Financing a Green Urban Economy: The Potential of the Clean Development Mechanism (CDM)

  • Maike Sippel
  • Axel Michaelowa
Part of the Local Sustainability book series (LOCAL, volume 3)


The Clean Development Mechanism (CDM) allows entities that reduce greenhouse gas emissions through projects in developing countries to generate revenues through the sale of emission credits. Principally, city governments are well placed to set up CDM projects in the waste, building, energy and transport sectors. With the price of emission credits reaching up to 20 EUR/t CO2 CDM revenues can finance the entirety of certain waste management projects and significant shares of energy and building efficiency projects. For transport projects CDM revenues can cover a significant share of operating costs. However, to date the share of cities in CDM projects has been relatively small, which might be due to the complexity of CDM rules and some short-term orientation of city officials. Private companies within cities have been more successful. With recent reforms the CDM has become much easier. If the demand for emission credits rises sufficiently to significantly increase their price from recent lows the CDM could become a cornerstone for financing a greening of the urban economy in developing countries.


Greenhouse gas mitigation Market mechanisms Clean Development Mechanism Offsets 


  1. C40 Cities (2009) CC40 Cities: Sao Paulo, Brazil, Sao Joao and Bandeirantes landfills. Accessed via Cited 23 Nov 2009
  2. Clapp C, Leseur A, Sartor O, Briner G, Corfee-Morlot J (2010) Cities and carbon market finance: taking stock of cities’ experience with Clean Development Mechanism (CDM) and Joint Implementation (JI). OECD environment working paper. 29. OECD Publishing, ParisGoogle Scholar
  3. Grütter JM (2007) The CDM in the transport sector, module 5d – sustainable transport: a sourcebook for policy-makers in developing cities. GTZ, EschbornGoogle Scholar
  4. Kennedy C, Steinberger J, Gasson B, Hansen Y, Hillman T, Havranek M, Pataki D, Phdungsilp A, Ramswami A, Villalba Mendez G (2009) Greenhouse gas emissions from global cities. Environ Sci Technol 43(19):7297–7302CrossRefGoogle Scholar
  5. Labriet M, Caldes N, Izquierdo L (2009) A review on urban air quality, global climate change and CDM issues in the transportation sector. Int J Glob Warm 1(3):144–159CrossRefGoogle Scholar
  6. Satterthwaite D (2008) Cities’ contribution to global warming: notes on the allocation of greenhouse gas emissions. Environ Urban 20:539–549CrossRefGoogle Scholar
  7. Sippel M, Michaelowa A (2009) Does global climate policy promote low-carbon cities? Lessons learnt from the CDM. Center for Comparative and International Studies (CIS) working paper no 49, ETH Zurich and University of ZurichGoogle Scholar
  8. Sovacool B, Brown M (2010) Twelve metropolitan carbon footprints: a preliminary comparative global assessment. Energy Policy 38:4856–4869CrossRefGoogle Scholar
  9. UNFCCC – United Nations Framework Convention on Climate Change (2011) CDM in numbers. Accessed via Cited 12 Dec 2011
  10. UN-Habitat – United Nations Human Settlements Programme (2011) Global report on human settlements 2011: cities and climate change – policy directions. Earthscan, LondonGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.University of Applied ScienceKonstanzGermany
  2. 2.University of ZurichZurichSwitzerland

Personalised recommendations