Many multilateral environmental agreements have adopted differentiated rules for different countries, based on the recognition of the ‘common but differentiated responsi- bilities’ (CBDRs) of states. By establishing two rigid groups of countries with and with- out emissions reduction obligations, the intergovernmental climate regime represents the most extreme case of such differentiation. The regime has struggled to overcome this rigidity and the resulting political deadlock between developing and developed countries. Transnational climate governance (TCG) initiatives have emerged as an alternative to provide mitigation, adaptation or finance outside the multilateral process. By drawing on synergies between public and private actors, it is hoped that they overcome the paralysis of the intergovernmental process. Yet, they take place in the same world of unequal peers, with different levels of capacity and responsibility for climate change. This article investigates the extent to which such TCG initiatives reflect the CBDR principle. Do different types of initiative – involving different types of actor or with different climate-related goals – address differentiation in distinct ways? Does taking account of CBDRs affect the membership of transnational initiatives? This article explores these questions empirically by analyzing a sample of TCG initiatives in terms of how they include differential treatment of states and non-state members. It concludes that TCG initiatives address differentiation in a pragmatic way. Most frequently, they either offer participants flexibility in how to implement their commitments, or provide support to members from developing countries. Such support is, so far, still insufficient to address the limited involvement of developing country actors.

International organizations sometimes institutionalize country groupings by specifying differentiated commitments that may, in turn, affect negotiation dynamics. Drawing on incentive-based and socialization arguments, we develop a ‘‘constructed peer group’’ hypothesis suggesting that by creating these groups those organizations may actually construct new lines of confrontation over and above the substance-based disagreements existing between countries. This generates a particular type of path dependence, rendering broad-based international agreements more difficult in the future. We analyze this question at the example of the United Nations Framework Convention on Climate Change’s increasingly politicized split between Annex I and non-Annex I countries. Using a self-coded dataset of country oral statements during the negotiations between December 2007 and December 2009 we assess whether Annex I membership influences a country’s stance toward other countries’ arguments, while controlling for country characteristics that may drive their preferences and the affiliation to Annex I. We find that the split between Annex I and non-Annex I has indeed influenced negotiation behavior and amplified the divide between developing and industrialized countries in the climate negotiations.

This article attempts to disentangle the determinants of the adoption of renewable energy support policies in developing and emerging countries. By analyzing policies already implemented in industrialized countries, we focus on the diffusion but not the invention of climate-relevant policies. We look at four different types of policies (renewable energy targets, feed-in tariffs, other financial incentives and framework policies) and consider both domestic factors and international diffusion mechanisms utilizing a discrete-time events history model with a logit link on a self-compiled dataset of grid-based electricity policy adoption in 112 developing and emerging countries from 1998 to 2009. In general, we find stronger support for the domestic determinants of policy adoption, but also substantial influence of international factors. Countries with a larger population and more wealth have a higher probability of adopting renewable energy policies. Only in some specific cases do natural endowments for producing renewable energy encourage governments to adopt policies, and hydro power resources even correlate negatively with the adoption of targets. Among the international determinants, emulation from colonial peers and membership within the EU seem to facilitate policy adoption. International climate finance is less relevant, as the Global Environmental Facility and the Clean Development Mechanism may only increase the adoption of frameworks and targets, but they have no influence on tariffs and incentives.

Small island states have been able to obtain some remarkable achievements in the climate change negotiations by building a cohesive coalition, the Alliance of Small Island States (AOSIS). Its cohesion, however, has been affected by changes in the UNFCCC process. The increase both in the number of issues on the climate agenda and the number of negotiation groups may have helped or hindered compromise and finding common ground. To track how AOSIS has fared in the climate change regime, the activities and positions of AOSIS, and of individual AOSIS members over three distinct periods (1995-2000, 2001-2005, 2006-2011) in the climate change regime, are compared. It is found that group activity has declined in relative terms and although there is overall agreement regarding mitigation and adaptation, there is less consensus regarding forestry (e.g. LULUCF and REDD) issues. However, despite controversies in some areas, AOSIS has remained a tightly coordinated and cohesive alliance that continues to be a key player in global climate policy.

