What is CDM?

The CDM is a flexibility mechanism under the Kyoto Protocol that allows countries meet part of their emission reduction targets by buying Certified Emission Reductions from projects hosted in countries with no obligation to reduce emissions.

Increasing scientific evidence of human interference in the global climate system led the international community to adopt the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC was opened for signature in 1992 and entered into force in 1994.

The Convention sets for all countries a general commitment to address climate change, adapt to its effects, and report their actions to implement the Convention. The Convention divides countries into two groups: Annex I Parties are industrialized countries who have historically contributed the most to climate change, and non-Annex I Parties, which include primarily the developing countries.

The principles of equity and "common but differentiated responsibilities" contained in the Convention required Annex I Parties to take the lead in returning their greenhouse gas (GHG) emissions to 1990 levels by the year 2000. It was also decided that post-2000 commitments would only be set for Annex I Parties, decision which was later entered in the Convention via the Kyoto Protocol.

The Kyoto Protocol established a legally binding obligation for 38 industrialized countries and 11 countries in Central and Eastern Europe to reduce their GHG emissions below their 1990 levels over the commitment period 2008-2012. The aggregated emission reduction of Annex I countries represents 5.2% of the total GHG emissions of these countries for 1990.

The Kyoto Protocol allows Annex I Parties to meet their emissions targets by reducing emissions in other countries, in order to reduce the related costs. The Protocol establishes three flexibility mechanisms for such purpose:

International Emissions Trading permits countries to transfer parts of their 'allowed emissions' (assigned amount units).

Joint Implementation (JI) allows countries to claim credit for emissions reductions that arise from investment in other industrialized countries. This mechanism leads to the transfer of 'emission reduction units' between countries.

The Clean Development Mechanism (CDM) allows Annex I countries to buy emissions reductions from projects hosted in non-Annex I countries. The CDM generates Certified Emission Reductions (CERs) for use by the Annex I countries or companies to meet part of their emission reduction commitments. CDM projects must contribute to sustainable development in the host countries and must be additional, i.e. would not have happened in the absence of the CDM.

In summary, the CDM is one of the flexibility mechanisms established in the Kyoto Protocol. Under the CDM, emission reductions generated by projects hosted in non-Annex I countries are sold to Annex I countries as a way to reduce the costs of meeting reduction targets of the latter.

Detailed background information on the CDM is available at the CD4CDM website.

Additional CDM information generated by the ACP-CD4CDM Project is available on the Publication pages of the Global Site and the Country Sites.

    Last updated: 2 September 2010

    This website has been produced with the assistance of the European Union