The Clean Development Mechanism (CDM) creates an institutional base for a direct participation of developing countries in the implementation of the Kyoto

Protocol. Although no emissions reductions target has been negotiated to developing countries, their involvement in climate change activities is essential since these countries are expected to have a huge increase in greenhouse gas emissions in the coming decades. Through the CDM, developing countries can become fully involved in mitigation measures, and thereby, important actors in the formation of carbon markets. This shall help pave the way to more ambitious targets and new commit­ments at a later stage.

The two overall requirements of CDM projects is that they should contribute both to the reduction of emissions according to a baseline or predetermined scenario, and to sustainable development according to priorities and strategies defined by the host country. The baseline gives the trajectory of expected emissions in the absence of the project. The emissions reductions have to be quantifiable and measurable, and should result in improvements in relation to the baseline. The contribution to sustainable development and to reduce emissions entails the issuing of certificates, CERs, which can be traded internationally after proper validation of the project, and verification of the emissions reductions actually achieved. Figure 12.1 summarizes the key requirements of CDM projects.

Various CDM projects are being presently implemented around the develop­ing world. This is contributing to the development of methodologies to define base­lines and determine actual emissions reduction. While baselines seem to be one of the most difficult issues around the CDM, once determined, the measurement of emissions reductions is a rather technical matter. It is less clear, however, how the sustainability dimension associated with these projects will be more closely defined and monitored. In principle, the contribution of the project to sustainable deve­lopment will be measured in relation to the host country’s development priorities and strategies. On the other hand, the long period for CER accreditation in a CDM project may be in contrast with the nonlinear dynamics of socioeconomic develop­ment within the same time frame, and the still very recent experience of introducing sustainability criteria in development strategies and projects.

Figure 12.1. Key requirements of CDM projects.