Clean Development Mechanism (CDM)

Havukainen, Minna; Waldén, Pirjetta; Kahiluoto, Helena

doi:10.1007/978-3-030-02006-4_1035-1

Cited by 2 publications

(1 citation statement)

References 14 publications

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“…Kyoto was a "cap and trade" system that imposes national caps on the emissions of industrialized Annex I countries. The CDM, which entered into force in 2005, was one of the flexibility mechanisms through which developing countries participated in mitigation actions under the Kyoto Protocol (Havukainen et al, 2022). 6 This flexible market-based offset mechanism allowed developing countries to earn CER credits, each equivalent to one ton of CO 2 , by investing in emission reduction projects (Lee & Jang, 2022).…”

Section: The Cdm Project Cycle and Associated Risksmentioning

confidence: 99%

Valuing investments in the Global Carbon Market Mechanism as compound real options: Lessons from the Clean Development Mechanism

Cassimon

Engelen

Peters

et al. 2023

Sustainable Development

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The Global Carbon Market Mechanism (GCMM) aims to incentivize national or sub‐national actors to invest in climate mitigation projects at the same time as limiting the global costs of tackling global warming. Using the worked example of the Clean Development Mechanism (CDM), this article shows that the exact valuation of a mitigation project requires the application of compound real options techniques, as it is able to account for the multi‐staged nature of a project cycle, as well as the two basic sources of uncertainty (the probability of not moving successfully to the next stage of the cycle, technical risk, and the uncertainty related to future emission reduction credit prices, market risk). Using parameters from the global database of registered CDM projects, this article illustrates that longer than projected lead times, higher than projected transaction costs, and higher than projected rates of failure lowered the value of investing in CDM projects considerably, alongside offset prices and their variability. Regulators of and participants within the patchwork of existing emission trading schemes and market mechanisms, including the GCMM (Article 6.4 of the Paris Agreement), could benefit through wider appreciation of the benefits of this valuation method.

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Section: The Cdm Project Cycle and Associated Risksmentioning

confidence: 99%

Valuing investments in the Global Carbon Market Mechanism as compound real options: Lessons from the Clean Development Mechanism

Cassimon

Engelen

Peters

et al. 2023

Sustainable Development

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The additionality problem of ocean alkalinity enhancement

Bach

2024

Biogeosciences

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Abstract. Ocean alkalinity enhancement (OAE) is an emerging approach for atmospheric carbon dioxide removal (CDR). The net climatic benefit of OAE depends on how much it can increase CO2 sequestration relative to a baseline state without OAE. This so-called “additionality” can be calculated as follows: Additionality=COAE-ΔCbaseline. So far, feasibility studies on OAE have mainly focussed on enhancing alkalinity in the oceans to stimulate CO2 sequestration (COAE); however, the primary focus has not been on how such anthropogenic alkalinity would modify the natural alkalinity cycle and associated baseline CO2 sequestration (ΔCbaseline). Here, I present incubation experiments in which materials considered for OAE (sodium hydroxide, steel slag, and olivine) are exposed to beach sand to investigate the influence of anthropogenic alkalinity on natural alkalinity sources and sinks. The experiments show that anthropogenic alkalinity can strongly reduce the generation of natural alkalinity, thereby reducing additionality. This is because the anthropogenic alkalinity increases the calcium carbonate saturation state, which reduces the dissolution of calcium carbonate from sand, a natural alkalinity source. I argue that this “additionality problem” of OAE is potentially widespread and applies to many marine systems where OAE implementation is considered – far beyond the beach scenario investigated in this study. However, the problem can potentially be mitigated by dilute dosing of anthropogenic alkalinity into the ocean environment and the avoidance of OAE in natural alkalinity cycling hotspots, such as in marine sediments. Understanding a potential slowdown of the natural alkalinity cycle through the introduction of an anthropogenic alkalinity cycle will be crucial for the assessment of OAE.

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Clean Development Mechanism (CDM)

Cited by 2 publications

References 14 publications

Valuing investments in the Global Carbon Market Mechanism as compound real options: Lessons from the Clean Development Mechanism

Valuing investments in the Global Carbon Market Mechanism as compound real options: Lessons from the Clean Development Mechanism

The additionality problem of ocean alkalinity enhancement

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