The Kyoto Protocol was adopted on 11th December 1997 as the first global response to climate change. In this binding international treaty, industrialised signatories jointly committed to limiting or reducing their greenhouse gas emissions to an average of 5% below 1990 levels.

 

The Protocol established the Clean Development Mechanism, or CDM, to promote sustainable development and greenhouse gas emissions reductions in developing countries, who were not given caps. This mechanism offers incentives to emerging economies to adopt green technology as well as practical solutions for industrialised countries to meet their emissions reduction obligations.

Under CDM, stakeholders from developed countries finance and transfer technology to greenhouse gas abatement projects in developing countries. Developed countries can use the resulting emissions reductions to help meet their Kyoto obligations. This system simultaneously curbs the growth of emissions in developing countries without imposing emissions caps that could restrict economic growth.

Before implementation, CDM projects must pass through a strict registration process regulated by the United Nations. A certified third party standards body verifies all of the project’s resulting emissions reductions on a retrospective basis and issues one Certified Emissions Reduction (CER) for every tonne of CO2 or equivalent greenhouse gas that has been abated. These CERs can be used by developed country stakeholders to offset one tonne of carbon dioxide produced domestically.