Under the Kyoto Protocol, developing countries can voluntarily participate in climate change mitigation through the Clean Development Mechanism (CDM), in which industrialized countries, in order to meet their mitigation commitments, can buy emission reduction credits from projects in developing countries. Before its implementation, developing-country experts opposed the CDM, arguing that it would sell-off their countries’ cheapest emission reduction options and force them to invest in more expensive measures to meet their future reduction targets. This ‘low-hanging fruit’ argument is analysed empirically by comparing marginal abatement cost curves. Emissions abatement costs and potentials for CDM projects are estimated for different technologies in eight countries, using capital budgeting tools and information from project documentation. It is found that the CDM is not yet capturing a large portion of the identified abatement potential in most countries. Although the costs of most emissions reduction opportunities grasped are below the average credit price, there are still plenty of available low-cost opportunities. Mexico and Argentina appear to use the CDM predominantly for harvesting the low-hanging fruit, whereas in the other countries more expensive projects are accessing the CDM. This evidence at first sight challenges the low-hanging fruit claim, but needs to be understood in the light of the barriers for the adoption of low-cost abatement options.

Financial support for Clean Development Mechanism (CDM) projects in under-represented host countries was agreed on at the 2009 Copenhagen climate conference. The EU rules include special import quotas for certified emission reductions (CERs) from least developed countries (LDCs). This paper discusses whether these measures can contribute to overcoming barriers to CDM development in LDCs, how programmes of activities (PoAs) are performing and how CDM projects and PoAs contribute to sustainable development (SD) in LDCs. CER supply and demand scenarios for 2013–2020 show that preferential access measures for LDCs would not have an important impact on CDM in these countries if the barriers for project implementation are not overcome. The specific CDM projects and PoAs found in LDCs yield potentially high SD benefits. Through a comparison between the climate regime and the Lomé Convention, a preferential access agreement in agricultural trade, we conclude that not just preferential access is important, but also reduced access costs and the removal of underlying barriers. Increased incentives for added-value products characterize Lomé's success stories. For the climate regime, this could be translated into additional financial incentives for CDM projects with added value. As LDCs host a high share of them, PoAs could constitute an opportunity here.

Discounting the value of emission credits has been proposed as a possible approach for addressing some of the shortcomings of the Clean Development Mechanism (CDM). It could be used to compensate for non-additional CDM projects; to increase the incentive for advanced developing countries to move from the CDM to own mitigation commitments; and to improve the competitiveness of less developed countries as hosts for CDM projects. We assess the impact of discounting on the distribution of CDM projects in host countries, with a special focus on Least Developed Countries (LDCs). CDM-specific abatement cost curves are built for 4 regions: China, India, other advanced Asian countries and LDCs. Abatement costs are estimated using the information provided in the project documentation of 108 projects from 17 subtypes in 16 host countries. Abatement potentials are derived from the current CDM pipeline for each region. For LDCs, we additionally include an optimistic potential estimation by adding to the current pipeline the potential found by a World Bank study for LDCs in Sub-Saharan Africa. We then assess the effect of two emission credit discounting schemes on these abatement cost curves. Credit discounting is differentiated by host countries, based on an index composed of per capita GDP and per capita emissions. In the first scheme, it only affects the most advanced CDM host countries; in the second one it also affects China. We find that discounting has an impact on the competitiveness of individual CDM host countries in the carbon market, as it affects their abatement cost curves. It could become an instrument for incentivising advanced developing countries to leave the CDM and engage in other farther-reaching climate-related commitments, as a result of the resulting emission credit cost increases. However, even with discounting, LDCs remain unimportant in terms of abatement potential if the financial, technical and institutional barriers to CDM development in these countries are not overcome.

