An Empirical Comparison of Carbon Credit Projects Under the Clean Development Mechanism and Verified Carbon Standard

Carbon credit trading regimes put a cost-efficient price on carbon emissions and foster investments in clean and low carbon technologies. As there are new carbon credit mechanisms evolving and old ones struggling we concentrate on the question what determinants make a carbon credit project successful. We focus on the Clean Development Mechanism (CDM) and the Verified Carbon Standard (VCS) as the leading carbon markets. We define success as the fulfilling of the ex-ante emission abatement estimation and apply regression analyses to explain its variation on project level by technology, location, scale, duration and participation. The results are discussed in detail on technology-level for wind power, energy efficiency, hydro power and biomass projects and are compared with regard to CDM and VCS. Our main results indicate that large scale projects often compensate their under-performance due to economies of time. Further, the duration of projects, the projects' location and structure of participants have significant influence on the projects' success