The clean development mechanism

The Clean Development Mechanism is one of three flexible mechanisms included in the Kyoto Protocol. It enables Annex I countries to finance emission reductions in developing (non-Annex I) countries and use the credits thus obtained to meet their quantified emission reduction commitments under the Kyoto Protocol. The CDM had two objectives: to reduce the costs of compliance of the Annex I countries' emission reduction commitments, and to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the UNFCCC. The major part of certified emission reductions (CERs) comes from renewable energy investments, reduction of non-CO2 greenhouse gases (HFCs, PFCs and N2O), and energy efficiency projects. The geographical distribution of projects and emission reductions is concentrated in a few countries: China, India, Brazil, and Mexico. A substantial amount of CERs was created under the CDM, but the uneven geographical distribution of projects and the lack of consistent control of projects' contribution to sustainable development have been arguments to contend that the CDM did not fulfil its initial objectives. The restriction by the EU in 2013 to use CERs in the EU-ETS brought down prices and the market for CERs has not recovered since. The CDM was discontinued as of 30 June 2022 and requests for exemptions were considered on a case-specific basis. Nevertheless, the CDM has continued to function while parties are waiting for the flexible mechanisms created in the Paris Agreement of 2015 to become operational, in particular the Sustainable Development Mechanism of Article 6.4 which is similar to the CDM in its objectives.