What is the Clean Development Mechanism (CDM)?
CDM allows Annex I (industrialised) countries to meet their emission reduction targets by paying for green house gas emission reduction in non-Annex I (developing) countries. Example (Figures are hypothetical): A company in India (a non Annex I country) switches from coal power to biomass. The CDM board certifies that by doing this the company has reduced carbon dioxide emissions by 5,000 tons per year. It is issued with 5,000 CERs (Certified Emission Reductions). Under the Kyoto Protocol, the United Kingdom (an Annex I country) has to reduce its green house gas emissions by 1 million tons of carbon dioxide each year. If it purchases the 5,000 CERs from the Indian company, this target reduces from 1 million tons/year to 9,95000 tons per year making the goal easier to achieve.
