COP 26: Will CDM regain focus?

09 Jun 2021

The CDM is a flexible mechanism in the Kyoto Protocol (KP) that allows a developed country with an emission-reduction commitment to implement projects in developing countries where the cost of mitigation is lower. However, under the Paris Agreement implementation rules are yet to be framed. CDM has been the biggest issuer of carbon credits measured in certified emission reductions (CER), with almost 50 per cent issuances from projects in renewable energy, industrial gases and fugitive emissions. Several developing economies have already accumulated huge credits. However, post 2012 the number of registered projects under CDM have rapidly dwindled. A credit that used to be traded at $25 per CER now trades at 25 cents, hardly covering the transaction cost. The decline in CER prices is attributed to myriad economic factors, the prominent ones being policy uncertainty regarding the international carbon market, lack of robustness of monitoring and verification mechanisms, lack of environmental integrity, and economic slowdown.

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Clean development mechanism
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