Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192573 
Year of Publication: 
2009
Series/Report no.: 
Discussion Papers No. 591
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given target for greenhouse gas (GHG) emissions in industrialized Annex B countries of the Kyoto Protocol, by shifting some of the emission reductions to Non-Annex B countries. This paper analyzes how CDM projects may lead to leakage of emissions elsewhere in Non-Annex B countries, taking into account also potential (negative) leakage effects from less emission reductions in Annex B. Leakage occurs because emissions reductions under a CDM project may affect market equilibrium in regional and/or global energy and product markets, and thereby increase emissions elsewhere. We find that overall leakage typically will be positive and sizeable, thus leading to an overall increase in global GHG emissions when CDM projects are undertaken. The leakage rate is greatest when the different fossil fuel markets are more segregated.
Subjects: 
Carbon leakage
Clean Development Mechanism
Kyoto protocol
JEL: 
F18
H23
Q41
Q54
Document Type: 
Working Paper

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