The program explores the applicability of international policy instruments, such as the Clean Development Mechanism (CDM) sanctioned at Kyoto in 1997, to decisions regarding and prospects for energy sector modernization in provinces of China. Much of the cheapest ways to reduce greenhouse gas (GHG) emissions is to take advantage of low-cost opportunities for reductions wherever they arise in the world. Nevertheless, there is much uncertainty as to whether the CDM is the most practical and reliable way to ensure GHG reductions in developing countries. Defining and agreeing on future projects eligible for subsidies poses fundamental problems. In addition, the subsidies that may be expected under the CDM may not be large enough to change the composition of the energy infrastructure in the most important developing nations such as China or India. Due to the importance of regional decision-making and regional differences in China, the thrust of this research is to assess the economic and institutional factors affecting energy sector decisions at the provincial levels and below.
Several regional case studies are planned. The first-stage study has concentrated on Guangdong province. Collaborating with a provincial energy research center, the research team has taken field trips, held a workshops and produced several detailed reports on Guangdong's electricity industry. A second case study of a different province is being scheduled. Started in the Fall of 1998, the project is expected to last two to three years.