Clean Energy

Global Strategy

To respond to the threats of a changing climate the United Nations Framework Convention on Climate Change (UNFCCC)* entered into force in 1994. At the third Conference of Parties to the UNFCCC in Kyoto in December 1997, the developed countries and economies in transition (Annex B countries) agreed to reduce their greenhouse gas emissions by an average of 5.2% from their 1990 levels between 2008 and 2012, as reflected in the Kyoto Protocol. Commitments to percentage reduction differ per country.

The Kyoto Protocol outlines a framework for three cooperative implementation mechanisms: joint implementation (JI), clean development mechanism (CDM), and emissions trading. Of the three mechanisms, CDM is the only one in which developing countries can participate.

Clean Development Mechanism

The Clean Development Mechanism (CDM)* is a financing instrument defined in Article 12 of the Kyoto Protocol that enables a project that reduces GHG emissions in a developing country to sell Certified Emission Reductions (CERs) to an interested buyer. The project owner or seller may be a DMC government or a DMC-based company and the buyer could be an Annex B country or an Annex B-based company with responsibility to reduce emissions at home or through the Kyoto mechanisms, or any company that might be interested in buying emission credits for investment, resale or enhancement of its green image.

The benefits of CDM for the developing country are new financial resources, better technology and achievement of its sustainable development objectives, while the benefit for developed countries is access to less expensive emission reduction opportunities in a developing country.

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