PROSPECTS OF CDM FOR PROMOTING SUSTAINABLE DEVELOPMENT IN CHINA

This report analyzes the potential for China to participate in the Clean Development Mechanism (CDM) under the Kyoto Protocol. It evaluates the economic, environmental, and social benefits and costs, emphasizing that while the CDM offers short-term gains in foreign investment and technology, it poses a long-term risk of technology dependence if core R&D and manufacturing capabilities are not transferred. The authors provide strategic recommendations for China to ensure the CDM supports its long-term sustainable development goals.

• The Clean Development Mechanism (CDM) serves a dual objective: assisting non-Annex I parties in achieving sustainable development and helping Annex I parties meet their quantified emission limitation and reduction commitments.
• China is positioned as a significant potential market for the CDM due to its coal-dominated energy structure and inefficient energy technology, which result in low marginal costs for greenhouse gas emission reduction.
• Estimates of the potential CDM market vary widely across studies, with figures ranging from a low of 67-141 MtC (Vrolijk) to a high of 723 MtC (Ellerman and Decaux).
• Zhongxiang Zhang estimates that China could hold a dominant share of the CDM market, approximately 60%, based on differences in marginal abatement costs.
• Participation in the CDM could attract substantial foreign investment to China; conservative calculations suggest potential investment as high as US$5.2 billion during the 2008-2012 commitment period if no restrictions are placed on Annex I countries.
• There is a significant risk that the CDM may only transfer 'Flow A' technology (capital goods/mitigation equipment) and 'Flow B' (operation and maintenance), rather than the core 'Flow C' technology (R&D and design), leading to long-term technology dependence on foreign suppliers.
• The report identifies a conflict between intellectual property rights and technology diffusion, noting that investors often restrain technology from diffusing to protect their economic interests, as seen in China's first AIJ pilot project.
• Beyond carbon reduction, CDM projects can provide indirect short-term benefits including improved air and water quality, biodiversity protection, rural development, and poverty alleviation.
• China's participation in the CDM is unlikely to cause a dramatic increase in its future marginal abatement costs, though it may raise them slightly (estimated at 2.3 to 6.4 US$/ton depending on the scenario).
• To ensure sustainable development, China should insist on prerequisites such as the transfer of R&D and manufacturing technologies, the ability to bank and transfer certified emission reductions (CERs), and the affirmation that participation does not create legally binding emission obligations.
• The report recommends initiating pilot CDM projects specifically in Western provinces to accelerate foreign investment and clean technology transfer to these underdeveloped regions.

APA

Jin, Y., Liu, X., & Yang, W. (2000). PROSPECTS OF CDM FOR PROMOTING SUSTAINABLE DEVELOPMENT IN CHINA. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/prospects-cdm-sustainable-development-china.pdf

Chicago

Jin, Yunhui, Xue Liu, and Wanhua Yang. PROSPECTS OF CDM FOR PROMOTING SUSTAINABLE DEVELOPMENT IN CHINA. International Institute for Sustainable Development, 2000. https://www.iisd.org/system/files/publications/prospects-cdm-sustainable-development-china.pdf.

Wikipedia

{{cite report |last1=Jin |first1=Yunhui |last2=Liu |first2=Xue |last3=Yang |first3=Wanhua |title=PROSPECTS OF CDM FOR PROMOTING SUSTAINABLE DEVELOPMENT IN CHINA |publisher=International Institute for Sustainable Development |date=August 2000 |url=https://www.iisd.org/system/files/publications/prospects-cdm-sustainable-development-china.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jin2000prospects, author = {Jin, Yunhui and Liu, Xue and Yang, Wanhua}, title = {{PROSPECTS OF CDM FOR PROMOTING SUSTAINABLE DEVELOPMENT IN CHINA}}, institution = {International Institute for Sustainable Development}, year = {2000}, month = aug, url = {https://www.iisd.org/system/files/publications/prospects-cdm-sustainable-development-china.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }