The Kyoto Protocol is an agreement that define greenhouse gas emission target for each member country, the framework of gas emission trading system.

According to the Kyoto Protocol, the CDM is a project-based mechanism under which developed country parties cooperate with developing country parties in order to meet part of their obligations to reduce their greenhouse gases (GHGs) emissions.

In addition to this, the purpose of the CDM is to assist developing country parties to achieve sustainable development, which is the ultimate objective of the UNFCCC. The core of the CDM is to allow developed country Parties, in cooperation with developing country Parties, to acquire certified emission reductions (CERs) generated by the projects implemented in developing countries.

CERs is a type of emissions unit (or carbon credits) issued by CDM Executive Board for emission reductions achieved by CDM project under Kyoto Protocol. CER can be used by Annex 1 countries to comply with their emission limitation targets. Each CER is equivalent to one ton of CO2 or CO2 equivalents in terms of global warming potential set in Kyoto Protocol, which can be counted towards meeting Kyoto targets.