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CDM

The Clean Development Mechanism (CDM) is one of three flexible mechanisms under the Kyoto Protocol. CDM allows industrialized countries with a greenhouse gas reduction commitment to invest in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. Private companies and organisations can also invest in, and carry out such projects in developing countries. To be approved as a CDM project, certain criteria must be fulfilled, including documentary evidence that the project would not have come to fruition without the CDM mechanism. An independent third party must also check the project plan before it can be approved by the CDM Executive Board in the UN.

The project is monitored and approved by an independent body, which ensures measurable, genuine reductions in emissions in line with the approved project plan. The CDM Executive Board then issues a certified emission right to the investing party. The number of emission rights corresponds directly to the number of tonnes of greenhouse gas emissions reduced.

As an example India has a great potential for wind power, but the initial investment costs have been too high. Due to CDM credits the Satara and Supa wind parks in India have recently been realised. Through financial support, it has been possible for the developer to make the project profitable.