The Kyoto Protocol provides the framework whereby developed countries have undertaken to limit their emissions by an average of about 5.2% below 1990 levels during the period 2006 to 2012.  Article 12 of the Kyoto Protocol creates the Clean Development Mechanism or “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 finds it difficult to comply with its emissions cap, and effectively pays a project developer in a developing country to develop a project that will lead to a decrease in emissions.

The basic requirements for a project to qualify as CDM are that the initiative must lead to a long term, verifiable emissions reduction, that it must assist in achieving sustainable development in the developing country, it must lead to technology transfer, and that 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 be additional to, i.e., not part of the project business-as-usual scenario of the project developer. Hence the requirement has been termed “additionality”.

Broadly speaking, CDM projects are divided into two groups namely:

• Projects that prevent CO₂ from entering the atmosphere

By far the greatest majority of projects registered so far fall into this category. (renewable energy, energy efficiency, fuel switching).  These projects are divided into large and small scale projects and over 70 methodologies for achieving carbon credits in this manner have been approved.

• Projects that capture CO₂ already in the atmosphere

This is known and “land use, land use change and forestry” (“LULUCF”) and at present CDM projects in this category are confined to afforestation and reforestation projects.

CDM Africa manages all steps of the CDM component of a project or process

• Project identification
• Project identification note (PIN)
• Project design document (PDD)
• Stakeholder participation
• Host country approval
• Validation by a designated operational entity
• Registration of the project with the UNFCCC
• Implementation and monitoring
• Verification
• Certification and issuance of credits