Reduction of greenhouse gases in developing countries
The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialized countries with a green house gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions of GHGs in developing countries as an alternative to more expensive emission reductions in their own countries. The most important factor of a carbon project is that it establishes that it would not have occurred without the additional incentive provided by emission reductions credits. The CDM allows net global green house gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialized countries. At the time it was considered a controversial element and was opposed by environment NGOs by developing countries who felt that industrialized countries should put their own house in order first and feared the environmental integrity of the mechanism would be too hard to guarantee. However, critics argue that by allowing projects some emission reductions under the CDM were false or exaggerated, and in early 2007 the CDM was accused of paying €4.6 billion for projects that would have cost only €100 million if funded by development agencies. The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Frame work Convention on Climate change (UNFCCC).