Issues Affecting the Clean Development Mechanism (CDM): A review

The Clean Development Mechanism (CDM) is one of the Kyoto Protocol (KP) policy instruments to stabilize the impact on global warming. The instrument implies the replacement of technology that is conducted through investment projects concerning specific productive activities. The aim of the CDM is to simultaneously fulfill different purposes for different participants. These purposes are: green-house gas (GHG) reductions for environmental integrity, sustainability for host countries, and cost-effective mitigation for investors. However, since its first implementation, the CDM seems not being able to succeed the role for which it was created. This situation has been presented due to the significant effect on investors´ decision-making process derived from issues belonging to technical, institutional authorities and emission trading dimensions. In this study, through a comprehensive review of literatures, we qualitatively analyze the contribution of CDM activities in recent years. The main findings in this study are, firstly, the weakness of the CDM to simultaneously provide benefits among participants and secondly, the key elements in which practitioners should pay attention to improve the role of the CDM in the upcoming future.