Clean Development Mechanism

The Kyoto Protocol has a strong market orientation in its approach and recognizes that it may be more cost-effective for Annex I parties to reduce emissions in non-Annex I countries. Consequently, Article 12 of the Kyoto Protocol grants Annex I parties the right to generate or purchase emissions reduction credits from projects undertaken by them within non-Annex I countries. In exchange, developing country parties will have access to resources and technology to assist in development of their economies in a sustainable manner.

Unlike the Joint Implementation provisions, the text of the Protocol provides much more detail for the Clean Development Mechanism (CDM). It is, however, anticipated that many of the rules governing the CDM will also apply to joint implementation activities.

The CDM is supervised by an 'Executive Board' (Article 12.4) and the credits earned from CDM projects are known as 'certified emissions reductions' (CERs). CDM projects will be externally verified and certified by 'operational entities' (Article 12.5). These are third party organizations that will be designated by the parties to the Protocol.

Like Joint Implementation projects, CDM projects must meet an 'additionality requirement'. Article 12.5.c specifies that CERs can only be issued for projects where the calculated reductions in emissions are additional to any that would have occurred in the absence of the project activity.

CDM project rules, as defined by the Kyoto Protocol and the Marrakesh Accords, state that projects must meet certain requirements in order to qualify as CDM. These requirements include compliance with the project and development criteria, the validation and project registration process, the monitoring requirements, the verification and certification requirements, and the rules governing the issuance of CERs.

The following issues must be considered for a CDM project:

-Project participants and other parties involved
-Technologies used in the project
-Baseline, validation, and verification methodologies
-Location of the project and status of the host country authorization letter
-Ownership of CER's
-Additionality
-Additional environmental and/or community development benefits resulting from the project
-Monitoring and verification plan

To explore this topic further, follow the "Related Links" on the right-hand side of CO2e CDM page.