Costs of Greenhouse Gas Emissions Abatement Under the Clean Development Mechanism

Rahman, Shaikh Mahfuzur; Larson, Donald F.; Dinar, Ariel

doi:10.1142/s2010007815500050

Cited by 10 publications

(5 citation statements)

References 14 publications

(10 reference statements)

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“…While the CER prices were falling, the costs of mitigation actions under the CDM were going up with time as project developers started to exhaust the cheap options (Rahman, Larson, & Dinar, 2015). The fall in carbon prices combined with regulatory uncertainty on the future of the CDM in the post-2012 climate regime resulted in a drastic decrease in the number of new CDM project registrations.…”

Section: Projects Squeezed Between Falling Demand and Rising Supplymentioning

confidence: 99%

Evolution of international carbon markets: lessons for the Paris Agreement

Michaelowa

Shishlov

Brescia

2019

WIREs Climate Change

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The Paris Agreement will greatly benefit from the past experience with international market mechanisms for greenhouse gas (GHG) emissions reductions and related regulatory systems, which have gone through four periods with specific challenges. The first period 1997–2004 operationalized the mechanisms defined in the Kyoto Protocol, the Clean Development Mechanism (CDM) and Joint Implementation (JI). Pilot activities in different sectors were undertaken by the public sector, and the first baseline and monitoring methodologies officially approved. Between 2005 and 2011, the carbon markets expanded massively. The EU emission trading scheme (EU ETS) was linked to the Kyoto mechanisms, creating demand for carbon credits from the private sector. During this “gold rush” period criticism emerged with regarding the uneven geographical distribution of projects, as well as environmental integrity problems related to baselines and additionality. The next period saw a collapse in carbon prices between 2012 and 2014, limiting the development of new projects. The quantitative limits on the use of offsets in the EU ETS were reached and the failure to agree on a new international regime resulted in a drying up of demand from governments. The 2015–2018 period is characterized by a gradual stabilization of the international climate regime. The Paris Agreement adopted in 2015 increases complexity through global participation in mitigation. Future carbon markets will therefore face both old challenges—supply–demand balance, environmental integrity, transaction costs—and new ones—interactions with other policies and national targets, and sectoral/policy baselines and additionality checks preventing hot air proliferation. This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior

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Section: Projects Squeezed Between Falling Demand and Rising Supplymentioning

confidence: 99%

Evolution of international carbon markets: lessons for the Paris Agreement

Michaelowa

Shishlov

Brescia

2019

WIREs Climate Change

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“…The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC) to fight global warming. Under this, developed nations (Annex-1 of Kyoto Protocol) and developing nations (Non-Annex-1 of Kyoto Protocol) will reduce combined Greenhouse gas (GHG) emissions by at least 5% below their 1990 levels by first commitment 2008 to 2012 [20]. Kyoto Protocol aims to bind constraints on GHG emissions, cut the costs of reducing emissions, and establish global markets for GHG emission permits.…”

Section: Small Hydropower and Clean Development Mechanism Technologymentioning

confidence: 99%

“…CDM is one of the flexibility mechanisms defined in Article 12 of the Kyoto Protocol and is intended to meet two objectives viz. to assist parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the UNFCCC, which is to avert treacherous climate change and to support parties involved in Annex I in attaining compliance with their enumerated emission limitation and reduction obligations (GHG emission caps) [20].…”

Section: Small Hydropower and Clean Development Mechanism Technologymentioning

confidence: 99%

“…Based on the cost correlations of civil and electro-mechanical components, total SHP cost is given by C SHP = 1.13 (C CIV + C EM ), (16) where C CIV is the cost of civil works, C PHB is cost of powerhouse building, C DW&I is cost of diversion weir and intake, C PC is cost of power channel, C DC is cost of desilting chamber, C F&S is cost of forebay and spillway, C PST is cost of the penstock, C TR is cost of tailrace, C I is cost of intake, C S is cost of spillway, C DW is cost of diversion weir, C TG is cost of turbine governor system, C GE is cost of generator exciter system, C AUX is cost of mechanical and electrical auxiliaries, C T&SY is cost of transformer and switchyard, C EM is cost of electromechanical works and C SHP is cost of SHP plant. The factor 1.13 corresponds to establishment related costs including survey and investigations, preliminary expenses on report preparation, design, audit and accounting, overheads, tools and facilities, communication costs and land costs have been included in indirect/ miscellaneous costs [6,19,20,30].…”

