A few words about the

CLEAN DEVELOPMENT MECHANISM

Thirty-seven industrialized nations (not including the U.S.) and all members of the European Community are committed under the Kyoto Protocol to reduce their greenhouse gas emissions below levels generated in 1990.

The Protocol requires countries to reduce emissions through domestic measures but also permits credits against emissions. The Clean Development Mechanism (CDM) is the first global environmental investment and credit instrument of its kind.

The CDM permits a developed country to receive credits when it finances projects in a developing country not bound by the Protocol’s emissions limits, such as China or India. By means of the CDM a developed country financing an approved project in a developing country can receive credits in the form of Certified Emissions Reduction allowances (CERs) that can be used to offset its own emissions.

Qualifying a project for the CDM entails a rigorous public process and defined criteria to ensure that emission reduction goals are met. The project itself must be sustainable, able to reduce greenhouse gas emissions compared to a project using customary practices and technology, and unlikely to get funding without the credits available from the CDM.

The CERs that result from an approved CDM project may be traded and sold in the CDM market registry established by the Kyoto Protocol. Developed countries may allow private industries, lenders, or syndicates of investors to carry out CDM projects and receive or sell the CERs generated by the projects.