If you're a company that does business in Asia, Africa and Latin America - and your technologies reduce greenhouse gas emissions - then you could qualify for CDM credits. Known as Certified Emissions Reductions (CERs), these credits can provide the security necessary to obtain financing for clean energy projects. If you're a company in a developing country that emits a large amount of greenhouse gases, reducing those emissions for the purpose of selling CERs could bring in additional revenues.
CDM projects are accredited by a UN agency, the UN Framework Convention on Climate Change (UNFCCC). For projects to be accredited, developers need to design a methodology for 1) determining the baseline against which emissions levels will be compared; and 2) accurately monitoring the emissions reductions. Once the methodology is approved (and companies can also use already approved methodologies if one exists), then the project is accredited, entered into the CDM registry, validated and then verified by an independent firm - all to make sure the emissions reductions take place.
Sound complicated? Trust us, it is. To get a UNFCCC-approved methodology can take many months, and many projects never get accredited. However, if successful and if credits are issued, it's virtually a guaranteed revenue stream. This is because most Europeans, Japanese, and Canadians that will exceed their limits are looking to CDM market which promises cheaper prices. Given the difficulty of getting CDM projects approved, most experts agree demand for CERs will far exceed supply over the next several years.
What are the other GHGs: It is important to note that CO2 is only one of six gases covered under the Kyoto Protocol. Other gases include methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs) and sulfur hexaflouride (SF6). Each of these gases has a different global warming potential (GWP). CO2 is the base gas, but methane - because it is 21 times more potent as a greenhouse gas - has a multiplier of 21. For every ton of methane reduced, 21 CERs can be achieved. That is why landfill gas and other methane projects are popular under the CDM. On the other end of the scale is SF6, which has a GWP of 23,900! QT has developed the first CDM methodology to reduce SF6 emissions in the power sector.