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Clean development mechanism

The Clean Development Mechanism (CDM) allows developed country with an emission reduction or emission-limitation commitment
under the Kyoto Protocol to implement an emission reduction project in developing countries as an alternative to more expensive
emission reductions in their own countries. In exchange for the amount of reduction in emission thus achieved, the investing gets carbon
credits which it can offset against its Kyoto targets. The developing country gains a Step towards sustainable development.

To get a CDM project registered and implemented, the investing country has to first take approval from the designated national authority
in the host country, establish Additionally, define baselines and get the project validated by a third party agency, called a Designated
Operational Entity (DOE). The Executive Body of CDM registers the project and issues credits, called Certified Emission Reductions (CERs)
or carbon credits, where each unit is equivalent to the reduction of one metric tonne of CO2 or its equivalent. There are more than 4200
CDM project in the pipeline as on 14.3.2010. The expected CERs till the end of 2012 is 2,900,000,000

The Additionality clause in a CDM project

The feature of additionality is a crucial element of CDM project it means that the industrialized country that is seeding to establish the
CDM project in the developing country and earns carbon credit from it has to establish that the planned carbon reductions would not

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have occurred on its own, in the absence of the CDM project. They have to establish a baseline of the project. Which is the emission level
that would have been there in the absence of the project? The difference between this baseline level and the (lower) emission level
achieved as a result of the project is the carbon credit due to the investing country i.e. CER units generated under the CDM will only be
recognized when the reductions of greenhouse gas emissions are additional to any that would occur in the absence of the certified project
activity.

The risk of false Credits is a cause for concern with regard to CDM projects i.e. a project does not actually offer an additionality and the
reduction in emission would have happened anyway even without the project.

The mechanisms help stimulate green investment and help Parties meet their emission targets in a cost-effective way.

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