Clean Development Mechanism (CDM)
The CDM is a mechanism that provides flexibility to the way in which countries achieve the binding obligations of the Kyoto Protocol. Its aim is two-fold:

1. The CDM helps non-Annex I (developing) countries achieve sustainable development while not accelerating climate change.
2. The CDM helps individuals, firms or Annex I (industrialized and economies-in-transition) countries meet their quantified emissions limits.

The CDM achieves these joint aims by asking individuals, firms and countries to invest in sustainable development and climate change mitigation projects in non-Annex I countries. This aids the developing countries, but it also allows project hosts to use the emissions that these projects will save as credit that will allow them to pollute back home. These emissions credits are quantified and validated using Certified Emission Reductions (CERs) that can be used in Annex I countries’ carbon trading schemes (such as the EU ETS).

The CDM is very similar to the Joint Implementation (JI). The only difference between the two mechanisms is that the CDM can be run by any country, firm or individual whereas JI projects can only be hosted by a country that has emissions reductions or limitations targets.