To date, Southern Mediterranean countries have hosted a limited number of projects under the
Clean Development Mechanism (CDM). There are three challenges to the participation of middleincome
countries in future carbon markets: the limited size of future demand for offsets or credits;
restrictions on the use of CDM credits in Phase III of the EU Emissions Trading Scheme; and the
lack of prompt preparation for the start of new market-based mechanisms. This study examines
existing and emerging activities in Southern Mediterranean countries that could fit into new market based
mechanisms. It explores options for the evolution of mechanisms and discusses the merits of
post-2012 carbon funds in bridging the gap between the end of the first commitment period of the
Kyoto Protocol and the entry into force of a new international agreement
