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The Clean Development Mechanism (CDM) is a market-based instrument under the 1992 Kyoto Protocol that enables emission-reduction projects in developing countries to earn certified emission reduction (CER) credits. Each CER represents one tonne of CO2 equivalent reduced or removed from the atmosphere. These credits can be traded and sold, providing financial incentives for sustainable development initiatives in developing countries while allowing industrialized nations to fulfill a portion of their emission reduction commitments.
The CDM promotes sustainable development by facilitating investments in projects that reduce greenhouse gas emissions while also generating social, economic, and environmental benefits. It encourages the adoption of clean technologies and practices in sectors such as energy, agriculture, waste management, and forestry, contributing to global efforts to combat climate change.
Key components of the CDM include methodologies for determining emission reductions, project validation, registration, monitoring, verification, and issuance of CERs. These processes ensure the credibility and integrity of CERs generated by CDM projects.
Revenue generated from the sale of CERs also supports the UNFCCC Adaptation Fund, which finances adaptation projects in developing countries vulnerable to climate change impacts. However, the CDM faces challenges such as methodological complexities, eligibility criteria, and fluctuations in carbon markets.