Kyoto mechanisms

The Kyoto Protocol defines three “flexible mechanisms” which are designed to lower the overall costs of achieving the emissions targets of Annex B countries. The mechanisms enable Annex B parties to purchase emissions reductions from other Kyoto signatories where the marginal cost of emission reductions may be less than they are domestically. The mechanisms are based on the premise that while the cost of abatement varies considerably from region to region, the effect on the global atmosphere of emission reductions is the same, wherever the abatement occurs.

The three Kyoto mechanisms are:

• International Emissions trading. This allows Annex B Parties to acquire units from other Annex B Parties. These units may be in the form of AAUs, Removal units (RMUs), ERUs, and CERs.

• The Clean Development Mechanism (CDM). This allows Annex B Parties to implement projects that reduce emissions in non-Annex I Parties. The projects produce Certificated Emission Reductions (CERs) which represent the reduction of 1 tonne of CO2e. There are also ancillary benefits to the projects such as assisting the host countries in achieving sustainable development. The CDM is supervised by the CDM executive Board to maintain its integrity.

• Joint Implementation (JI) whereby an Annex B Party may implement an emission-reducing project or a project that enhances removals by sinks in another Annex B country. The projects result in Emission Reduction Units (ERUs) with each ERU representing the reduction of 1 tonne of CO2.