Taking stock of progress under the Clean Development Mechanism (CDM)

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Organisation for Economic Co-operation and Development


University of Cape Town

The Kyoto Protocol’s Clean Development Mechanism (CDM) was established in 1997 with the dual purposes of assisting non-Annex I Parties in achieving sustainable development and assisting Annex I Parties in achieving compliance with their quantified greenhouse gas (GHG) emission commitments. This paper looks at the achievements of the CDM to date in the context of wider private and public flows of investment into developing countries. Market demand for GHG credits from CDM projects comes from Annex I countries’ emission commitments. Annex I countries can meet those commitments by domestic as well as international emission mitigation activities, including the CDM. The CDM can be an attractive compliance option as it can help meet Annex I GHG commitments more cost-effectively through project-based activities that are consistent with host-countries’ sustainable development priorities. The extent of the demand for CDM credits depends on the stringency of emission commitments, the “gap” between countries’ emission commitments and actual emissions, and the relative use of CDM and other means of meeting emission commitments