Picard, Pierre M.[University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
2012
Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
CORE Discussion Papers
Yes
[en] clean development mechanism ; climate policy ; strategic interactions
[en] This paper discusses the role of the Clean Development Mechanism (CDM) on the market for carbon quotas and countries' commitments to reduce their carbon emission levels. We show that the CDM contributes to an efficient funding of clean technology investments in least developed countries. However, the CDM is not neutral on the global level of carbon emissions as it entices countries to raise their emission caps. The CDM may also make inappropriate the inclusion of any country that takes no emission abatement commitment. It can even make inefficient a country's decision to commit to an emission target.