The Clean Development Mechanism: Issues and Solutions

The Clean Development Mechanism (CDM) is one of the three market based flexible mechanisms established under the Kyoto Protocol. It was established in order to aid parties in meeting their emission reduction quotas. The three instruments include:

* Emissions Trading (ET) (Article 17): Parties included in Annex B can purchase assigned amount units (AAUs) from other Annex B countries in order to fulfill their emissions reduction commitments. All emissions trading must be supplemental to domestic action.

* Joint Implementation (JI) (Article 6): In order to attain their reduction commitments, JI allows Annex B countries to purchase emissions reduction units (ERUs) resulting from emissions reducing or emissions avoiding project activities implemented by another Annex B Party.

* Clean Development Mechanism (CDM) (Article 12): The CDM allows Annex B countries to acquire certified emissions reductions (CERs) resulting from project activities implemented in Non-Annex B countries. Annex B countries can use these CERs to partially comply with their reduction commitments.

(Figueres, 2002)

These three mechanisms were developed due the fact that green house gases (GHGs) are distributed around the world i.e. there are no hot spots. This makes the sequestration of these gases equal no matter where the mitigation practices take place. After the adoption of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 scientists started to realize that the commitments made under this convention would not be sufficient to tackle climate change on the scale that was necessary (Foot, 2004). This led to the adoption of the Kyoto Protocol and in turn the establishment of the above mentioned three mechanisms. The CDM has been subject to intense academic discussion since its inception in 2003 with many researchers claiming that the CDM fails to meet its goals. In this paper a brief overview of the status and the process by which the CDM works will be explained...