The market impact of a CDM capacity fund
The market impact of a CDM capacity fund : final report. London : Vivid Economics, June 2013, 52 p.
This paper, prepared with the financial support of the Secretariat of the United Nations Framework Convention on Climate Change, explores the possible market impact of a CDM capacity fund. It investigates the impact of a fund focussing on purchasing credits from existing projects, suggesting that a fund of €2.5 – €3.0 billion may be needed to have a fundamental impact on the supply-demand balance in the market, but that a smaller sized fund could still generate some benefits. The report also explores how a fund that focusses on credits from new projects might be designed, suggesting that placing a floor price in the market could be attractive. Finally, it outlines the key considerations that policymakers may wish to take into account if choosing between a fund focussed on credits from existing or new projects. The paper responds to the recommendation made in last year’s report by the High-Level Panel on the CDM Policy Dialogue (‘A Call to Action’) to consider establishing such a fund and is intended to contribute to ongoing dialogue with policymakers on this topic.