Exploration of the underlying factors affecting the use of CDM: a comparative analysis of CDM in South Africa and China

Abstract

Both South Africa and China are emergent economies heavily dependent on fossilfuel based energy sources, and the potential to leverage the Clean Development Mechanism (CDM) is significant in both countries. However, experience to date with CDM indicates South Africa has significantly lagged behind China in the uptake of the CDM, accounting for only 0.9% of the worldwide registered annual Certified Emission Reductions (CERs) while China has dominated the market, generating over 54% of the annual worldwide CERs. Thus, an opportunity exists to redefine the role of CDM in South Africa to better incentivise a lower carbon development trajectory. This paper provides a comparative analysis of the CDM experience in China and South Africa in order to identify the underlying drivers and obstacles to CDM in both countries. It is the authors’ objective to analyse the lessons learnt from marketleading China and laggard South Africa to better understand the structures and policies necessary within host CDM countries to unlock the potential of CDM in a post 2012 regime.