Consider the following statements: 1. Clean Development Mechanism (CDM) in respect of carbon credits is one of the Kyoto Protocol Mechanisms. 2. Under the CDM, the projects handled pertain only to the Annex-I countries. Which of the statements given above is/are correct?

Statement 1 is correct: the Clean Development Mechanism (CDM) is established in Article 12 of the Kyoto Protocol and allows a Party with emission‑reduction commitments (Annex B/Annex I Party) to implement emission‑reduction projects in developing countries and generate Certified Emission Reduction (CER) credits that can count toward Kyoto targets [1]. Statement 2 is incorrect: CDM projects are implemented in developing (non‑Annex I) host countries, enabling Annex I parties to finance or invest in emission reductions outside their territories and receive CERs for compliance [2]. Therefore, only statement 1 is correct.

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > SUSTAINABLE DEVELOPMENT GOALS > p. 599
2. [2] https://unctad.org/system/files/official-document/ditcted20031_en.pdf