Industrial N2O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage?

The research finds that while the CDM successfully drove N2O abatement efficiencies to 98-100%, it created significant competitive advantages for registered plants. This led to carbon leakage during 2008 and 2009, where production shifted from plants in industrialized countries or those with existing abatement to CDM plants. The authors estimate that approximately 13.5 MtCO2e of issued CERs for 2008 and 2009 did not represent real emission reductions. To mitigate this, the paper recommends implementing ambitious baseline emission benchmarks in the CDM methodology.

• The carbon market successfully incentivized N2O abatement levels that exceeded previous technical literature and reference values. While the IPCC and European Commission cited best available technology efficiencies between 82% and 96%, CDM and JI projects achieved elimination rates of 98% to 100%.
• The CDM created a massive competitive advantage for registered adipic acid plants because the profits from selling CERs could exceed the actual production costs of the chemical. This allows CDM plants to operate at negative or very low costs (EUR -350 to EUR +500), whereas non-CDM producers face significantly higher costs.
• During the 2008-2009 economic recession, adipic acid production shifted from non-CDM plants to CDM plants. While non-CDM plant utilization dropped to 60% in 2009, CDM plants maintained an average utilization rate of 85%.
• The shift in production to CDM plants resulted in carbon leakage, meaning the issued credits did not represent real atmospheric emission reductions. The authors estimate that 6.3 MtCO2e (17%) of CERs in 2008 and 7.2 MtCO2e (21%) of CERs in 2009 were not real reductions, totaling approximately 13.5 MtCO2e.
• Joint Implementation (JI) projects in Western Europe did not show evidence of significant production shifts or carbon leakage, likely because the economic incentives (ERU revenues) are significantly lower than those provided by the CDM.
• The authors recommend replacing the current CDM methodology with an ambitious baseline emission benchmark (e.g., in the range of 9 to 50 kg N2O / t adipic acid) to eliminate competitive distortions and prevent future leakage.

APA

Schneider, L., Lazarus, M., & Kollmuss, A. (2010). Industrial N2O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage? Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-adipicacidleakage-9oct2010.pdf

Chicago

Schneider, Lambert, Michael Lazarus, and Anja Kollmuss. Industrial N2O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage? Stockholm Environment Institute, 2010. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-adipicacidleakage-9oct2010.pdf.

Wikipedia

{{cite report |last1=Schneider |first1=Lambert |last2=Lazarus |first2=Michael |last3=Kollmuss |first3=Anja |title=Industrial N2O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage? |publisher=Stockholm Environment Institute |date=9 October 2010 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/sei-adipicacidleakage-9oct2010.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schneider2010industrial, author = {Schneider, Lambert and Lazarus, Michael and Kollmuss, Anja}, title = {{Industrial N2O Projects Under the CDM: Adipic Acid - A Case of Carbon Leakage?}}, institution = {Stockholm Environment Institute}, year = {2010}, month = oct, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/sei-adipicacidleakage-9oct2010.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }