The CDM project can be developed by public or private entities. The objective is to create a clear line of procedures so that participation is facilitated, and CERs can become internationally accepted and tradeable. Initially, CDM projects were mainly developed on an experimental basis by enthusiastic countries and companies that believed in the economic and environmental benefits of CDM, or wanted to take advantage of being early starters. Attitudes towards the mechanism have varied both in developing and industrialized countries, but ratification of the Kyoto Protocol has contributed to broader engagement of governments and enterprises in developing new projects.

A project becomes a CDM project when conceptualized according to the require­ments of the mechanism. A project design document (PDD) is prepared including the description of project activities and participants, project boundaries, the base­line and methodology for quantifying the reduction of emissions, expected leakages, as well as a plan for monitoring and verifying those reductions. The additionality of the project needs to be justified. This means that the project should result in emissions reductions which would not occur in the absence of the project.

The CDM project needs the approval of the host country’s CDM authority, the so-called Designated National Authority (DNA), which shall certify that the project contributes towards sustainable development. After this, the project needs to be registered with the Executive Board in order to be eligible for CERs. The Executive Board supervises the implementation of the CDM and is nominated by the parties to the Kyoto Protocol.

The project is implemented and monitored by the developers and other partici­pants, who shall collect all necessary information for the verification of emissions reduction by authorized entities. The Designated Operational Entities are the only ones in position to validate the project activities and performance, and certify the accomplishment of emissions reductions. Only then can CERs be issued by the Executive Board and, eventually, traded or used to meet commitments. Figure 12.2 summarizes the CDM project cycle. The upper boxes indicate the institutions res­ponsible for each step.

The role and level of importance attributed to CDM as part of emissions reduction efforts has varied among industrialized countries. A country can choose to use CERs as part of mitigation measures of companies in their territory, or can put a cap to how much reduction can be accomplished through CDM projects. Ideally, there should be as many projects as possible to reduce emissions as much as possible and foster sustainable development. In practice, however, industrialized countries need to also implement measures at home to enhance credibility about their

commitment to climate change issues, and as a way to foster low carbon or carbon — free production systems.