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CDM post-2012 FAQs

The UNFCCC secretariat has published clarifications to frequently asked questions on issues concerning the CDM in

the post-2012 period1.

1. Will the CDM continue after 2012?The CDM exists as part of the Kyoto Protocol, an agreement that established a legal framework for an indefinite

period. Although the emission targets of Annex I Parties are negotiated on a commitment period by commitment

period basis, the CDM itself is a long-term mechanism that continues from one period to the next, and is not tied to

specific commitment periods. This continuity applies to all aspects of the CDM, including the registration of project

activities, issuance of certified emission reductions (CERs), approval of methodologies, and accreditation of

designated operational entities.

The CDM is sometimes associated only with the period up to 2012 because the Parties to the Kyoto Protocol have so

far agreed on emission targets only for the first commitment period, which stretches from 1 January 2008 to 31

December 2012.

2. How will emission targets for a second commitment period be determined?

Emission targets for a second commitment period are currently being negotiated under the Ad Hoc Working Group

on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP). There are also other negotiations

underway in the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention (AWG-LCA) to

ensure the full, effective and sustained implementation of the UNFCCC.

The outcomes of the AWG-KP and AWG-LCA negotiations, including the form for expressing emission targets beyond

2012, are not yet clear. If these targets are expressed in a form other than a second commitment period under the

Kyoto Protocol, Parties may wish to provide guidance on how activities under the CDM may continue. In view of the

widespread participation in the CDM, various options can be envisaged for such guidance, including that the

operation of project activities and issuance of CERs may continue directly under the Kyoto Protocol or that the

governance of these activities may be transferred to another instrument.

In any event, the treatment of emission reductions or removals taking place up to the end of 2012 is regulated by

the existing rules under the Kyoto Protocol (see next question).

3. What CERs may be used in complying with emission targets for the first commitment

period?

CERs may be used by Annex I Parties in complying with their emission targets for the first commitment period, as

long as they have been issued for emission reductions or removals taking place up to the end of 2012. In this context,

the monitoring and verification of emission reductions or removals will often mean that the corresponding CERs are

issued in January 2013 or thereafter. However, the serial numbers of these CERs will indicate that they were issued

for reductions or removals that took place during the first commitment period.

1Source: CDM post-2012 FAQs published. Accessed on 06 Sep 2010 available at http://cdm.unfccc.int/index.html

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Additional guidance will need to be provided in due course in relation to the CDM on the issuance of CERs during the

transition to a second commitment period. For example, a cut-off date may need to be set for requesting the

issuance of CERs from the first commitment period. Clarification may also need to be given for the treatment of

project activities whose emission reductions and removals span both commitment periods. This could be done, forexample, by allocating emissions during a verification period to one commitment period to another, in accordance

with monitoring results or on a pro rata basis, or requiring verification periods to end on 31 December 2012 and

commence on 1 January 2013.

4. Can CERs from the first commitment period be traded after 2012?

The Kyoto Protocol allows CERs from a commitment period, as with other types of units, to be traded into or out of a

Party's national registry until the end of the 'true-up period' associated with that commitment period. This true-up

period is formally defined as extending to 100 days after the date agreed by the Parties for completing the reviewsof Annex I Parties' emission inventories for the 2012 calendar year. On this basis, the true-up period associated with

the first commitment period is expected to extend until around mid-2015. CERs from the first commitment period

may not be traded after this date unless they are first 'carried over' to the second commitment period.

Most non-government buyers and sellers of CERs will, however, fall under the rules for domestic or regional

emissions trading systems, such as the EU emissions trading system, which may impose other deadlines for using

CERs from the first commitment period. These market participants may wish to confirm the deadlines for

surrendering CERs against entity-level targets and/or exchanging CERs from the first commitment period for units

issued by such trading systems, as applicable, under the rules of such systems.

5. How can CERs from the first commitment period be carried over to the second commitment period?

Annex I Parties may decide to 'carry over' CERs from the first commitment period for use in complying with their

emission targets for the second commitment period. Such carry-over transactions, as initiated by national registries,

result in the serial numbers of the CERs being updated.

Each Annex I Party is limited in the number of CERs that it may carry over from the first commitment period. This

limit is set at 2.5% of the Party's original allocation of assigned amount for the first commitment period. Each Party

may determine which CERs in its national registry are to be carried over. It is not possible to carry over tCERs or

lCERs.

There are no provisions allowing the carryover of CERs held in accounts in the CDM registry.