The Clean Development Mechanism (CDM) under the United Nations Framework Convention on Climate Change allows emission reduction projects in developing countries to earn certified emission reductions (CERs), which can be traded and used by industrialised countries to fulfil part of their emission reduction obligations under the Kyoto Protocol. The CDM was forecasted to follow an investment model where the private sector in industrialised countries would invest in emission reduction projects in return for CERs, yet most projects, contrary to initial expectations, are not financed by foreign...