The project provides a comprehensive appraisal of the strengths and shortcomings of the CDM and develops practical reform options covering measures that could be taken by (a) the UN within the CDM process (referred to within this report as supply side measures), (b) those that could be taken by the EU regarding the use of CDM credits within the EU ETS (referred to as demand) side as well as examining (c) the potential for alternative mechanisms. The work takes into account recent developments at the UN level, the EU international position and EU domestic policy.

The Clean Development Mechanism is currently at a crossroads. As the first commitment period of the Kyoto Protocol is set to expire at the end of 2012, there remains uncertainty about the future of the CDM. At the same time, the EU plans to allow continued, though restricted, use of CDM credits post-2012 within the EU ETS and the Effort Sharing Decision, and potentially other emissions trading systems may adopt a similar approach. At the same time, numerous stakeholders have called for specific CDM reforms to increase the effectiveness of the mechanism in the future.

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