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Title:Value and Risks of Expiring Carbon Credits from CDM Afforestation and Reforestation PDF Logo
Authors:Dutschke, Michael
Schlamadinger, Bernhard
Wong-Leung, Jenny P.
Rumberg, Michael
Issue Date:2004
Series/Report no.:HWWA Discussion Paper 290
Abstract:The Milan conference of the UN Framework Convention on Climate Change has established two types of emission offsets under the Clean Development Mechanism (CDM), valid for afforestation and reforestation activities. In order to account for the non-permanent nature of carbon storage in forests, these credits expire after a predefined periods, after which the buyer needs to replace them. The present article assesses their market value in relation to ?permanent? credits, identifies their specific risks and proposes how to mitigate and manage them. It analyzes strengths and weaknesses of expiring credits for sellers and buyers. Taking the example of the EU emissions trading system, the authors discuss how expiring credits could reach fungibility with permanent emission allowances on domestic markets.
Subjects:CDM
afforestation
reforestation
permanence
insurance
lCER
tCER
JEL:Q13
Q25
Q23
Document Type:Working Paper
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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