Clean Development Mechanism (CDM)

The Clean Development Mechanismallows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.

Project eligibility

In order for a project to be eligible for CDM, it must meet the following criteria:

  1. Reduction in GHG Emissions covered by the Kyoto Protocol (CO2, CH4, N2O, SF6, HFCs, PFCs)
  2. The host country (Rwanda) must be a Party to the Kyoto Protocol
  3. Contribution to Sustainable Development of Rwanda
  4. Additionality (demonstration that the project would not have happened without the incentive from CDM revenue)
  5. Emission reduction must be real, measurable, and long term
  6. The sector must be eligible (nuclear is not eligible, only afforestation and reforestation in the land use, land change, and forestry sector are eligible)

Purpose of the CDM

The purpose of the CDM is to promote clean development in developing countries, i.e., the "non-Annex I" countries (countries that aren't listed in Annex I of the Framework Convention). The CDM is one of the Protocol's "project-based" mechanisms, in that the CDM is designed to promote projects that reduce emissions. The CDM is based on the idea of emission reduction "production". These reductions are "produced" and then subtracted against a hypothetical "baseline" of emissions. The baseline emissions are the emissions that are predicted to occur in the absence of a particular CDM project. CDM projects are "credited" against this baseline, in the sense that developing countries gain credit for producing these emission cuts.