Clean Development Mechanism

Monthly registered CDM projects 2005–2021[1]

The Clean Development Mechanism (CDM) is a United Nations-run carbon offset scheme allowing countries to fund greenhouse gas emissions-reducing projects in other countries and claim the saved emissions as part of their own efforts to meet international emissions targets. It is one of the three Flexible Mechanisms defined in the Kyoto Protocol. The CDM, defined in Article 12 of the Protocol, was intended to assist non-Annex I countries (predominantly developing nations) achieve sustainable development and reduce their carbon footprints, and to assist Annex I countries (predominantly industrialized nations) achieve compliance with greenhouse gas emissions reduction commitments.[2]

The CDM is supervised by the CDM Executive Board under the guidance of the Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC).

The scheme allows Annex I countries to buy Certified Emission Reduction units (CERs) from approved CDM emission reduction projects in developing countries,[3] where investments in emission reductions are cheapest globally.[4] Certified Emission Reduction units may also be traded in emissions trading schemes.[5]

Between the first year CDM projects could be registered, 2001, and 7 September 2012, the CDM issued 1 billion CERs.[6] As of 1 June 2013, 57% of all CERs had been issued for projects based on destroying either HFC-23 (38%) or N2O (19%).[7] Carbon capture and storage was included in the CDM carbon offsetting scheme in December 2011.[8]

Most of the market for CDMs came from European countries, as several countries with high emissions, including the United States and China, were not either signatories of the Kyoto Protocol or required by it to reduce their emissions. This, together with the recessions brought on by the global financial crisis and the European debt crisis, resulted in very low demand for carbon offsets, causing the value of CERs to plummet.[9] 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.[9] The following year, the price abruptly crashed to less than 1 USD.[10] 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 2019 United Nations Climate Change Conference.[11]

  1. ^ "United Nations Framework Convention on Climate Change". cdm.unfccc.int. Retrieved 2021-05-13.
  2. ^ Clifford Chance LLP (2013). "Clean Development Mechanism: CDM and the UNFCC" http://a4id.org/sites/default/files/user/CDM%26UNFCCCcorrected.pdf Archived 2013-09-21 at the Wayback Machine . Advocates for International Development. Retrieved 19 September 2013.
  3. ^ Cite error: The named reference carbont was invoked but never defined (see the help page).
  4. ^ Cite error: The named reference grubb was invoked but never defined (see the help page).
  5. ^ IPCC (2007). "Glossary J-P. In (book section): Annex I. In: Climate Change 2007: Report of the Intergovernmental Panel on Climate Change (B. Metz et al. Eds.)". Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A. Archived from the original on 2010-05-03. Retrieved 2010-04-23.
  6. ^ "Kyoto Protocol's CDM passes one billionth certified emission reduction milestone" (Press release). UNFCCC CDM. 7 September 2012. Retrieved 9 October 2012.
  7. ^ CDM (June 1, 2013). "CDM Projects grouped in types". UNEP Risoe CDM/JI Pipeline Analysis and Database. Archived from the original on May 30, 2013. Retrieved June 18, 2013.
  8. ^ "Carbon capture and storage (CCS) accepted as UN-based carbon offsetting scheme, paving way for developing country finance". Global CCS Institute. Archived from the original on 2012-06-16. Retrieved 2011-12-14.
  9. ^ a b Cite error: The named reference :1 was invoked but never defined (see the help page).
  10. ^ Twidale, Shadia Nasralla, Susanna (2021-02-25). "Factbox: Carbon offset credits and their pros and cons". Reuters. Retrieved 2021-05-13.{{cite news}}: CS1 maint: multiple names: authors list (link)
  11. ^ "COP25, the UN climate talks in Madrid, ends in a sad splutter". The Economist. 15 December 2019. Retrieved 17 December 2019. Thousands of CDM projects were registered but their credits left unclaimed after their value crashed in 2012 because demand dried up. Some countries, chiefly Brazil, India and China, the main participants in the CDM, would like those credits transferred into the new Paris trading scheme. Others contend that doing so would flood the Paris scheme with past carbon credits that no longer correspond to real, future emissions reductions.