Kick the Habit: A UN Guide to Climate Neutrality

own country but to account for their national emission reduction targets. Offsets offered and purchased under this framework are part of the “com- pliance market”. For all offsets created under the Kyoto mechanisms it is independently verified that the reductions have actually taken place and registered in the Clean Development Mechanism (CDM) registry which has the advantage of transaction credibility, protection against fraud and errors, and simplified facilitation of transactions based on established standards and procedures. In 1997 the Kyoto Protocol established legally-binding targets for green- house gas reductions by the so-called Annex I countries (predominantly developed countries and countries with economies in transition). The Pro- tocol established what are called Flexible Mechanisms to allow these coun- tries to meet their targets by trading carbon credits or emission reduction units – essentially this means buying the right to emit from those with emission rights to spare. Emission reductions can be achieved through the ‘Clean Development Mechanism’ (CDM) and ‘Joint Implementation’ (JI). The compliance market is the product of these Flexible Mechanisms. Inter- national ‘Emissions Trading’ is an option under which most Annex I coun- tries can supplement domestic reductions by trading spare GHG emission quotas with each other. ing the largest number of emission reductions in the world. It allows Annex I countries to invest in projects that reduce emissions in developing coun- tries as an alternative to more expensive emission reductions in their own countries to meet their own reduction targets. The projects generate emis- sions credits called Certified Emissions Reductions (CERs), which can then be traded. Anyone, not only governments, can buy the CDM certificates and use them to meet their obligations under the Kyoto Protocol. For the countries where the projects take place, the investment results in various benefits such as technology transfer and economic stimulus. To date there are almost 1 000 projects registered under the CDM mechanism. In order to qualify for the CDM, one must demonstrate that the activities result in additional emissions reductions. Clean Development Mechanism (CDM) The CDM is expected to have delivered close to three thousand million tonnes of CO 2 e in offsets by 2012 which makes it the framework generat-

THE CYCLE – OFFSET KICK THE HABIT

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