Has the Clean Development Mechanism promoted renewable energy in the developing world

Global leaders recently achieved an unprecedented international agreement on climate change mitigation -- the Paris Agreement. In light of this new agreement, it is necessary to review whether the Clean Development Mechanism (CDM), a major mechanism stemming from the 1997 Kyoto Protocol, has significantly contributed to climate change mitigation or not. Studies have mainly focused on evaluating CDM's effects on emission reduction and technology transfers. However, another indispensable aspect to examine is CDM's influence on the renewable energy development in the developing world, which is crucial to both emission reduction and energy security in the long run. CDM by design provides developing countries access to considerable financial and technical support from developed countries, which is essential for renewable energy to develop and compete against fossil fuels. Some studies have suggested the positive effects of CDM on renewable energy production and recommended CDM as a tool to promote renewable energy, but most of them are targeting the case in one or a small amount of countries. This raises the question of whether CDM has really contributed to promotion of renewable energy in an aggregated level. My thesis therefore is to study the relationship between CDM and renewable energy development using a panel data set covering 109 countries over a period from 2000 to 2011 in a fixed effect model setup. I found that investment in CDM projects has no significant correlation with the share of renewable energy in the total installed capacity in sampled countries, indicating that CDM fails to be an effective driver to promote renewable energy at an aggregated level, reaffirming the findings of existing studies on CDM. Understanding this relationship also provides policy makers with insights on whether and how future international mechanisms for climate change can influence renewable energy development.