Clean development mechanism practice in China: Current status and possibilities for future regime

The Clean Development Mechanism (CDM) is expected to help Annex I countries achieve their binding commitment through a cost-effective way and to promote sustainable development in non Annex I countries including China, which has been the largest host country in the CDM market. This paper aims at reviewing the CDM practice followed in China from institutional arrangement to the risk and barriers faced by the project owners. The analysis shows that a clear institutional setting and implementation strategy is crucial for the effective implementation of CDM projects. The geographic uneven distribution of the CDM project partly due to the uneven capacity building practice can be removed by knowledge transfer and the learning by doing method. The sectoral uneven distribution caused by lack of proper methodology and unsatisfied technology transfer caused by risk consideration are also discussed. The experience and lessons learned from the CDM practice in China will be meaningful and valuable not only for other slow starters like Africa to improve their capacity but also for the international negotiation of future CDM regime aiming at expanding the coverage of CDM and fostering technology transfer.