ECONOMICS ECONOMICS OF CLIMATE CHANGE ECONOMIES OF SCALE ELASTICITIES ELASTICITY ELECTRIC POWER ELECTRICITY ELECTRICITY GENERATING ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SALES ELECTRICITY TARIFF ELECTRICITY TARIFFS EMISSION ABATEMENT EMISSION CONTROL EMISSION PERMITS EMISSION RATES EMISSION REDUCTION EMISSION REDUCTION CREDIT EMISSION REDUCTION TARGETS EMISSION TRADING EMISSIONS EMISSIONS ABATEMENT EMISSIONS REDUCTION EMISSIONS REDUCTIONS ENERGY EFFICIENCY ENVIRONMENTAL ECONOMICS ENVIRONMENTAL REGULATION FIXED COSTS FOREST FORESTRY FORESTRY PROJECTS FOSSIL FOSSIL FUEL FRAMEWORK CONVENTION ON CLIMATE CHANGE FUEL SWITCHING GENERATING CAPACITY GENERATION CAPACITY GHG GHGS GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GAS MITIGATION GREENHOUSE GASES HFCS HOURS OF OPERATION INTEREST RATE INTERNATIONAL ENERGY AGENCY INVESTMENT DECISIONS LAND ECONOMICS LANDFILL LANDFILL GAS LEVELS OF EMISSIONS LOWER COSTS MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL COST OF ABATEMENT METHANE MITIGATION POTENTIAL N2O NET COST NITROGEN NITROUS OXIDE NUCLEAR ENERGY PFCS PIPELINE POLICY IMPLICATIONS POLLUTANTS POLLUTION LEVELS POLLUTION LOAD PORTFOLIO POWER GENERATION POWER GENERATION CAPACITY POWER SECTOR PRESENT COST PRESENT VALUE RENEWABLE ENERGY RENEWABLE ENERGY PROJECTS RENEWABLE RESOURCE RESOURCE ECONOMICS SO2 SOLAR POWER SUBSTITUTION SULFUR SULFUR EMISSIONS SUPPLY SIDE SUSTAINABLE DEVELOPMENT TOTAL COST TOTAL COSTS TOTAL EMISSIONS TRADABLE EMISSION TRANSACTION COSTS TRANSPORT TRANSPORT PROJECTS TRANSPORTATION TRANSPORTATION PROJECTS TRUE UNCERTAINTIES UNEP VARIABLE COST WASTEWATER TREATMENT WATER POLLUTION WATER QUALITY WATER TREATMENT WIND WIND FARM
spellingShingle	ABATEMENT COSTS ABATEMENT TECHNOLOGY AFFORESTATION AGGREGATE LEVEL AIR AIR POLLUTION ALTERNATIVE METHODS AMOUNT OF EMISSIONS ANIMAL WASTE ANTHROPOGENIC GREENHOUSE ANTHROPOGENIC GREENHOUSE GAS APPROACH ATMOSPHERE BASELINE EMISSIONS BIOGAS CALCULATION CAPITAL COST CAPITAL COST DATA CAPITAL COSTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CARBON CARBON CAP CARBON DIOXIDE CARBON EMISSIONS CARBON MARKET CEMENT CERTIFIED EMISSION REDUCTION CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATIC CHANGE CO2 COAL COAL MINE COST OF PRODUCTION COSTS OF ABATEMENT DEVELOPMENT ECONOMICS DISCOUNT FACTOR DRIVING ECOLOGICAL ECONOMICS ECONOMICS OF CLIMATE CHANGE ECONOMIES OF SCALE ELASTICITIES ELASTICITY ELECTRIC POWER ELECTRICITY ELECTRICITY GENERATING ELECTRICITY GENERATION ELECTRICITY GENERATION CAPACITY ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SALES ELECTRICITY TARIFF ELECTRICITY TARIFFS EMISSION ABATEMENT EMISSION CONTROL EMISSION PERMITS EMISSION RATES EMISSION REDUCTION EMISSION REDUCTION CREDIT EMISSION REDUCTION TARGETS EMISSION TRADING EMISSIONS EMISSIONS ABATEMENT EMISSIONS REDUCTION EMISSIONS REDUCTIONS ENERGY EFFICIENCY ENVIRONMENTAL ECONOMICS ENVIRONMENTAL REGULATION FIXED COSTS FOREST FORESTRY FORESTRY PROJECTS FOSSIL FOSSIL FUEL FRAMEWORK CONVENTION ON CLIMATE CHANGE FUEL SWITCHING GENERATING CAPACITY GENERATION CAPACITY GHG GHGS GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GAS MITIGATION GREENHOUSE GASES HFCS HOURS OF OPERATION INTEREST RATE INTERNATIONAL ENERGY AGENCY INVESTMENT DECISIONS LAND ECONOMICS LANDFILL LANDFILL GAS LEVELS OF EMISSIONS LOWER COSTS MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL COST OF ABATEMENT METHANE MITIGATION POTENTIAL N2O NET COST NITROGEN NITROUS OXIDE NUCLEAR ENERGY PFCS PIPELINE POLICY IMPLICATIONS POLLUTANTS POLLUTION LEVELS POLLUTION LOAD PORTFOLIO POWER GENERATION POWER GENERATION CAPACITY POWER SECTOR PRESENT COST PRESENT VALUE RENEWABLE ENERGY RENEWABLE ENERGY PROJECTS RENEWABLE RESOURCE RESOURCE ECONOMICS SO2 SOLAR POWER SUBSTITUTION SULFUR SULFUR EMISSIONS SUPPLY SIDE SUSTAINABLE DEVELOPMENT TOTAL COST TOTAL COSTS TOTAL EMISSIONS TRADABLE EMISSION TRANSACTION COSTS TRANSPORT TRANSPORT PROJECTS TRANSPORTATION TRANSPORTATION PROJECTS TRUE UNCERTAINTIES UNEP VARIABLE COST WASTEWATER TREATMENT WATER POLLUTION WATER QUALITY WATER TREATMENT WIND WIND FARM Rahman, Shaikh M. Larson, Donald F. Dinar, Ariel The Cost Structure of the Clean Development Mechanism
relation	Policy Research Working Paper;No. 6262
description	This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time.
format	Publications & Research :: Policy Research Working Paper
author	Rahman, Shaikh M. Larson, Donald F. Dinar, Ariel
author_facet	Rahman, Shaikh M. Larson, Donald F. Dinar, Ariel
author_sort	Rahman, Shaikh M.
title	The Cost Structure of the Clean Development Mechanism
title_short	The Cost Structure of the Clean Development Mechanism
title_full	The Cost Structure of the Clean Development Mechanism
title_fullStr	The Cost Structure of the Clean Development Mechanism
title_full_unstemmed	The Cost Structure of the Clean Development Mechanism
title_sort	cost structure of the clean development mechanism
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2012/11/16952290/cost-structure-clean-development-mechanism http://hdl.handle.net/10986/19929
_version_	1764443926298624000

The Cost Structure of the Clean Development Mechanism

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