Carbon credits for your projects: A quick guide to CDM

Posted on March 29, 2011 by

Clean Development Mechanism is the flexible mechanism helps developed countries reduce their green house gas emission using projects and activities outside their geographical boundaries. Reducing emissions within their own boundaries is costlier for developed countries as compared to doing the same in developing countries. CDM allows a developed country (Country which is included in Annex 1 of the Kyoto protocol) with emission-reduction targets to implement an emission reduction/sink project in developing countries (Non-annex 1 country).  These projects result in quantified emission reductions and can claim for Certified Emission Reductions (CERs). Each CER is equivalent to one tone of CO2 and can be traded in International Market.

Since the introduction of CDM, project developers are always in dilemma regarding their emission reduction project to go for CDM or not. Many of them lack relevant information about the eligibility of their project for earning carbon credits.  Sometimes project technology or measures leads to GHG emission reduction but relevant CDM methodology is not available. This post is dedicated to the understanding of the eligibility of the carbon reduction project under the CDM.

At a simplistic level, it is possible to segregate five main sectors of the GHG emission reduction project

  1. Energy (Renewable energy and energy efficiency)
  2. Waste
  3. Fugitive emission reduction
  4. Agriculture
  5. Forestry

The project in any of the above sectors must reduce any or all of the following Greenhouse gases below that would occur in the absence of the proposed project activity (business-as-usual case).  (Forestry project should increase the quantity of carbon/carbon stock in the biomass of selected plant species)

Following GHG emission reduction activities are eligible to earn carbon credits

Energy (1)

Renewable Energy Biomass
Small hydro
Geothermal(Know more about RE based carbon credits projects)
Energy efficiency & fuel switch Fuel Switch from high carbon intensive fuels to low carbon intensive fuels in the same facilityUse of low carbon intensive fuels in a Greenfield project

(Know more about fuel switch project based on Natural Gas)

Energy savings/other energy efficiency projects

Waste heat recovery/Utilization Waste flue gas utilization
Other waste heat recovery projects


Fugitive Emissions(3) Agriculture(4)

Forestry (5)

Methane avoidanceMethane capture and utilization (waste to energy)

Pyrolysis (waste to energy)


Recycling (Energy efficiency)

SF6ReductionHFC Reduction

PFC Reduction

N2O ReductionMethane destruction from manure and  wastes from agricultural activitiesEnergy efficiency and fuel switching measures for agricultural facilities and activitiesCarbon sink projects Afforestation and Reforestation(Know more about registered A/R CDM projects across the world)

(Know more about India’s first A/R CDM project)

Sectoral scopes under the CDM

Following sectoral scopes are officially identified under the CDM – Energy industries (Renewable/ non-renewable sources), Energy Distribution, Energy Demand, Manufacturing Industry, Chemical Industries, Construction, Transport, Mining/ Mineral production, Metal Production, Fugitive emissions from fuels (Solid, oil & Gas), Fugitive emissions from production & consumption of   halocarbons & sulphur hexafluoride, Solvent use, Waste handling & disposal, Afforestation & Reforestation, Agriculture.

Renewable energy project generates clean energy and hence avoids the uses of fossil fuel for the generation of same quantity of energy. Therefore such project activities are eligible to earn carbon credits. Another example is the uses of less carbon intensive fossil fuel instead of high carbon intensive fossil fuel also lead to GHG emission reduction. A fundamental criterion for the any successful emission reduction project is to reduce GHG emission by taking certain measures and by proving additionality.

A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity.

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Posted in: Carbon Markets