Clean Development Mechanism

Abstract

The Clean Development Mechanism (CDM) is one of three flexible mechanisms included in the Kyoto Protocol. It enables Annex I countries to finance emission reductions in developing (non-Annex I) countries and use the credits thus obtained to meet their emission reduction commitments under the Kyoto Protocol. The CDM has two objectives: to reduce the costs of compliance of the Annex I countries’ emission reduction commitments, and to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the United Nations Framework Convention for Climate Change (UNFCCC). The major part of emission reductions under the CDM (certified emission reductions – CERs) comes from renewable energy investments, reduction of nonCO2 greenhouse gases (hydrofluorocarbons, perfluorocarbons, and nitrous oxide), and energy-efficiency projects. Over two-third of projects and emission reductions occur in China and India. The uneven geographical distribution of projects and the lack of consistent control of projects’ contribution to sustainable development make some contend that the CDM has not fulfilled its initial objectives. On the other hand, it has brought forth a substantial amount of CERs, and it is the only Kyoto Mechanism to bring developing countries into the efforts of the UNFCCC, notably through unilateral projects developed solely by the developing host country.