As a significant component of the Kyoto Protocol , a series of " Kyoto Mechanisms " were developed that would enable Annex I countries to find solutions outside their borders that are lower cost while satisfying their collective reduction target. Through the Clean Development Mechanism (CDM), Annex I countries may invest in sustainable development projects, which mitigate GHG emission in the developing countries . Certified Emission Reductions (CERs) will be issued by the CDM Executive Board after meeting several requirements and procedures, which may be used towards meeting their reduction targets under the Kyoto Protocol. CER is a unit of emissions reductions, which is equal to the verified amount of reductions of anthropogenic emissions achieved through a CDM project.

The definition of CDM under the Protocol is as follows: "The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3. (Article 12, paragraph 2 of the Kyoto Protocol.)"

CDM is expected to become a modality, which would benefit both the industrialized (Annex I) countries (by assisting their GHG emission reduction obligations through less-costly options) and the developing (non-Annex I) countries (by contributing to their sustainable development).

At the seventh Conference of the Parties (COP7) held in Marrakech in 2001, rules for implementing the Kyoto Protocol were agreed and adopted (The Marrakech Accord). Regarding CDM, several key issues were agreed:

• CDM should be supplemental to Annex I countries' domestic mitigation efforts
• Host country (= non-Annex I country) has the initiative in confirming whether a project would be applicable as CDM
• Nuclear power projects cannot be used for CDM
• Equitable geographical distribution of CDM projects should be promoted
• Official development assistance (ODA) funds cannot be diverted for CDM
• CDM should contribute to the transfer of environmentally safe and sound technology and know-how

We will be looking at the above qualification as well as other issues and procedures of CDM in more detail in the following sections.