While helping a developing country find ways to reduce their greenhouse gas (GHG) emissions, you are honouring your own reduction commitments as well. The CDM project in which you invest has to be eligible under the Kyoto Protocol, which means it reduces GHG emissions beyond levels achieved in a business-as-usual scenario.
Credit-earning opportunities
The CDM project must reduce GHG emissions consistently over a period of time. Investing companies earn a determined amount of credits for achieved emissions reductions. Credits awarded in the form of certified emission reductions (CER) can be used to fulfil own reduction commitments or be traded on the CDM market.
When properly organised and fulfilling the external validation and verification/certification requirements, CDM projects can earn credits for either a 10-year period or for a 7-year period with the option of two renewals of 7 years each. Participation in the scheme is voluntary.
Putting the climate first
The CDM scheme provides for a cost-effective implementation of the Kyoto Protocol, since emissions can be reached at the lowest possible cost. Investments in CDM projects benefit both developing and industrialised countries, as well as the environment:
- Host countries receive assistance in reaching sustainable development.
- Investor parties receive help to achieve compliance with their emissions reduction commitments.
- Real, measurable, long-term, and cost-effective benefits that can help reduce the climate change are achieved.
- Reductions in emissions that are additional to business as usual operations are achieved.
What requirements is your CDM project subject to?
According to the Kyoto Protocol, your CDM project is subject to two external assessments by an operating entity. They occur at various stages of the project cycle:
