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

Chapter
Part of the Local Sustainability book series (LOCAL, volume 3)

Abstract

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.

Keywords

Greenhouse gas mitigation Market mechanisms Clean Development Mechanism Offsets 

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

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

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