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The aim of this project is to determine how the CDM can be utilised in energy planning in non-Annex 1 countries in order to achieve the development goals set by the government. The report considers the Energy Efficiency Strategy in South Africa as a case study. The findings of the report indicate that the CDM can be applied in the Energy Efficiency Strategy by using it to fund pilot projects through a CDM Pilot Project Scheme. These pilot projects should be selected using a bidding process administered by the Promotions sub-committee under the DNA. The bidding process would be based on the targets set for the third phase of the Energy Efficiency Strategy in order to ensure additionality as well as replication of the project in the medium-term. Once selected the projects would fall under Eskom’s DSM Programme and would be eligible for financial assistance from the state utility’s DSM Fund. The CDM Pilot Project Scheme would also include a South African Carbon Fund. This would be used to consolidate the CERs produced by CDM activities in the country in order to demand a better price from foreign buyers by reducing the risk involved for purchasers of CERs through the fund as well as reducing transaction costs for CDM activities in the country. Foreign and loca