i. Additional

A CDM project must provide additional reductions in emissions than would not have occurred without the project. In practice, this means that a baseline of “what would have occurred without the project” must be defined, and any emission reductions additional to this baseline level of emissions can yield CDM credits.

ii. Certified Emissions Reductions (CERs)

This is the term used for the credits or units that are issued by the CDM Executive Board for CDM project emission reductions. One CER represents one tonne of CO2 equivalent which may be sold on the international emissions market.

iii. Clean Development Mechanism (CDM)

The CDM is established under Article 12 of the Kyoto Protocol. The CDM enables projects that reduce emissions in developing country parties to be funded by entities in industrialized countries in return for credits for any emissions reductions that result from the project. The objective of the CDM is to assist developing country parties in promoting national development and to assist developed countries to meet their Kyoto Protocol greenhouse gas reduction targets.

iv. CDM project

CDM projects can include any activity which reduces greenhouse gas emissions (x), with a few exceptions (see eligibility rules (1.1)). In many SIDS, relatively few emission reduction measures have been taken. Relatively cheap investments such as the replacement of petroleum fuel energy generating equipment with renewable energy installations (such as wind mills or solar panels) can be made resulting in significant reductions in greenhouse gas emissions. Many SIDSs lack the resources to make the changes themselves. In these circumstances, a developed country could invest in a CDM project in an island state. The SIDS would benefit from having a more efficient and less costly means of generating electricity and a more sustainable economy. The developed country would benefit from credits that it could use toward meeting its commitments under the Kyoto Protocol. Examples: conversion to renewable energy, energy efficiency improvements, conversion to clean coal, conversion of buses to fuel cells, fuel efficiency improvements, purchase new ferries, modal shift from buses to trains, modal shift to from ferries to planes, methane collection for energy generation, utilization of waste for agriculture.

v. Commitment period

Kyoto targets are set in an initial 5-year commitment period from 2008 to 2012. Future 5 year commitment periods will be negotiated. A commitment period is the period within which a developed country Party to the Kyoto Protocol (Annex B Parties) must remain within the national emissions levels specified by its Kyoto target. Developing countries do not have Kyoto targets for the first commitment period.

vi. Crediting Period

A crediting period is the period of time during which a proposed project’s emissions are measured for the calculation of CDM credits that should be issued. Crediting periods may either be for a maximum of seven years (which may be renewed at most two times) or a maximum of ten years with no option of renewal.

vii. Developed countries

For the purpose of the CDM, developed countries are those countries listed in Annex B of the Kyoto Protocol. This includes most OECD countries and central and eastern European countries in the process of transition towards a market economy. These countries have Kyoto targets limiting their emissions during the commitment period 2008 to 2012 and are likely buyers of CDM credits from developing countries which can help them to meet these targets at lower cost. The Kyoto targets only take effect for countries that ratify the Kyoto Protocol (as at January 2002 the USA and Australia had not ratified and so would be unlikely to purchase CDM credits).

viii. Developing countries

For the purpose of the CDM developing countries are countries that do not have Kyoto targets under the Kyoto Protocol and are not listed in Annex B to the Protocol.

ix. Fossil fuels

Carbon dioxide from the burning of fossil fuels is the largest single source of greenhouse gas emissions from human activities. The supply and use of fossil fuels accounts for about three quarters of mankind's carbon dioxide (CO2) emissions (equal to some 5.9 billion metric tonnes of carbon in 1992). Most emissions associated with energy use result when fossil fuels are burned. Oil, natural gas, and coal (which emits the most carbon per unit of energy supplied) furnish most of the energy used to produce electricity, run automobiles, heat houses, and power factories.

x. Greenhouse gas emissions

The main greenhouse gases are water vapour, carbon dioxide, ozone, methane, nitrous oxide, and the chlorofluorocarbons (CFCs). Apart from CFCs all of these gases occur naturally. Together, they make up less than 1% of the atmosphere. Greenhouse gases covered by the Kyoto Protocol are Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), and Sulphur hexafluoride (SF6) (Kyoto Protocol, Annex A.)

xi. Host country

The country in which a CDM project (iv) is located.

