Clean Development Mechanism

Type of Standard
The Clean Development Mechanism (CDM) is a fullfledged offset standard and is a part of the international legally binding Kyoto Protocol and its related accords.
It is administered by the United Nations Framework Convention on Climate Change (UNFCCC). CDM enables industrialized countries to achieve emissions reductions
by paying developing countries for certified emission reductions (CERs).

History of Standard
Recognizing the need for stronger action to combat climate change, the parties of the UNFCCC negotiated and adopted the Kyoto Protocol in 1997. At the time
of its adoption, the treaty only sketched out the basic features of the GHG trading mechanisms like the CDM. The rulebook detailing how the mechanisms would
operate was fleshed out over the next four years, culminating in the Marrakech Accords. The treaty came into force on 16 February 2005, making the trading
mechanisms operational.

Administrative Bodies
Conference of Parties serves as the Meeting of Parties to the Kyoto Protocol (COP/MOP): The COP/MOP is the ultimate decision-making body of the UNFCCC. It is comprised of representatives from each member state that has ratified the Kyoto Protocol. The COP/MOP reviews and approves the CDM EB’s recommendations,
thereby providing guidance and direction to the EB in administering the CDM.
CDM Executive Board (CDM EB) supervises the CDM under the authority and guidance of the COP/MOP, and is fully accountable to the COP/MOP. The EB has 10
members from parties to the Kyoto Protocol including one representative each from the five UN regions, two each from the list of industrializing countries with emission reduction targets and those without targets, and one from the Small Island Developing States.

The responsibilities of the CDM EB include:
• Developing and amending the rules of procedure for CDM
• Accrediting DOEs
• Registering CDM projects
• Approving new baseline and monitoring methodologies or amendments to existing ones
• Authorizing the issuance of CERs

Accreditation Panel reviews applications from prospective DOEs, reports conclusions and prepares recommendations to the EB for accrediting and designating operational entities.

Financing of the Standard Organisation
The Clean Development Mechanism is financed through the CER issuance fees and through start-up donations from Annex I countries.

Recognition of Other Standards
The CDM does not recognize any other standards. However, many of the regulated and voluntary carbon offset schemes recognize CDM and accept CERs as
eligible offsets under their respective schemes. These schemes include the EU ETS, the VOS, VER+, CCX, and the VCS.

Number of Projects
As of September 2007, there are 827 registered projects with a further 154 in the registration process, 2,647 projects in the CDM Pipeline, 46 projects have been
rejected and 8 withdrawn. 85,9 million CERs have been issued to date. More information on CDM is available here.

Source: WWF Germany, March 2008, Making Sense of the Voluntary Carbon Market: A Comparison of Carbon Offset Standards, Anja Kollmuss (SEI-US), Helge Zink (Tricorona), Clifford Polycarp (SEI-US). Full report is available as a PDF here.

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