National requirements

A developing country can be a location for CDM projects if it fulfills the following requirements:

1. the government ratifies the Kyoto Protocol
2. the government designates a national authority for the CDM (1.3)

Developed countries may only participate in the CDM if they have complied with the inventory, reporting, compliance, and various other requirements. A list of countries that meet the CDM eligibility requirements will be maintained by the UNFCCC secretariat and available on the UNFCCC website (http://cdm.unfccc.int). SIDS can use this list to check whether potential investors are eligible to make CDM investments.

Participation in the CDM is voluntary. Each country may decide whether on not to participate in the CDM based on its own assessment of the pros and cons (1.2).

Link to further information: http://cdm.unfccc.int/pac/ProjectParticipation.html

Project requirements

The CDM rules do not define what a CDM project is. Instead, the rules require that CDM projects must meet certain criteria:

• CDM projects must promote sustainable development in the countries in which they are located;
  
  
• The emissions reductions from CDM projects must be real, measurable, long-term, and additional to reductions that would have occurred without the project.
  
  
• Funding for CDM projects must not divert funding from existing official development assistance

Certain types of activity are encouraged under the CDM and are subject to simplified requirements (1.5.6):

• Small-scale renewable energy projects up to 15 megawatts;
  
  
• Energy efficiency projects which reduce energy consumption by up to15 gigawatt hours per year;
  
  
• Other project activities that reduce anthropogenic emissions by sources and emit less than 15 kilotonnes of carbon dioxide equivalent annually.

Certain types of activity are excluded from the CDM:

• Projects that sequester carbon are restricted to afforestation and reforestation. Tree planting is accepted but activities that prevent deforestation are not. Precise rules on forestry projects are scheduled to be agreed in November 2003.
  
  
• Developed countries have been encouraged not to purchase credits from nuclear energy, effectively excluding nuclear energy projects from the CDM.