About CDM

Article 12 of the Kyoto Protocol creates the "CDM". This is a mechanism through which a developed country can outsource part of its obligation to limit emissions to a developing country. It can also happen on industry level where, for instance an installation in the EU that is unable to comply with its emissions cap effectively pays a project developer in a developing country to undertake a project that will lead to a decrease in emissions.

The basic requirement for a CDM project is that it must take place in a developing country that has acceded to the Kyoto Protocol (a non annex 1 country in terms of the Protocol). The CDM project must lead to a long term, verifiable emissions reduction, must assist in achieving sustainable development, must lead to technology transfer, and there must be a causal link between the revenue stream created by the CDM and the fact that the project happens. Another way of articulating the last mentioned requirement is that the CDM project should not part of the project business-as-usual scenario of the project developer. Hence the requirement has been termed "additionality".

The price obtained for the certified emission reductions (CERs) or carbon credits from CDM accredited projects will be determined in part by the operation of the carbon trading market as a whole. The carbon market is in reality a diverse set of buyers and sellers who trade emission reduction units. There is no central exchange or trading floor for prices and a regulatory body has not yet been established to monitor transactions in this market.

For more information on CDM, visit the cdmafrica.org site, sponsored by CDM Africa and dealing exclusively with CDM.