Carbon Offsets with Endogenous Environmental Policy
Interests in obtaining carbon offsets in host countries for Clean Development Mechanism projects may serve as an obstacle to implementing more stringent general environmental policies in the same countries. A relatively lax environmental policy, wh...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100507104204 http://hdl.handle.net/10986/3782 |
| Summary: | Interests in obtaining carbon offsets in
host countries for Clean Development Mechanism projects may
serve as an obstacle to implementing more stringent general
environmental policies in the same countries. A relatively
lax environmental policy, whereby carbon emissions remain
high, can be advantageous for such countries as it leaves
them with a higher than otherwise scope for future emissions
reductions through Clean Development Mechanism and other
offset projects. In this note, the potential to affect the
availability of future Clean Development Mechanism projects
is shown to distort environmental and energy policies of
Clean Development Mechanism host countries in two ways.
Measures to reduce use of fossil energy are weakened.
Because this weakens private sector incentives to switch to
lower-carbon technology through Clean Development Mechanism
projects, host governments then also find it attractive to
subsidize this switch, in order to maximize the country s
advantage from the Clean Development Mechanism. |
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