The Clean Development Mechanism (CDM) was established as a key flexibility mechanism under Article 12 of the Kyoto Protocol. The Protocol came into force in 2005, and commits developed nations collectively to cut their greenhouse gas emissions to 5.2 per cent of 1990 levels by 2012. More than 160 countries have ratified the agreement, including most of the world's developed nations.

The CDM is a project-based emission reduction programme designed to address the sustainable development needs of developing host countries, while increasing the opportunities available to developed countries to meet their reduction commitments under the Kyoto Protocol. CDM carbon credits are called Certified Emission Reductions (CERs). CERs become ‘issued' once emissions reductions have been achieved from a source project that has been ‘registered' (approved) by the Executive Board of the CDM. The issued CERs generated from a registered project (which can occur at any time from 2000 on) may be used to meet emissions targets under the IET in the first commitment period (which runs from 2008 to 2012), and also in the first and second stages of the EU ETS.

The CDM offers business in ‘developing' countries the opportunity to access working capital, improve production efficiency and improve profitability.

The idea is simple. A company builds a wind turbine, or installs solar power generating cells at its factory, or implements any one of hundreds of other initiatives which can reduce CO 2 emissions. This leads to a reduction in carbon emissions compared to the baseline (the emissions which would happen in the absence of the project). The CDM then issues the company with a Carbon Emission Reduction credit (CER) for every tonne of annual CO 2 reduction. The company can then sell these to any EU business which can't meet its target.

The deal can be very lucrative for business in ‘developing' countries, but the process to gain approval for the CDM is complex. That where CMC helps. We will advise you on cost effective projects you can implement which can improve your energy efficiency and profitability. We'll then work with you to guide your project through the approval process and help you sell the CER's to maximize your profit.