What is the Clean Development Mechanism?

The Clean Development Mechanism (CDM) is an emission reduction mechanism established in Article 12 of the Kyoto Protocol. Under this mechanism Annex I countries can participate in the implementation of projects that reduce GHG emissions and that are physically located in non-Annex I countries. Provided certain conditions are met, they can use these emission reductions to comply with their emission reduction commitment targets under the Kyoto Protocol.

CDM offers Annex 1 countries a flexible and cost-efficient means of fulfilling a part of their Kyoto commitments, while the non-Annex 1 party benefits from foreign investment and technology transfer.

CDM cycle

The CDM cycle consists of the following steps:

• Project Design Document development
• National approval
• Validation of the project by an accredited auditor ("Designated Operational Entity - DOE").
• Registration of the project by the CDM Executive Board of the UNFCCC
• Monitoring of the emission reductions
• Verification and certification of the emission reductions by a DOE
• Issuance of the Certified Emission Reductions (CERs) by the CDM Executive Board.

What has CDM achieved?

• More than 1600 CDM project activities registered.
• About 1.5 billion CERs expected from registered projects up to 2012.
• Over 280 million CERs already issued

In order to qualify under the CDM, emission reductions resulting from the implementation of registered projects need to be real, measurable, and long term. Furthermore, each tonne reduction of carbon-dioxide-equivalent-emissions, once verified and certified, results in the issuance of a CER (Certified Emissions Reduction). The purchase and sale of CERs constitutes a CDM transaction.