The clean development mechanism and the markets for new technologies: The case of China

The paper discusses the repercussions of the Clean Development Mechanism (CDM) for green innovation in developing countries, taking China as a point of departure. China's active participation is key to reaching the goal of protecting the global climate, as it will be the world's no. 1 emitter of greenhouse gases (GHGs) in the future. The CDM rules and procedures must be further refined if the CDM is to fulfil its goal: to provide developing countries with funding and technology for climate-friendly projects, while simultaneously satisfying developed countries' need for cheap and flexible ways of reducing their emissions. Another serious obstacle for green CDM-based innovation in the South is project-specific implementation barriers. In China, horizontal and vertical fragmentation of authority may potentially threaten the smoothness of project negotiations and approval processes, and the follow-up of pilot initiatives.