Contribution of clean development mechanism to the mitigation of greenhouse gas emissions

The scale and role of the emerging carbon market are forecasted using a partial equilibrium model of the global trade of carbon reduction to investigate the market potential and market structure of the clean development mechanism(CDM),as well as its contribution to the reduction of global greenhouse gas emissions.The results show that during the first commitment period of the Kyoto Protocol,the China's CDM market CO2 scale will be 2 200 Mt per year,accounting for 40% of the whole CER supply in the world. If only joint implementation and emission trading is available without the CDM,the total cost for Annex B countries to fulfill their commitment in the Kyoto Protocol would increase by 67%.China's CDM supply then reduces Annex B countries' economic cost for CO2 reduction by 23%.The hot air ratio and the CDM project development transaction costs are major two sensitive parameters in the model.The results show that capacity building that aims to alleviate the CDM transaction cost in developing countries will significantly increase the CDM market.