What is the CDM?

The Clean Development Mechanism (CDM) is one of the Kyoto Protocol’s flexible mechanisms, so called because they allow companies in industrialised countries that have emission-reduction targets to take part in projects that aim to cut greenhouse-gas pollution in emerging economies, where there are no fixed emission goals.The CDM has a dual aim: on the one hand, it allows developing countries to get equipped with cleaner technologies; on the other, it drives emission-saving projects to the places where they are most economical, thus lowering the overall cost of meeting Kyoto Protocol commitments.The emissions that are avoided thanks to these projects are recognised in the form of carbon credits – known as Certified Emission Reductions (CERs) – and these can be used towards the greenhouse-gas commitments that countries and companies are legally bound to meet.

How does it work?

A typical CDM project takes place in the following way:

  • a private company or a state body goes to a developing country to carry out a project that aims to abate the production of greenhouse gases
  • the amount of emissions saved is calculated as the difference between actual emissions and the quantity that would have been produced without the project being undertaken, and this amount is recognised with CERs
  • the CERs can be kept by the company or country in question for use towards Kyoto Protocol emissions limits or sold on international markets.

For example, the landfill site at Elbasan in Albania releases large amounts of methane into the atmosphere as a result of the decomposition of organic waste. A project to improve this situation would involve capturing the gas and using it in an electricity-generation plant. The methane emissions avoided as a consequence would be automatically turned into carbon credits in the form of tradable CERs. TimingAll projects started as of the year 2000 are eligible for inclusion in the CDM. Credits generated as of that year can be accumulated and used to meet greenhouse-gas reduction commitments undertaken by Italy in the first compliance period (2008-2012).

Link to further information on the Clean Development Mechanism (Italian only)