xii. Joint Implementation

Under Article 6 of the Kyoto Protocol, Annex I Party governments and/or companies can fund projects in other Annex I countries in return for emission reduction units, which are the equivalent of certified emission reduction (ii) credits (or CERs) for emission reductions from projects in developed countries.

xiii. International Emissions Trading

Under Article 17 of the Kyoto Protocol Annex I Parties (ie developed countries with Kyoto targets) can sell emission reductions if their national emissions are below their national Kyoto targets (which represent a level of emissions that the nation can emit in the period 2008 to 2012) or buy emission reductions from another Annex I Party if their national emissions are above the Kyoto target.

xiv. Kyoto targets

The main commitments for industrialized country parties that are set out in the Protocol are found in Article 3. In that article, industrialized countries are obliged to ensure that their greenhouse gas emissions do not exceed the level agreed to by each of them in the Protocol. The greenhouse gas emission reductions targets are set out in terms of carbon dioxide; however, they apply to all greenhouse gases. Emissions from greenhouse gases other than carbon dioxide are converted into figures that are equivalent to carbon dioxide emission reductions.

xv. Leakage

Project leakage is the total change in emissions by human sources which occur outside the CDM project activity boundary, and that is measurable and attributable to the CDM project activity. Accounting for leakage requires the assessment of baselines on a regional basis so that the synergistic effects of several projects on one another and the environment may be assessed.

xvi. Measurable

Emissions from CDM project should ideally be accurately measured or at least estimated according to approved methods. Both baseline emissions (emissions from would have occurred in the absence of the project activity) and emissions monitored once the project is implemented should be accurately estimated or measured.

xvii. Monitoring Plan

The monitoring plan for a proposed project can be a monitoring methodology that has been approved by the CDM Executive Board for other projects. Alternatively, it can be a new methodology that the designated operational entity agrees is appropriate for the proposed project activity’s circumstances. The CDM Executive Board is responsible for developing guidelines for establishing monitoring methodologies and monitoring plans. The monitoring plan must include provisions for collecting data relevant to the emissions baseline, the project activity’s emissions and emissions not directly caused by the project, the collection and archiving of information needed for Environmental Impact Assessment (where required by national law), a description of quality assurance and control procedures, and documentation on the calculations on any changes in emissions from human sources outside the project that may occur as a result of the project.

xviii. Nuclear energy

Nuclear energy does not create greenhouse gas emissions but has other environmental implications such as those associated with waste disposal and decommissioning. This controversy has resulted in developed countries being asked not to use CDM credits from nuclear facilities such as nuclear power stations. (FCCC/CP/2001/13/Add.2 English Page 20 Decision 17/CP.7)

xix. Official development assistance

ODA is concessional financial assistance from official government agencies to developing countries and multilateral institutions which aims primarily to promote the economic development and welfare of developing countries. (OECD DAC: http://www.oecd.org/department/0,2688,en_2649_33721_1_1_1_1_1,00.html).

xx. Project Boundaries

The project boundary encompasses all emissions from human sources under the control of the project participants that are significant and reasonably attributable to the CDM project activity. It is important to set these parameters in order to measure the degree to which emissions of been reduced due to a CDM activity. Emissions from a project that go beyond the project’s boundary are called ‘leakage’.

xxi. Project proponent or project participants

Entities or individuals that identify, develop and implement the project. These may be private enterprises (including companies, individuals, and non-governmental organizations) or public entities.

xxii. Prototype Carbon Fund

Under the auspices of the World Bank, the Prototype Carbon Fund’s objective is to demonstrate the possibilities for public-private partnerships in international sustainable development investments. The fund invests in projects that produce reductions in greenhouse gas emissions that could be used to generate credits under the CDM. Information and knowledge gleaned from the fund’s experiences in making these investments will be analyzed and distributed to potential CDM participants and non-governmental organizations in an attempt to develop confidence and certainty in the system. The Fund invests contributions made by companies and governments in CDM and Joint Implementation projects then distributes the Kyoto credits (CERs and ERUs) in a proportionate share to the level of investment that each contributor has made. Examples of project that the PCF has invested in are Chile where it is investing in projects substituting coal and gas energy production with renewable energy, Latvia where methane emissions are being reduced through investments in waste management systems, and Uganda where off-grid hydroelectric power installations are being developed.

