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

Carbon credit projects generate carbon credits by abating greenhouse gas emissions. Carbon credits can then be traded on carbon markets or immobilized in order to compensate for caused emissions. The Clean Development Mechanism (CDM) and Verified Carbon Standard (VCS), as the two most important carbon credit mechanisms, are investigated and compared regarding the success of projects. We define success as the fulfilling of the ex-ante emission abatement estimation and apply regression analyses to explain its variation on a 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 as well as biomass projects and are compared with regard to CDM and VCS. Our main results indicate that large scale projects often compensate for their under-performance due to economies of time. Furthermore, the duration of projects, their location and structure of participants have significant influence on the success of the projects. The sign of the coefficients of explanatory variables are broadly in line with intuition and related literature, although, due to data availability, they are not always highly significant statistically.