Knowledge Base Determinants of Technology Sourcing in the Clean Development Mechanism Projects

The Clean Development Mechanism (CDM) is one of the three greenhouse gas emission reduction and trading instruments of the Kyoto Protocol (KP). The CDM allows governments and business entities from developed countries to offset their emissions liabilities by reducing or avoiding emissions in developing countries, where it is often cheaper to do so. Examples of CDM projects include the installation of various renewable energy producing facilities, cutting the GHG emissions in industry and waste management, or projects focused on improving energy efficiency. From the sustainable development perspectives CDM has been alleged as a new channel of transfer and diffusion of climate friendly technologies (CFT) in developing countries. However we are evidencing that the majority of the CDM projects deploy local sources of technology, which challenges the North- South technology transfer paradigm established under the sustainable development agenda of the KP. This paper is an attempt to explain technology sourcing patterns in CDM projects through employment of knowledge base determinants. On the basis of an empirical analysis we conclude that in countries with a stronger knowledge base in CFT, CDM project implementers tend to go for local and combined technologies and less for foreign technologies.