About the CDM Entente

A project is eligible for CDM benefits if the project will result in a net decrease in green house gas emissions – this is called additionality. For example a company can get CER’s if it installs a waste heat recovery boiler that saves energy. This is because reduced fuel use reduces the amount of carbon dioxide emitted.

Technically speaking a CDM project 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."

However, if the developer has to undertake the project activity because of law, for example if the industry is legally mandated to have a waste-heat recovery boiler, such a project is generally not eligible for CDM benefits.

In some cases however, if the law is shown to be "systematically not in force" or "non-compliance is widespread" in the country such a project can still be eligible.

National and local policies which are not legally binding do not nullify the project. For example a government wind energy promotion policy does not disqualify a wind farm from CDM.

If this criteria is fulfilled, then the developer follow two more steps :

1. Outline the alternatives to the CDM activity
The developer has to first outline what the possible outcomes of the project are if it doesn’t get CDM benefits – so called "baseline" scenarios the associate green house gas emissions. It must then show that with the CDM project, greenhouse gas emissions are reduced. This reduction in emissions over the baseline, is the CER's that the project would generate.

2. Investment analysis.
Once the possible alternatives are outlined, and the CDM project is shown to have lower greenhouse gas emissions, the developer must show that CDM scenario satisfies is either:
·  Not common practice in the region or sector
·  Is the least financially attractive option available or
·  Faces "barriers" preventing from implementation if the project was not registered as a CDM project such as either:
Financial : such an inability to get bank loans
· Technological : lack of infrastructure for implemention or skills/labour to operate the technology.
· "First of it's kind" : No project activity of it's type is operational in the region or country.