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Technology transfer and cost structure of clean development mechanism projects: an empirical study of Indian cases

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Abstract

This research empirically estimates abatement costs under the Clean Development Mechanism (CDM) in India, using project-level data for 830 projects that had been registered as of April 2014. Emphasis lies on assessing the impact of international technology transfer on abatement costs and on testing whether CDM projects in India have experienced a “low-hanging fruits” problem or have benefitted from learning effects. The results suggest that projects that include technology transfer have higher abatement costs. However, this does not appear to be universally applicable when assessing technology transfer by project type. Second, no conclusive evidence is found to support a “low-hanging fruits” problem, both empirically and based on the finding that most Indian projects are conducted unilaterally. On the contrary, some project types showed that abatement costs decrease as more projects are implemented. Finally, results suggest increasing returns to scale as well as economies of time in terms of project duration.

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Notes

  1. Datasets were constructed for ASEAN, China and India as part of a research paper by the Institute for Global Environmental Strategies, Japan (IGES, forthcoming).

  2. Kim et al. (2013) introduced the concept of “neglected technology.” They pointed out that CDM does not necessarily provide technologies which developing countries are demanding. The examples of neglected technologies include “solar energy for remote locations, biofuels, improved cooking stoves, and efficient lighting” (Kim et al. 2013).

  3. See Narain and Van’t Veld (2001, p. 7).

  4. In addition, a validation report by the designated operational entity (DOE) and letter of approval by the Designated National Authority (DNA) need to be submitted (CDM Rulebook 2015a).

  5. Additionality is the key criteria of CDM projects and is defined as “CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity” (CDM Rulebook 2015b). For more detailed information on the concept of additionality, see Müller (2009).

  6. Simple cost analysis is applicable for projects with no revenue other than CERs. Costs of CDM project activity are compared with the project costs of alternatives.

  7. Key terms such as “transfer”, “technology”, “manufacturer”, “import”, and others were looked up using the search function. If a search was inconclusive, the PDD was read in more detail. In addition to key terms used by Dechezleprêtre et al. (2008), “license” was included based on three technology transfer channels identified in Popp (2011).

  8. See Seres et al. (2009; p. 4920).

  9. In addition, it appears that projects with negative project costs (i.e., those that do not fulfill the additionality criteria) are included in the sample. This can potentially be explained by the option of barrier analysis. If barriers can be identified that hinder project implementation without CDM project status, a project may still be eligible for CDM registration (UNFCCC 2012).

  10. Phrasing such as “indigenous technologies that are locally available are used” is considered to implicitly deny technology transfer. Other instances in which the technology supplier could be identified as Indian also count as implicit denial of technology transfer.

  11. For an overview of the conceptual model, see Sect. 2.1 in Rahman et al. (2012).

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Authors and Affiliations

  1. Graduate School of Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjyuku-ku, Tokyo, 169-8050, Japan

    Nils Simon

  2. Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjyuku-ku, Tokyo, 169-8050, Japan

    Toshi H. Arimura & Minoru Morita

  3. The Institute for Global Environmental Strategies, 2108-11 Hayama, Kanagawa, 240-0115, Japan

    Akihisa Kuriyama & Kazuhisa Koakutsu

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  1. Nils Simon
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  2. Toshi H. Arimura
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  3. Minoru Morita
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  4. Akihisa Kuriyama
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  5. Kazuhisa Koakutsu
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Corresponding author

Correspondence to Toshi H. Arimura.

Additional information

This research was financially supported by The Institute for Global Environmental Strategies. Toshi Arimura and Minoru Morita are also grateful to the Center for Global Partnership of the Japan Foundation for the financial support. Toshi Arimura also appreciates the funding from the Environment Research and Technology Development Fund (2-1501) of the Ministry of the Environment, Japan. The views expressed herein and those of the authors do not necessarily reflect the views of the Institute for Global Environmental Strategies.

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Simon, N., Arimura, T.H., Morita, M. et al. Technology transfer and cost structure of clean development mechanism projects: an empirical study of Indian cases. Environ Econ Policy Stud 19, 609–633 (2017). https://doi.org/10.1007/s10018-016-0175-0

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