The Clean Development Mechanism: a review of the first international offset programme

Abstract

This review article examines the primary issues, the successes and the challenges of the Clean Development Mechanism (CDM), established under the Kyoto Protocol. It is the primary international greenhouse gas (GHG) emissions offset programme in existence today, and while not perfect, it has helped to establish a global market for GHG emission reductions. It generates offsets through investments in developing countries. The CDM has managed to establish – in its relatively nearly decade of existence –a credible, internationally recognized, multibillion dollar carbon offset market with participation from a large number of developing countries and private investors. It has also created processes and methodologies that other programmes are already emulating. A vast amount of work and investment – by participating countries, the private sector, and the UNFCCC secretariat – has gone into developing the CDM's rules, procedures and institutional structures. The creation and rapid growth of a large and unprecedented international programme, however, has not been without its challenges or controversies. Issues have been raised regarding the governance of CDM, the quality of approved projects and the contribution of CDM to sustainable development.