Executive Summary

The 2015 Paris Agreement, which sets out the framework for global climate action after 2020, includes the establishment of the Sustainable Development Mechanism (SDM). The goals of the SDM are to promote higher ambition that contributes to emission reductions and sustainable development, and deliver an overall mitigation of greenhouse gas emissions.

While it shares a number of the characteristics of its predecessor, the Clean Development Mechanism (CDM) established under the Kyoto Protocol in 1996, the SDM must function in a world where all countries have climate mitigation targets. This stands in stark contrast to the design of the CDM which was established as a pure offsetting mechanism for a bifurcated world. Reductions in developing countries produced credits that could be used to ‘offset’ increased emissions in developed countries but still meet their climate targets. Yet, the future of the CDM, its rules, institutional set-up and projects remains unclear.

To avoid a dangerous overlap of the two mechanisms that could jeopardize the accounting of emission reductions towards the Paris Agreement’s goals, it is time to phase out the CDM and learn from the experiences with the mechanism to start over new with the SDM.

This briefing explains the differences in the contexts of the Kyoto Protocol and the Paris Agreement, the differences between the CDM and the SDM, the lessons of the CDM experience for the SDM, and recommends steps to transition from the CDM to the SDM.

Read full briefing here

Read European Commission study here