Clean Development Mechanism (CDM)
Clean Development Mechanism (CDM) projects play their part in combating the effects of climate change. They are part of the flexible mechanisms based on Article 12 of the Kyoto Protocol. Industrial countries may fulfil their Kyoto Protocol pledge to reduce and stabilise their emissions by funding and carrying out climate action projects in less developed countries.
The management of CDM projects is supervised by the CDM Executive Board. The CDM Executive board is an institution created by the Kyoto Protocol which fulfils a wide range of tasks and is housed at the secretariat of the United Nations Framework Convention on Climate Change in Bonn. It issues certificates to confirm that CDM projects meet the relevant criteria. These are known as Certified Emission Reductions (CERs).
Criteria for Participation in CDM Projects
Investor states and participating companies must fulfil the following five criteria in order to set off the emission credits (CERs) from a CDM project (see Marrakech accords decision 17/CP.7 F no 31):
- Ratification of the Kyoto Protocol
- Calculation of Assigned Amount Units, AAUs, in compliance with Kyoto Protocol Annex B
- Established national system for the evaluation of greenhouse gas emissions and carbon sinks
- Established computer-based national registry
- Timely submission of annual emissions inventories
- Submission of additional information on the Assigned Amount
Ratification of the Kyoto Protocol is the sole requirement for the participation of a developing country to act as host country.
For a CDM project to go ahead, the consent of the host country is required. The consent should confirm that the project is in the interest of sustainable development. If available, the consent document should be submitted to DEHSt in due course.
In order to register a project with the Executive Board, project documentation, validation report and consent of the host country must be submitted to the Board. The consent of an investor state must be sought, at the latest when an Annex B state applies for CERs at the emissions trading registry.
Host countries are entitled to make their own requirements for CDM projects, reflecting their national needs. Both host and investor countries must nominate a Designated National Authority (DNA) which is responsible for CDM projects. The German DNA is the Federal Environment Agency.
CDM Project Methodology
The development and monitoring of a project follows an internationally agreed procedure. Project participants are also required to apply an approved methodology. Practical experience with CDM projects has led to the development of an increasing range or catalogue of methodologies for the various project categories, which can be applied under specific circumstances. Thus, time-served and recognized methods can be used alongside methods that were developed specifically for an individual project.
Should the DOE which is responsible for the validation of the project become aware that the methodology used in the project concerned has not been approved by the CDM Executive Board, it will send a request for assessment and approval to the Executive Board, along with the PDD. Once a methodology has been submitted to the CDM Executive Board and approved by it, it is freely available to other participants.
Even recognized methodologies are subject to continuous assessment and may be modified or rejected. Such modifications and rejections, however, do not imply that projects that were registered on the basis of these methodologies need to be revised. The registration will remain valid for the entire application period.