The Clean Development Mechanism (CDM)

In 1992 over 180 countries adopted the United Nations Framework Convention on Climate Change (UNFCCC) at the "Earth Summit" in Rio de Janeiro. The UNFCCC is a legal framework that enables Parties to the Convention to start the process of stabilizing greenhouse gases (GHG) in the atmosphere. Parties to the UNFCCC have been meeting every year since 1994 to implement and define this framework. At the third conference of the Parties, COP 3, the Kyoto Protocol was adopted and set legally binding greenhouse gas emission reductions of 5% compared to 1990 levels for the so called Annex-B countries (industrialised countries and a number of countries with economies in transition) for the first commitment period (2008-2012).

 

The Clean Development Mechanism (CDM) is one of four flexible mechanisms of the Kyoto Protocol which can be used by Annex-B countries to comply with their quantitative emission targets. In the framework of the CDM, emission reduction or sinks projects can be implemented in developing countries (Non Annex-B countries). For the emission reduction or carbon sequestration, tradable emission credits (called “certified emission reductions” CERs) are issued which can be used by Annex-B countries for complying with their emission targets. The purpose of the CDM is for both the investor and host countries to benefit  by contributing to sustainable development in the host countries, and by allowing investor countries to meet their emission reduction targets at the lowest possible cost. It is, however, the prerogative of the host country to define whether the project contributes to their sustainable development.

 

Especially small-scale and community-based projects are important for achieving sustainable development since they have a great potential to strenghten the livelihoods of people and rural communities in the host countries. To increase transparency concerning the sustainability of emission reduction projects, the gold standard, a quality standard for emission reduction projects in the energy sector, has been developed under guidance of the WWF by a network of environmental and development experts.