Cost-benefit evaluation on CDM project

The incremental cost of unit energy (ICUE) for emission reduction equivalent to the incremental cost of emission reduction (ICER) was proposed to evaluate the financial feasibility of CDM project. That the CDM project at least have same commercial competitive potential as the baseline project have same competitiveness potential because both have same net present value (NPV), benefit-cost ratio (BCR), internal rate of return (IRR), dynamic payback period (DPP), when the ICUE or the ICER was adopted as the lowest supply cost of GHG emission reduction was proofed. Using the ICUE, Issues that compare different scale CDM project and baseline project, adopt technology level or sector level baseline can be easily dealt with. In the end, a case study was given to demonstrate the calculation of the ICER and the ICUE.