The Clean Development Mechanism (CDM) is one of the three flexible mechanisms under the Kyoto Protocol. It is an instrument that allows Annex I Parties (developed countries) to receive Certified Emission Reductions (CERs) for financing emission reduction or carbon removal projects in non-Annex I Parties (developing countries or emerging markets). These projects contribute to sustainable development in the host country, and once they have been successfully implemented, carbon credits are issued by the CDM Executive Board. CERs can be used by Annex I countries to meet their emission targets specified in the Kyoto Protocol, and they can be traded in emission trading schemes like the EU ETS.
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