The Clean Development Mechanism (CDM) is a market-based mechanism established by the United Nations Framework Convention on Climate Change (UNFCCC) to allow developed countries to offset their emissions of greenhouse gases by investing in emission-reduction projects in developing countries. The goal of the CDM is to encourage the transfer of technology and investment from developed to developing countries to help reduce emissions while also promoting sustainable development.
The CDM allows industrialized countries to invest in emission reduction projects in developing countries, and then receive Certified Emission Reduction (CER) credits, which can be used towards meeting their emission reduction targets under the Kyoto Protocol. In this way, the CDM provides a way for developed countries to achieve their emissions reduction targets at a lower cost than if they were to make the reductions themselves, while also providing a source of funding for emission reduction projects in developing countries.
To be eligible for CDM, a project must be located in a developing country, must result in a reduction in greenhouse gas emissions that is additional to what would have occurred without the project, and must be approved by the CDM Executive Board. The Executive Board is responsible for determining whether a project is eligible for the CDM and for issuing CERs to the project developer.
The CDM has been successful in driving investment in clean energy and emission reduction projects in developing countries, with over 7,000 projects in over 80 countries having been registered as of 2018. This investment has not only helped to reduce greenhouse gas emissions, but also helped to improve the lives of people in these countries through increased access to clean energy and other sustainable development benefits.
However, it’s also important to note that CDM has been subject to criticism over the years. Some argued the lack of oversight and potential for fraud, or that the projects didn’t necessarily result in real emissions reductions, but rather a shift of emissions to other locations. The CDM also faced a significant drop in demand due to the economic downturn of 2008, but later recover.
Despite its limitations, the CDM remains an important tool for developed countries to invest in emission reduction projects in developing countries and to achieve their emissions reduction targets under the Kyoto Protocol. And with the ongoing global effort to limit global warming, the role of CDM in international climate cooperation will be an ongoing topic of debate and discussion.