The Clean Development Mechanism or CDM is one of two “mechanisms for flexibility” listed under the Kyoto Protocol. Through the Kyoto protocol Industrialized countries have obliged themselves to reduce their emissions to 5% below the levels of 1990. The Kyoto protocol allows to offset part of the emissions to achieve the overall reduction and developed the CDM which allows industrialized countries to invest in emission reduction projects in the developing world in exchange for carbon credits.
The use of offsets to achieve the reduction goals allows industrialized countries to achieve a reductions cheaper as it gives some flexibility. s. As well as assisting developing countries in achieving sustainable development while at the same time assisting industrialized countries to meet the necessary emission reduction requirements set by the Kyoto Protocol. According to the World Bank, most of these reductions are met through renewable energy, energy efficiency, and fuel switching.

Advantages

– Cost effective reduction of GHG emissions in developed countries
– Helps to reduce “leakage”, meaning that emission reduction actions in one country result in another’s increasing
– Transfers clean energy technology to developing countries
– Boosts economic development in developing countries