To promote and further the understanding of sustainable development of the natural resources, especially through forestry, and to maximize Malaysia’s carbon potential through the Clean Development Mechanism (CDM) of the Kyoto Protocol.

The Kyoto Protocol and The CDM

The Kyoto Protocol
The Kyoto Protocol is a mechanism to procure sustainable development to offset the emissions from developed countries. The most important aspect of the Kyoto Protocol is its legally binding commitments for 39 developed countries to reduce their greenhouse gas (GHG) emissions by an average of 5.2% relative to 1990 levels. These emission reductions must be achieved by 2008-2012: the so called “first commitment period”.

The developed countries with emission reduction targets are the Annex 1 countries, whereas those without targets are the Non-Annex 1 countries. The ultimate goal of the Kyoto Protocol is to prevent dangerous human interference with the climate that cannot be met without entailing specific controls on the emissions.

The Clean Development Mechanism

The Kyoto Protocol allows developed countries to reach their targets in different ways through“Flexibility Mechanisms”. These include: Emissions Trading (trading of emission allowances between developed nations); Joint Implementation (transferring emission allowances between developed nations, linked to specific emission-reduction projects); and The Clean Development Mechanism (CDM).

The CDM is the only flexibility mechanism that involves developing countries. CDM allows developed nations to achieve part of their reduction obligations through projects in developing countries that reduce emissions or “fix” or “sequester CO 2” from the atmosphere.

The CDM was introduced in Article 12 of the Kyoto Protocol during the Third Conference of Parties (COP 3) in 1997. It is the only mechanism that allows developing countries to participate in the Kyoto Protocol.

CDM would assist Annex 1 (developed) countries in achieving their targeted reductions in GHG emissions and at the same time contribute to sustainable development in Non-Annex 1 (developing) countries.

This mechanism is based on private investments and therefore, its early success would be largely determined by the efforts taken to create awareness and interest among investors.

However, it is the host country’s prerogative to decide whether a CDM project is acceptable-based on whether the sustainability criterion has been met.

The Clean Development Mechanism has two key goals:

  • To assist developing countries who host CDM projects to achieve sustainable development; and
  • To provide developed countries with flexibility for achieving their emission reduction targets, by allowing them to take credits from emission reducing projects undertaken in developing countries. The greenhouse gas benefits of each CDM project will be measured according to internationally agreed methods and will be quantified in standard units, to be known as“Certified Emission Reductions” (CERs).These are expressed in tons of CO 2 emission avoided. Upon implementation, “carbon credits” will be bought and sold in a new commodity market and trading has already commenced in London, Chicago and Frankfurt.

Industrialized countries have gradually developed domestic policies to comply with the Kyoto Protocol which has led to a growing demand for carbon credits. Developing countries are well placed to supply such carbon credits and while many factors influence the size and stability of the global market, studies have indicated that it could be in the order of billions of dollars a year.