In this groundbreaking book, Paula Castro presents the first systematic categorization of positive and negative incentives generated by the Clean Development Mechanism (CDM) for climate change mitigation in the Global South. To reduce the cost of meeting their greenhouse gas emission reduction commitments under the Kyoto Protocol, industrialized countries may rely on the CDM, a market instrument that allows them to count emission reductions from projects in developing countries as their own. Presented in four core empirical chapters, the book critically reviews whether and how the CDM creates incentives or disincentives for developing country action towards reducing greenhouse gas emissions, and draws lessons for the future international climate change regime. Recommendations and discussion on the reform of the CDM invoke debate on the future of this policy in developing countries, which is vital material for both policymakers and international institutions introducing similar instruments. Students and researchers working on topics related to environmental politics, climate policy, environmental economics and environmental science will also find this resource invaluable.

Clean energy technology transfer is an important precondition for climate change mitigation and the transition to a low-carbon global economy, because clean energy technologies are costly and face a number of barriers to adoption, particularly in developing countries. Technology transfer is defined by the Intergovernmental Panel on Climate Change (IPCC) as ‘a broad set of processes covering the flows of know-how, experience and equipment for mitigating and adapting to climate change amongst different stakeholders such as governments, private sector entities, financial institutions, non-governmental organizations and research/education institutions’ (IPCC, 2000: 3). Under the United Nations Framework Convention on Climate Change (UNFCCC), this transfer occurs from developed to developing countries, and involves technology information, learning, enabling environments, capacity building and mechanisms for transfer to occur (UNFCCC, 2017a). This chapter examines what political processes shape the polycentric structure of clean technology transfer. It analyses the early role of the UNFCCC’s technology-related and market-based mechanisms in promoting technology transfer to developing countries. It then investigates the horizontal rescaling of international institutions through the rise of initiatives in the multilateral, transnational and bilateral spheres, and the implications for polycentric governance. Finally, this chapter investigates to what extent we can observe some of the anticipated effects of polycentricity in shaping clean energy technology pathways.

This chapter aims to provide empirical evidence that fossil fuel subsidies present a considerable barrier to the deployment of renewable energy, even in the presence of policies that also subsidize or otherwise support renewables. The empirical relationship is analysed using the example of electricity, by modelling the determinants of electricity generation from non-hydro renewable energy sources, using a large cross-country dataset covering the time period from 2003 to 2013. As non-hydro renewables participation has been zero in many (low-income) countries until very recently, we estimate two-part models. This involves panel binary regressions in the first part to model the probability that a positive amount of electricity from renewables is produced. In the second part, we apply linear panel models to estimate the expected share of renewables, given that it is positive. We found that the likelihood that a country produces any electricity from renewables at all is positively related to the existence of policies that support renewables deployment, but does not seem to be related to fossil fuel subsidies. In cases where countries already produce grid-based electricity from renewable sources, we find significant evidence between-country effects for fossil fuel subsidies and financial support policies. Hence there are indications that the contribution of non-conventional renewables to electricity generation is negatively related to higher than average per capita levels of fossil fuel subsidies but despite this, financial support policies do make a positive difference in cross-country comparisons of renewable electricity shares.

Climate change mitigation in the South has not only been achieved through the Clean Development Mechanism (CDM) or through donor-funded projects. Even though many industrialized countries still claim that developing countries have not embarked on emission reductions, several unilateral initiatives exist, as will be shown through the cases of the Brazilian ethanol programme and China’s massive wind energy expansion. The aim of this chapter is to show, on the basis of these two cases, how financial resources have been mobilized domestically in the South to support programmes that have had a proven impact on energy systems and, by extension, on greenhouse gas (GHG) emissions. These examples provide lessons that can be used when defining financial packages for future mitigation in developing countries - either through pure unilateral means, or through a combination with international funds or carbon markets. The chapter will also discuss the motives behind the creation of these programmes, and why the governments in both countries were persuaded to mobilize resources to fund these energy sources that were, at the time of launching, not fully competitive with the conventional fossil fuels they were replacing.