CDM Process

The CDM is a novel mechanism, one that can potentially redirect the flow of investments to a variety of different projects, from major transportation initiatives to energy conservation measures to small-scale solar home systems. To ensure that the CDM accomplishes the important goals it is intended to fulfill, numerous safeguards and checks have been included in the rules of its implementation, and many participants will have a say in the process.

Of the three flexibility mechanisms in the Kyoto Protocol designed to engage the marketplace in meeting the commitments of the developed countries, the Clean Development Mechanism (CDM) is the only one that involves developing countries. The CDM aims to direct private sector investment into emissions-reduction projects in developing countries while promoting sustainable development in these countries. In return, the industrialized countries investing in projects will receive credits against their Kyoto targets. Kyoto Parties with emission targets for 2008-2012 are eligible to apply certified emission reduction units from CDM-funded emission reductions towards meeting their target. An important outcome of the Eighth Conference of the Parties (COP-8, 2002) was to make the Kyoto Protocol’s CDM fully operational. The decision also adopted the simplified modalities and procedures for small-scale CDM project activities and paved the way for possible early approval of CDM activities. The stakeholders potentially include government negotiators, designated national authorities, in-country government agencies in the fields of environment, energy, development and finance, local project developers, relevant NGOs, local financial institutions, technology vendors and consultants and operational entities.

As the lead agency for capacity building for sustainable development, United Nations Development Program (UNDP) has a specific contribution to make in the overall response of the United Nations system and in assisting developing countries to implement the United Nations Framework Convention of Climate Change (UNFCCC) and the Kyoto Protocol. UNDP’s integrated approach to national development – with a focus on creating an enabling policy environment and strengthening human and institutional capacities through a learning-by-doing strategy – is suited to overcoming barriers to CDM’s success. In keeping with UNDP’s focus on promoting greater project level and geographical equity in the implementation of CDM, many of these projects could be included in a portfolio approach that will focus on disadvantaged countries and, as relevant, on smaller projects.