The Clean Development Mechanism is an arrangement under the Kyoto Protocol, allowing industrialized countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. This also allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions education projects in developing countries.
The CDM is supervised by the CDM Executive Board and is under the guidance of the conference of the parties of the UNFCCC.
But the basic objective of the CDM is to assist developing country parties in achieving sustainable development and assist Annex-I countries in complying with their quantified emission limitation and reduction commitments under the Kyoto Protocol.
A process for independent review of the certification of the emission achieved is necessary for the credibility of CDM. For the implementation there is provision under Article 12.4 established an executive board for the CDM and Article 12.5 specifies that emission reductions must present real, measurable and long term benefits related to the mitigation of climate change.
The host government must approve proposed CDM projects and as a part its approved process it will need to access whether the proposed project contributes to sustainable development.
CDM also specifies that a share of the proceeds from its projects will be used to cover administrative expenses and to assist developing country parties that are vulnerable to the adverse effect of the climate change. The major advantage of CDM is that it supports developing countries obtaining access to cleaner technology earlier.