Section: Cost Correlations Of Shpmentioning

confidence: 99%

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Levelized Cost of Electricity Generation by Small Hydropower Projects under Clean Development Mechanism in India

Patro

Kishore²,

Haghighi

2022

Energies

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Contrary to conventional fossil fuel-based electricity generation technologies, renewable energy centered technologies, specifically small hydropower, release a lesser amount of anthropogenic greenhouse gases but are normally more expensive. A major segment of the capital investment in the current small hydropower scenario accounts for equipment and construction process costs. The construction and cost administration process are generally limited to analysis of the capital cost of civil constructions, electro-mechanical equipment works, neglecting the costs related to operating and maintaining the plant, replacement or refurbishment, certified emission reductions, among others. Contemporary studies indicate that these costs form a substantial fraction of the total capital investment. Consequently, for cost management and investment decision making, small hydropower plant developers are drawing increased attention in recent years towards conducting life cycle costing studies that take into account the ignored costs. In addition, small hydropower plants in developing nations can become more competitive by trading the emission reductions achieved under the provision of the Clean Development Mechanism, an outcome of the Kyoto Protocol proposed at the United Nations Framework Convention on Climate Change. In this paper, a modest attempt has been made to determine the Levelized cost of electricity generation using life cycle costing methodology, which accounts for all the costs over operating lifetime on a range of small hydropower plants and the results are analyzed.

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“…Following the fall of prices, combined with uncertainties regarding the future, which are now greater with the creation of the Sustainable Development Mechanism, a new market mechanism to support global emissions mitigation that was introduced in the 2015 Paris Agreement, CDM experienced a large drop in new projects developed under its program (Gao et al 2019;Michaelowa et al 2019). Evidence provided by Rahman et al (2015) indicate that CDM projects' abatement costs are on a downward trend and emphasize that projects must have new benefits to be promoted and cannot just rely on their mitigation.…”

Section: Introductionmentioning

confidence: 99%

Economic feasibility analysis of small hydro power projects

Monteiro

Costa

Christo

et al. 2020

Int. J. Environ. Sci. Technol.

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The clean development mechanism (CDM) was created with two main goals: help developed countries achieve the greenhouse gas emissions reduction targets set out in the Kyoto Protocol and provide sustainable development to developing countries who host the projects. Sustainable project management shares the same goals as the CDM project, which could be a valuable asset in the development of new projects. Much has been discussed about the effectiveness of the program in achieving those goals and even more in the post-2012 period when the CDM has experienced fewer new projects and lower certified emissions reduction (CER) prices compared to previous years. Based on Brazilian CDM project data, this works aims to analyze the economic aspect of sustainable management by observing the influence of the obtained CERs on the internal rates of return (IRRs) of a small hydro plant (SHP) according to the current CDM scenario, marked by CER prices reaching their lowest historical values. For this study, a spreadsheet was developed to simulate a project's cash flows and thus determine its IRRs. The results show that using the current CER prices, carbon credits do not significantly affect SHP projects' IRRs, with increases of less than 0.2% compared to a scenario with no credits. CDM projects may benefit more from optimizing the investment costs or increasing energy production. These results highlight a need to emphasize the sustainable benefits of the CDM program rather than only focusing on the economic return perspective.

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Costs of Greenhouse Gas Emissions Abatement Under the Clean Development Mechanism

Cited by 10 publications

References 14 publications

Evolution of international carbon markets: lessons for the Paris Agreement

Evolution of international carbon markets: lessons for the Paris Agreement

Levelized Cost of Electricity Generation by Small Hydropower Projects under Clean Development Mechanism in India

Economic feasibility analysis of small hydro power projects

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