This article has been written by Ayush pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by  Prashant Baviskar (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).


Clean development mechanism (CDM) is a United Nations offset scheme to fund greenhouse gas emissions-reducing projects that contribute to climate change. It is a part of United Nations action on climate change and it allows developed countries to meet their Kyoto targets by financing the carbon emission-reducing projects in low and middle income group countries because lower-income group countries have lower energy efficiencies, low labour costs, and weaker regulatory requirements and less advanced technologies. The purpose of the CDM is to benefit both the investor and host countries by contributing to sustainable development in the host developing countries. It is the sole prerogative of the host country to confirm whether the project contributes to its sustainable development. Through this article, the author seeks to discuss the 

Advantages of CDM

  1. It not only offers opportunities for sustainable development but also brings important co-benefits like poverty reduction, access to energy efficient lighting and cooking, improvement in air quality and living conditions.
  2. The CDM PROJECT offers for technology transfer and contributes to national sustainable development by promoting the latest technology.
  1. It helps to harness incentives for climate action. The CDM is harnessing the entrepreneurial power of the markets and private sectors to meet the goals on sustainable development and climate change.
  1. It raises money to help most vulnerable countries to bring a change in climate  and this is because the 2% levy on each CDM transaction is transferred into United Nations funds climate change adaptation fund.

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India’s role in clean development mechanism 

India ratified the Kyoto protocol in December, 1997 and ratified in august 2002. Effective institutional framework is proactive DNA which issues host country approval in 40 days of project submission. India has consolidated its position among non-annex-1 countries in CDM implementation.

India holds around 24% of the global CDM market. ONGC was the first PSU to have taken the lead role in the area of the clean development mechanism. As previously stated, biomass combustion is the method of energy generation in most rural households.  Although biomass combustion is a form of renewable energy, there are unsustainable characteristics of the status quo.  First, the majority of biomass is currently burnt in open fires or inefficient cook stoves, which have large emission factors.  Second, biomass is the only renewable if it is harvested in a sustainable manner, which is generally not the case where forests are owned and managed by government agencies.  The effects of unsustainable harvesting are forest degradation and depleted biodiversity.  Consequently, although the majority of rural communities currently use a “renewable” energy source, improvements on the current rural energy model are necessary for it to be sustainable. 

Solar energy is an important source of renewable sources. Solar energy being abundant in nature can easily meet the current global need for clean and renewable energy sources. Solar energy is in phase of development in order to meet and compete with other sources in terms of cost, efficiency and performance. Using rooftop solar is one of the promising sources of energy in India. Thus, this work addresses the problems faced by the rooftop solar sector in the Indian market. Design of a PV system is shown in order to run the simulation in a PV system to understand the potential of one rooftop solar PV system and to explain its benefits. The work also addresses the problems associated with rooftop solar PV systems that can be tackled, and a proper system for having the most efficient possible design is established. The work will simplify the processes involved in planning of a solar PV system.

CDM should be reformed and these reforms should be an integral part of India’s climate change. India must call for:

  1. Greenhouse gas emissions reduction commitments to ensure long term CDM projects.
  2. Transparency and clean public accountability procedures.
  3. Reform of CDM so that projects are in line with the government policies.

The central government has constituted a national clean development mechanism authority for the purpose of protecting and improving the environment in terms of the Kyoto protocol. 

Case laws

  1. Smith vs Fonterra cooperative limited 


Plaintiff Michael John Smith asserts that he is of Ngāpuhi and Ngāti Kahu descent and he is the climate change spokesman for the Iwi Chairs’ Forum. He claims customary interests in lands and other resources situated in or around Mahinepua in Northland, and asserts that various sites of customary, cultural, historical, nutritional and spiritual significance to him are close to the coast, on low-lying land or are in the sea. Smith brought suit against several defendants that operate facilities that emit greenhouse gas emissions, including dairy farms, a power station, and an oil refinery. Smith alleges that the defendants’ contributions to climate change constitute a public nuisance, negligence, and breach of a duty cognizable at law to cease contributing to climate change.  The High Court of New Zealand Auckland Registry dismissed the first two claims, but not the third. The court concluded that Smith cannot call it public nuisance because damage caused was neither known to him nor to the public.


The court declined to strike the third cause of action, which alleged that the defendants have a duty to cease contributing to climate change. The court found that there were “significant hurdles” for Smith in persuading the court that this new duty should be recognized, but determined that the relevant issues should be explored at a trial. The court explained that “it may, for example, be that the special damage rule in public nuisance could be modified; it may be that climate change science will lead to an increased ability to model the possible effects of emissions.” The Court warned, however, that it would likely be unable to provide the injunctive relief that Smith seeks, which would require a “bespoke emission reduction scheme.”

  1.  Hanuman laxman Aroskar vs. union of India

Summary: On March 29, 2019, the Supreme Court of India suspended the environment clearance for an airport in the state of Goa. Citizen petitioner Hanuman Laxman and NGO federation of rainbow warriors challenged the clearance in the supreme court of India. The court suspended the airport’s environment clearance on the ground that the government failed to take into account the impacts on the environment. The Court then cited the reason by saying that both the Paris Agreement and India’s contribution to the Paris Agreement are key aspects of India’s environmental rule of law. It is challenging the grant of environmental clearance for the development of the Greenfield international airport at mopa in Goa.

Issue: Whether the Government of India’s approval of the new airport being constructed adapted the environmental policies adequately or not?

Decision: On January 16, 2020, the Supreme Court lifted its suspension of environmental cleanliness and allowed the airport project to move forward .The court said in its ruling that the government has taken notice of the environmental commitments that it has to make and to make an airport a zero carbon airport operation. In addition, this court has also appointed the national environmental engineering institute to oversee the government project and whether the government has applied the environmental commitments properly or not. The EAC has analysed the EIA report based on the impact analysis of the different features such as land, water, air, and biological environment etc. for the study of the area within 10 km radius, not only to the project area based on the parameters in the notification and the airport manual.


The clean development mechanism stimulates investments on renewable projects in developing countries. The CDM project must provide the long term benefits relating to the mitigation of climate change. CDM project proponents should be free to choose cost-effective technology as long as objectives of the emissions are achieved. CDM projects should not be judged only by the criterion of the technology but the investments and the ability to overcome market barriers should be considered too. 

The demand from airline operators to meet the commitments under CORSIA (carbon offsetting and reduction scheme) which addresses the increase in carbon dioxide levels from international aviation above 2020 levels. India should try to ensure that it doesn’t get out of the CORSIA market even if ICAO (International Civil Aviation Organization) enlarges the source of supplies from other countries. CDM has been a useful source of finance to industry and India may rebuild a viable domestic carbon market in future on the foundation of environmental protection. The CDM is an interesting instrument to release incentives for new goals and new projects in the renewable energy sector. The goal of the CDM project is both emission reduction and sustainable development but while the emission reductions generate revenues for the developer of the project no such benefit for the sustainable development has been achieved so far but it has helped in the reduction of the greenhouse gas emissions. 


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