The Project Design Document (PDD) is a key document that will have a critical influence on all the following steps of the CDM project cycle. A careful design and formulation of the project will enhance the chances for its successful development.
 
The United Nations Framework Convention on Climate Change (UNFCCC) has established a layout of the PDD for each project developer to fill in. 
 

1. General description of project activity 
2. aseline methodology 
3. Duration of the project activity/crediting period 
4. Monitoring methodology and plan 
5. Calculation of GHG emission by sources 
6. Environmental impacts 
7. Stakeholder comments 

Annex 1. Contact information on project participants 
Annex 2. Information regarding public funding 
Annex 3. New baseline methodology 
Annex 4. New monitoring methodology 
Annex 5. Table of baseline data 
 

In order to be eligible for CDM registration, the project proposal should demonstrate additionality and contribute to sustainable development in the Host Country.
 

• Emission Additionality: the project should lead to real, measurable and long term GHG mitigation. GHG emission reductions are to be calculated with reference to a baseline. 

• Financial Additionality: the project proponent must demonstrate that the project could not be undertaken without the revenue from the sale of the attached Certified Emission Reduction (CERs) and that the procurement of the CERs is not part of an Official Development Assistance (ODA) scheme. 
  

Sustainable development of the host country 
It is the prerogative of the host party to confirm whether a CDM project activity contributes to the country's sustainable development. Each country will have its own indicators for sustainable development, generally comprising of social, economic, environmental and technical well-being. 

In order to evaluate and then calculate the GHG emission reductions resulting from the project activity, the baseline and monitoring methodologies must be clearly determined.
 

The baseline methodology
The baseline scenario is the scenario that would take place if the project activity is not implemented. The GHG emissions that occur in the baseline scenario are the basis for the calculation of the emission reductions from the project activity. The project proposal must clearly and transparently describe the methodology of determination of the baseline. The project proponent can develop a new methodology for its project activity or can use one of the methodologies approved by the CDM Executive Board. For small-scale CDM projects, the project proponent can use the simplified procedures. The project proposal should indicate the formulae used for calculating GHG offsets in the project and baseline scenario. Leakages, if any, within or outside the project boundary, should be clearly described. Any alternative to the proposed CDM project activity should also be described in the project proposal. 
  

Monitoring is a verification process designed specifically to measure and to audit the carbon component of the project activity. In establishing the PDD, project proponents must describe the instruments and timings for the project monitoring as well as the data to be monitored.