Clean Development Mechanism(CDM)

The Kyoto Protocol was adopted in Kyoto, Japan on 11 December 2011 and entered into force on 16 February 2005. The major feature of the protocol is that it sets binding targets for 37 industrialized countries and the European Community for reducing green house gas (GHG) emissions. This amount to an average of 5 percent against 1990 levels over the five year period 2008-2012. Three market based mechanisms were developed to meet the objectives of Kyoto Protocol:

  • Emissions Trading
  • Clean Development Mechanism
  • Joint Implementation

CDM was designed to meet a dual objective:

  • To help developed countries fulfill their commitments to reduce emissions and
  • To assist developing countries in achieving sustainable development.

The Clean Development Mechanism is a market-based flexibility mechanism under the Kyoto Protocol that enables developing countries to undertake projects that reduce GHG emissions to obtain carbon credits that can be sold to industrialized countries to meet their emissions reduction commitments under the Kyoto Protocol. Developing countries earn Certified Emission Reduction (CER) credits through the projects and each CER is equivalent to one tone of CO2. A levy of 2% on the CERs finances the Adaptation Fund which was established to finance adaptation projects and programmes in developing country parties to the Kyoto Protocol. As of November 2011, there are more than 3500 projects registered. CDM Project Cycle

  • Project Design: Using approved emissions baseline and monitoring methodology, project participant prepares Project Design Document (PDD).
  • National Approval: Project participant must secure a letter from approval from the Designated National Authority (DNA), the host country where the project is planning to be implemented. The DNA submits a letter indicating that the country has ratified Kyoto Protocol, that participation is voluntary and that the project contributes to sustainable development.
  • Validation: PDD is validated by an accredited Designated Operational Entity (DOE), private third party certifier.
  • Registration: DOE submits valid projects to the CDM Executive Board (EB) with requests for registration. Registration is the formal acceptance by EB of a validated project as a CDM project.
  • Monitoring: Project participants are responsible for monitoring actual emissions according to approved methodology.
  • Verification: DOE verifies that emission reduction took place in the amount claimed and according to approved monitoring plan
  • CER issuance: DOE submits verification report to CDM EB and CERs are issued based on issuance process.

Bhutan signed the Kyoto Protocol 26 August 2002. The National Environment Commission Secretariat is the Designated National Authority for Bhutan. As the Executive Orders of the Prime Minister in 2009, a Multi Sectoral Technical Committee on CDM was formed comprising of members from:

  • Department of Energy, MoEA
  • Department of Industry, MoEA
  • Ministry of Agriculture
  • Ministry of Works and Human settlement
  • Ministry of Finance and
  • National Environment Commission Secretariat