The clean development mechanism (CDM) defined in Article 12 provides for Annex I Parties to implement project activities that reduce emissions in non-Annex I Parties, in return for certified emission reductions (CERs).  The CERs generated by such project activities can be used by Annex I Parties to help meet their emissions targets under the Kyoto Protocol.  Article 12 also stresses that such project activities are to assist the developing country host Parties in achieving sustainable development and in contributing to the ultimate objective of the Convention.

The current modalities and procedures for the CDM focus on activities that reduce emissions.  A CDM project activity might involve, for example, a rural electrification project using solar panels or the installation of more energy efficient boilers.  Annex I Parties are to refrain from using CERs generated through nuclear facilities to meet their emission targets.

Definitions and modalities have been developed for including afforestation and reforestation activities (often referred to as “sinks”) in the CDM for the first commitment period.  However, Annex I Parties are limited in how much they may use CERs from such activities towards their targets (up to 1% of the Party’s emissions in its base year, for each of the five years of the commitment period).

The Protocol envisages a prompt start of the CDM, allowing CERs to accrue from project activities from the year 2000 onwards.  In particular, the election of the CDM Executive Board at COP 7 and the beginning of its operations have already put this prompt start into effect.  For up-to-date information on the CDM, see the CDM web pages.

The CDM is expected to generate investment in developing countries, especially from the private sector, and promote the transfer of environmentally-friendly technologies in that direction.  In addition, the finance and technology transfer commitments of Annex II Parties under the Convention and Kyoto Protocol are separate and remain valid.  Furthermore, public funding for CDM project activities must not result in the diversion of official development assistance.