India will sign a memorandum of understanding (MoU) with Denmark for co-operation in the field of clean development mechanism (CDM) projects aimed at reducing carbon dioxide emissions.

A cabinet meeting here Friday, chaired by Prime Minister Manmohan Singh, cleared the proposal, Finance Minister P. Chidambaram told reporters after the meeting.

'The MoU will facilitate exchanging information between the two countries for clean development projects through their designated agencies,' Chidambaram said.

India has set up the National Clean Development Mechanism Authority (NCDMA).

CDM is one of three flexible mechanisms of the Kyoto Protocol under the UN Framework Convention on Climate Change, an international agreement to reduce the emission of greenhouse gases (GHG) that binds industrialised countries to specific reduction targets. The Kyoto Protocol came into force February 2005.

'The agreement will provide an institutional mechanism between the two countries for the promotion of the Kyoto Protocol CDM projects,' Chidambaram said.

The countries that ratified the Kyoto Protocol Dec 11, 1997 at Kyoto, in Japan, are required to reduce greenhouse gas emissions, which cause climate change.

As of November 2007, a total of 175 countries had ratified the protocol, including 137 developing countries like Brazil, India and China.

CDM allows emission reduction projects of the host country to capitalise on the emission reduction through the sale of certified GHG emission reductions (CERs) from the project.

According to an estimate, CDM has around 1,000 projects in around 50 countries across the world to reduce carbon dioxide emissions by more than 34,000 tonnes annually. It has so far generated over 135 million certified emission reductions (CERs).