Clean Development Mechanism. One of three flexible mechanisms under the Kyoto Protocol that allows developed countries with an emission-reduction or limitation commitment under Annex B of the Kyoto Protocol to finance greenhouse gas emission-reduction or removal projects in developing countries. By implementing such projects developed countries can earn saleable certified emission reduction credits (see CER), which can be purchased and used by Annex B Parties to meet their obligatory emission targets under the Kyoto Protocol. CDM project activities can involve e.g. rural projects for meeting electricity needs using solar panels or wind power, or by recovering methane from wastewater treatment, and installations of more energy-efficient boilers. The mechanism has a dual purpose: 1) stimulating sustainable development and emission reductions in developing countries, and 2) helping developed countries to meet their emission reduction targets under the Kyto Protocol by reducing the costs of greenhouse gas abatement. CDM is also the main source of income for financing adaptation projects and programmes in developing countries (see Adaptation Fund).

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