Marginal cost of CER supply and implications of demand sources

The Clean Development Mechanism (CDM) is the world‘s largest greenhouse gas (GHG) offsetting mechanism to date. Although its future after 2020 is uncertain, policy-makers are currently considering the use of Certified Emission Reductions (CERs) from emission reductions delivered in the period up to, and including, 2020. In this context, it is important to understand the impact on GHG emissions of using CERs as well as the costs at which further CERs can be supplied. This paper examines the marginal cost to supply CERs from projects registered under the CDM.