Countries with commitments under the Kyoto Protocol to limit or reduce greenhouse gas emissions must meet
their targets primarily through national measures. As an additional means of meeting these targets, the Kyoto
Protocol introduced three market-based mechanisms, thereby creating what is now known as the “carbon
The Kyoto mechanisms are:
The Kyoto mechanisms:
Stimulate sustainable development through technology transfer and investment
Help countries with Kyoto commitments to meet their targets by reducing emissions or removing
carbon from the atmosphere in other countries in a cost-effective way
Encourage the private sector and developing countries to contribute to emission reduction efforts
JI and CDM are the two project-based mechanisms which feed the carbon market. JI enables industrialized
countries to carry out joint implementation projects with other developed countries, while the CDM involves
investment in sustainable development projects that reduce emissions in developing countries.
The carbon market is a key tool for reducing emissions worldwide. It was worth 30 billion USD in 2006 and is
Annex I Parties must provide information in their national communications under the Protocol to demonstrate
that their use of the mechanisms is “supplemental to domestic action” to achieve their targets.
This information is assessed by the facilitative branch of the Compliance Committee