Clean Development Mechanism

The Clean Development Mechanism (CDM) is a <a href="/facts/United_Nations/fgXLnmgT">United Nations</a>-run <a href="/facts/Carbon_offset/WcHDkyKE">carbon offset</a> scheme allowing countries to fund <a href="/facts/Greenhouse_gas_emissions/Cu9nXPHE">greenhouse gas emissions</a>-reducing projects in other countries and claim the saved emissions as part of their own efforts to meet international <a href="/facts/Emissions_target/pSNeK82u">emissions targets</a>. It is one of the three <a href="/facts/Flexible_Mechanisms/q9f0sjGC">Flexible Mechanisms</a> defined in the <a href="/facts/Kyoto_Protocol/88twzpDf">Kyoto Protocol</a>. The CDM, defined in Article 12 of the Protocol, was intended to assist non-<a href="/facts/Annex_I/teNJ6tdw">Annex I</a> countries (predominantly <a href="/facts/Developing_country/eTfS4kxl">developing nations</a>) achieve <a href="/facts/Sustainable_development/zGqWBsaK">sustainable development</a> and reduce their <a href="/facts/Carbon_footprint/gRb1RaQl">carbon footprints</a>, and to assist Annex I countries (predominantly <a href="/facts/Developed_country/sqwTSDHm">industrialized nations</a>) achieve compliance with <a href="/facts/Greenhouse_gas/HXaHqrT8">greenhouse gas</a> emissions reduction commitments.
The CDM is supervised by the CDM Executive Board under the guidance of the Conference of the Parties of the <a href="/facts/United_Nations_Framework_Convention_on_Climate_Change/Tg7f18g3">United Nations Framework Convention on Climate Change</a> (UNFCCC).
The scheme allows Annex I countries to buy <a href="/facts/Certified_Emission_Reduction/m8KXD0WP">Certified Emission Reduction</a> units (CERs) from approved CDM emission reduction projects in developing countries, where investments in emission reductions are cheapest globally. Certified Emission Reduction units may also be traded in <a href="/facts/Emissions_trading/8fLLLdAL">emissions trading</a> schemes.
Between the first year CDM projects could be registered, 2001, and 7 September 2012, the CDM issued 1 billion CERs. As of 1 June 2013, 57% of all CERs had been issued for projects based on destroying either HFC-23 (38%) or N2O (19%). <a href="/facts/Carbon_capture_and_storage/d8DzjobH">Carbon capture and storage</a> was included in the CDM carbon offsetting scheme in December 2011.
Most of the market for CDMs came from European countries, as several countries with high emissions, including the <a href="/facts/United_States/P0sCdLe5">United States</a> and <a href="/facts/China/lTjIXY5p">China</a>, were not either signatories of the Kyoto Protocol or required by it to reduce their emissions. This, together with the <a href="/facts/Great_Recession/9LoVUhLf">recessions</a> brought on by the <a href="/facts/Financial_crisis_of_2007%25E2%2580%25932008/qw8n1pSN">global financial crisis</a> and the <a href="/facts/European_debt_crisis/lWMvbhYH">European debt crisis</a>, resulted in very low demand for carbon offsets, causing the value of CERs to plummet. In 2012, a UN-authorized report said governments urgently needed to address the future of the CDM and suggested the CDM was in danger of collapse. By that point, the value of a CERs had dropped to 5 USD per tonne of CO2, from 20 USD in 2008. The following year, the price abruptly crashed to less than 1 USD. As a result, thousands of projects were left with unclaimed credits. Disagreements with what to do with the old credits was a major cause for the perceived failure of the <a href="/facts/2019_United_Nations_Climate_Change_Conference/sQz6Ns5B">2019 United Nations Climate Change Conference</a>.

Clean Development Mechanism open-in-new

Clean Development Mechanism