Research On Clean Development Mechanism Of The New Situation

Climate change is a challenge, which all the countries around the globe must face. The Kyoto Protocol sets binding obligations on industrialized countries to reduce emissions of greenhouse gases. CDM (Clean Development Mechanism) is one of the3flexibility mechanisms defined by the Protocol, which can be used by Annex I Parties in meeting their emission limitation commitments, as emission cuts are believed to be less expensive in developing countries than developed countries. CDM makes it possible that developing countries can reduce greenhouse gas emissions with financial and technological support from developed countries, as well as trading Certified Emission Reduction units (CERs) to developed countries. As one of the largest developing countries in the world, China has huge potential in cutting emissions and can reduce emissions at a lower price. Based on marginal cost theory, the article analyses costs and benefits of developed and developing countries when collaborating on CDM projects. The article also lays theoretical basis for Chinese companies in terms of how to get better involved in the international carbon market under new circumstances.