Will CDM Still be Effective after Kyoto Protocol? - Two Dilemmas in the Mechanism

Clean Development Mechanism is one of the Climate Mitigation tools with the purposes to reduce GHGs. We resemble the one-shot public-goods game to deduce the constraints for CDM’s long-term effectiveness. By studying PDDs of China’s registered programs, we find the effect of technology transfer is not obvious. The dilemma between CDM’s additionality and host countries’ environment policies, as well as the dilemma between CDM as public good and technology as private good can account for the uncertainty about CDM after the expiring of Kyoto Protocols. Our analysis shows with the development of Carbon Finance of the host countries and the symmetry of information between each participant have a positive affect on the effectiveness of CDM.