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The CLEAN DEVELOPMENT MECHANISM (CDM) is defined in Article 12 of Kyoto Protocol. It involves climate change mitigation activities undertaken between Annex I (developing) countries and non-Annex I (developing) countries. The CDM is the only mechanism in the Kyoto Protocol through which developing countries may engage in emission reduction activities. As defined by the Protocol, the purpose of CDM is twofold:
Non Annex I countries are supposed to gain their economic, developmental and environmental benefits from implemented CDM projects that generate Certified Emission Reductions (CER's) for export.