While the trading prices of issued Certified Emission Reductions (CERs) within the European Union Emissions Trading Scheme (EU-ETS) are transparent, there is limited knowledge about the actual origination cost of Clean Development Mechanism (CDM) projects. Minimum CER prices required for financial viability of a CDM project idea define a measure for CDM cost effectiveness and indicate the floor price for project participation. As CDM projects are located in developing countries, they face substantial implementation and performance risks that need to be considered for CDM cost effectiveness calculation. As existing studies primarily focus on qualitative risk assessment, there is a lack of a monetary evaluation of risk impact on CDM origination cost and CER floor price.
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