The Contribution of Clean Development Mechanism to CO2 Emission Reduction: A Case Study

The clean development mechanism (CDM), one of the flexible mechanisms of the Kyoto Protocol, has received noticeable attention in China. In this paper, the project of waste gases utilization for combined cycle power plant in Handan Iron & Steel Group Co., Ltd is used as a CDM case to reveal the CO₂ emission reduction and the mitigation cost per unit CO₂. The analyses are conducted based on using the methodology ACM0004 of clean development mechanism for the estimation of CO₂ emission reduction. Moreover, a mitigation cost analysis is also carried out. The results show that the mitigation cost per unit CO₂ is 6.23 $/t, and the emission reduction of CO₂ per year is 665,545 CO₂te. Given that the results of the financial analysis conducted clearly show that the implementation of this type of waste gases recovery and utilization project is not the economically most attractive course of action in China. With the revenue from the sale of certified emission reduction (CERs), the proposed project will be investment attractive.