Clean Development Mechanism

The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol which allows industrialised countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce greenhouse gas emissions in developing countries.

This is a lower cost alternative to undertaking more expensive emission reduction projects in their own countries. It is therefore important that the project undertaken establishes that it would not have occurred without the additional incentive provided by emission reductions credits – otherwise there would be a net increase in global emissions.

Emission reductions achieved with CDM projects are awarded credits called Certified Emission Reductions (CERs). One CER signifies an emission reduction of one tonne of CO2 equivalent. The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Framework Convention on Climate Change (UNFCCC).