Clean Development Mechanism (CDM) and Joint Implementation (JI)

The Clean Development Mechanism (CDM) was defined at the United Nations climate conference in Kyoto, Japan, in 1997. Joint Implementation (JI) is also a part of the Kyoto Protocol. You can read more about this below.

The Clean Development Mechanism was defined at the United Nations climate conference in Kyoto, Japan, in 1997. The CDM enables industrialized countries with greenhouse gas emission reduction targets to compensate for their emissions by implementing or supporting activities that reduce emissions in developing countries.

In return the contributing country or company receives Carbon Emission Reductions (CERs), also called climate credits. CDM projects should also contribute to sustainable development in the host countries.

Joint Implementation is also a part of the Kyoto Protocol and enables investments in emission reduction activities by countries obliged to emissions, a majority of which is located in the industrialized world. The climate credits for JI are called Emission Reduction Units (ERUs).

Kyoto Protocol
Flexible Mechanisms
International Emissions Trading (IET)
Joint Implementation
Clean Development Mechanism
EU-Emissions Trading Scheme (EU ETS)

Kyoto Protocol *

The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012.

The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. 184 Parties of the Convention have ratified its Protocol to date. The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh in 2001, and are called the “Marrakesh Accords.”

Flexible Mechanisms *

Under the Kyoto Protocol, countries must meet their targets primarily through national measures. However, the Kyoto Protocol offers them an additional means of meeting their targets by way of three market-based mechanisms.

The Kyoto mechanisms are:

• Emissions trading
• Clean development mechanism (CDM)
• Joint implementation (JI).

The mechanisms help stimulate green investment and help Parties meet their emission targets in a cost-effective way.
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International Emissions Trading (IET)*

Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not "used" - to sell this excess capacity to countries that are over their targets.

Thus, a new commodity was created in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the "carbon market."

Joint Implementation*

The mechanism known as “joint implementation,” defined in Article 6 of the Kyoto Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex B Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project in another Annex B Party, each equivalent to one tonne of CO₂, which can be counted towards meeting its Kyoto target.

Joint implementation offers Parties a flexible and cost-efficient means of fulfilling a part of their Kyoto commitments, while the host Party benefits from foreign investment and technology transfer.
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Clean Development Mechanism*

The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO₂, which can be counted towards meeting Kyoto targets.

The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction or limitation targets.

EU-Emissions Trading Scheme (EU ETS) **

In January 2005 the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced operation as the largest multi-country, multi-sector Greenhouse Gas emission trading scheme world-wide.

The scheme is based on Directive 2003/87/EC, which entered into force on 25 October 2003.

The aim of the EU ETS is to help EU Member States achieve compliance with their commitments under the Kyoto Protocol. Emissions trading does not imply new environmental targets, but allows for cheaper compliance with existing targets under the Kyoto Protocol. Letting participating companies buy or sell emission allowances means that the targets can be achieved cost effectively. If the Emissions Trading Scheme had not been adopted, other – costlier – measures would have had to be implemented.

* Source: UNFCCC
** Source: Europa – Gateway to the European Union
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