The Trust Fund is used to manage revenue collected from project participants and other stakeholders in the CDM, and the revenue in the Trust Fund is used to finance the administration of the CDM:
The Conference of the Parties:...
- Invites Parties to finance the administrative expenses for operating the clean development mechanism by making contributions to the UNFCCC Trust Fund for Supplementary Activities. Such contributions shall be reimbursed, if requested, in accordance with procedures and a timetable to be determined by the Conference of the Parties upon the recommendation of the Executive Board (17/CP.7, paragraph 17).
At EB 33, the Executive Board requested that the secretariat establish separate Trust Fund accounts to collect revenue from:
- Accreditation fees;
- Registration fees;
- Methodology and assessment fees;
- The share of proceeds; and
- Interest accrued on the operating reserve.
The Executive Board noted that the establishment of separate accounts will help the secretariat to be more efficient and transparent in the management of income and expenditure, in servicing auditing processes and in providing services to private sector clients (project participants and DOEs) (EB 33, paragraph 86).
49/CMP.4 indicates that the Executive Board is to allocate financial resources from the interest accrued on the principal of the Trust Fund, as well as any voluntary contributions from donors, in order to provide loans to support the following activities:
- To cover the costs of the development of project design documents; and
- To cover the costs of validation and the first verification for these project activities.
To be eligible to receive these loans, countries must currently have fewer than 10 registered CDM project activities.
Repayment of these loans are to commence from the date of the first issuance of certified emission reductions (50/CMP.4).
Neither the CMP or the Executive Board have indicated how they intend to operationalise this loan mechanism.