xxiii. Public participation

Public participation may take place at various levels in the planning and implementation of a CDM project. At local level, each project design document requires that comments and inputs from communities be solicited and that a description of the public’s involvement be provided. Public participation at the local level may also be engaged if the project is likely to have significant impacts on the environment. In such cases, an environmental impact assessment (EIA) must be conducted based on the rules for such procedures established by the host country of the project. The degree of public participation in such instances will depend on the level of involvement required in the national EIA rules or legislation.

xxiv. Real

CDM projects must provide “real” emission reductions, ie reduce emissions below the level that would have been expected in the absence of the CDM project activity.

xxv. Ratifies the Kyoto Protocol

To ratify, and thus become a Party to, the Kyoto Protocol, a country must have already ratified the UNFCCC and must deposit their official national statement of ratification with the Secretary General of the United Nations. Being a Party to the Protocol is a commitment to comply with its provisions. Ratification of the Protocol does not commit a country to participation in the CDM, but is a prerequisite for hosting CDM projects. (See Kyoto Protocol text: http://unfccc.int/resource/convkp.html)

xxvi. Sequestering greenhouse gas emissions

Afforestation and reforestation are the only project activities that reduce emissions or increase sequestration from the land use, land-use change and forestry sectors that are valid under the CDM. Planting trees on land that was previously unforested and replanting land that was previously forested are valid CDM activities. Changing land-use from farming to grassland that is not ploughed, protecting forests from deforestation, or growing crops in a way that sequesters more carbon are examples of activities that are not valid under the CDM for the first commitment period from 2008-2012. (FCCC/CP/2001/13/Add.2 English Page 22 Decision 17/CP.7). The treatment of land use, land-use change and forestry project activities under the clean development mechanism in future commitment periods shall be decided as part of the negotiations on the second commitment period. (UNFCCC decision http://cdm.unfccc.int/EB/COPMOP)

xxvii. Share of credits

a small amount of the CDM credits from each project are kept by the Executive Board as a levy to assist in the funding of adaptation measures to help least developed countries prepare for the adverse effects of climate change. A two percent share of the proceeds earned from each CDM project is set aside to fund adaptation projects in states that are particularly vulnerable to the adverse effects of climate change and to cover the administration costs incurred by the executive board and other UNFCCC bodies to administer the CDM. CDM activities in least developed countries are exempt from paying this levy. The COP also has the responsibility to decide what percentage of the proceeds from CDM projects will be paid to cover the administrative costs of running the CDM; however, Parties are encouraged to assist in the financing of the CDM through contributions to the UNFCCC Trust Fund for Supplementary Activities.

xxviii. Stakeholder consultation

Stakeholder consultation and public participation provides decision-makers with all relevant information in making a decision, contributes different perspectives on issues, assists in attaining community consensus on decisions and thus reduces the likelihood of protests later in the process when changes are more difficult and more costly to make, and promotes legitimacy and transparency in the process.

xxix. Sustainable development

CDM projects must promote sustainable development in the host developing country. Each country that hosts a CDM project can decide whether a project meets its sustainable development needs. Typically, economic development, social development and environmental protection are seen as interdependent elements of sustainable development (eg WSSD). Sustainable development has also been defined as development that meets the needs of the current generation without compromising the abilities of future generations to meet their own needs (Brundtland Commission).

xxx. Unilateral CDM

Unilateral CDM is the term used for CDM investments by developed countries in their own territories. The developed country government would define and implement the CDM project and then sell the resulting credits. This idea of ‘unilateral CDM’ may work well for countries that want a high degree of control over projects.

xxxi. United National Framework Convention on Climate Change (UNFCCC)

The UNFCCC is the framework Convention which was agreed at the Earth Summit in 1992. It’s objective stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. The Kyoto Protocol to the UNFCCC has developed from this. The UNFCCC Secretariat administers the UNFCCC meetings and carries out work related to the Convention as requested by UNFCCC Parties.