Clean Development Mechanism (CDM)

Question 1

What is the CDM?

Answer 1

• One of the flexible market mechanisms under Kyoto
• It allows Annex I countries (developed countries) to reach their carbon emission reduction targets outside of their geographical boundaries in non Annex I countries (developing countries)
• It allows certain methodologies how those emission reductions can be generated

Question 2

The Clean Development Mechanism:
How does it generate carbon credits?

Answer 2

• So called „Climate protection projects“ are realized in non Annex I countries
• The projects have to be developed according to a „methodology“ published by the CDM
• The are then certified by an accredited certification body
• Then the project developer can sell „Certified Emission Reductions“ (CERs)

Question 3

Summary of Arguments Regarding the CDM

Answer 3

• A flexible market mechanism that generated a large market on carbon credits
• Its overall results are ambiguous:
• Projects might not have created real emission reductions
• Mainly countries that had an emerging economy hosted the climate protection projects
• Credits were mainly used by European countries under the EUETS and their low price partially reduced the ETS effectiveness
• Some NGOs believe that the CDM should end because
• It did not create additional emission reductions
• It has many negative side effects