The Clean Development Mechanism (CDM), provided for under Article 12 of the Kyoto Protocol, enables developing countries to participate in joint greenhouse gas (GHG) mitigation projects. Under this Protocol, Annex I countries (developed countries and economies in transition) are required to reduce GHG emissions to below their 1990 levels.

The CDM enables these countries to meet their reduction commitments in a flexible and cost-effective manner. It allows public or private sector entities in Annex I countries to invest in GHG mitigation projects in developing countries. In return the investing parties receive credits or certified emission reductions (CERs) which they can use to meet their targets under the Kyoto Protocol.

While investors profit from CDM projects by obtaining reductions at costs lower than in their own countries, the gains to the developing country host parties are in the form of finance, technology, and sustainable development benefits.

The basic rules for the functioning of the CDM were agreed on at the seventh Conference of Parties (COP-7) to the UNFCCC held in Marrakesh, Morocco in October-November 2001. Projects starting in the year 2000 are eligible to earn CERs if they lead to "real, measurable, and long-term" GHG reductions, which are additional to any that would occur in the absence of the CDM project. This includes afforestation and reforestation projects, which lead to the sequestration of carbon dioxide.

At COP-7, it was decided that the following types of projects would qualify for fast-track approval procedures:
Renewable energy projects with output capacity up to 15 MW
Energy efficiency improvement projects which reduce energy consumption on the supply and/or demand side by up to 15 GWh annually
Other project activities that both reduce emissions by sources and directly emit less than 15 kt CO₂ equivalent annually.

The CDM will be supervised by an executive board, and a share of the proceeds from project activities will be used to assist developing countries in meeting the costs of adaptation to climate change.

For more information         CCKN - Clean Development Mechanism TERI - Clean Development Mechanism UNFCCC - Clean Development Mechanism