The Kyoto Protocol broke new ground by defining three innovative “flexibility mechanisms”
to lower the overall costs of achieving its emissions targets. These mechanisms enable Parties to
access cost-effective opportunities to reduce emissions, or to remove carbon from the atmosphere, in
other countries. While the cost of limiting emissions varies considerably from region to region, the
effect for the atmosphere of limiting emissions is the same, irrespective of where the action is
taken.
Much of the negotiations on the mechanisms has been concerned with ensuring their integrity. There was
concern that the mechanisms do not confer a “right to emit” on Annex I Parties or lead to
exchanges of fictitious credits which would undermine the Protocol’s environmental goals. The
negotiators of the Protocol and the Marrakesh Accords therefore sought to design a system that
fulfilled the cost-effectiveness promise of the mechanisms, while addressing concerns about
environmental integrity and equity.
All three mechanisms under the Kyoto Protocol are based on the Protocol’s system for the
accounting of targets. Under this system, the amount to which an Annex I Party (with a commitment
inscribed in Annex B of the Kyoto Protocol) must reduce its emissions over the five year commitment
period (known as its “assigned amount”) is divided into units each equal to one tonne of
carbon dioxide equivalent. These assigned amount units (AAUs), and other units defined by the Protocol,
contribute the basis for the Kyoto mechanisms by providing for a Party to gain credit from action taken
in other Parties that may be counted towards it own emissions target.
The three Kyoto mechanisms are:
- The clean development mechanism (CDM) defined in Article 12
provides for Annex I Parties to implement projects that reduce emissions in non-Annex I Parties, or
absorb carbon through afforestation or reforestation activities, in return for certified emission
reductions (CERs, tCERs and lCERs) and assist the host Parties in achieving sustainable development
and contributing to the ultimate objective of the Convention. The CDM is supervised by the
CDM Executive Board.
- The basic principles of the mechanism commonly referred to as “Joint Implementation (JI)” are defined in Article 6 of the Kyoto
Protocol. Under JI, an Annex I Party (with a commitment inscribed in Annex B of the Kyoto Protocol)
may implement an emission-reducing project or a project that enhances removals by sinks in the
territory of another Annex I Party (with a commitment inscribed in Annex B of the Kyoto Protocol) and
count the resulting emission reduction units (ERUs) towards meeting its own Kyoto target.
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Emissions
trading, as set out in Article 17, provides for Annex I Parties to acquire units from other
Annex I Parties. These units may be in the form of AAUs, removal units (RMUs), ERUs, CERs, tCERs
and lCERs.
The AAUs, RMUs, ERUs, CERs, tCERs and lCERs are the accounting units of the “assigned
amount” of each Annex I Party referred to in the provisions of Article 3 of the Protocol. Each
unit is equal to one metric tonne of emissions (in CO2-equivalent terms). AAUs are issued on the
basis of the assigned amount pursuant to Article 3.7 and 3.8 while RMUs are issued on the basis of
land use, land-use change and forestry (LULUCF) activities (often referred to as
“sinks”) under Articles 3.3 and 3.4. In accordance with Article 3.10 and 3.11, the
issuance of ERUs results in the cancellation of either AAUs or RMUs, in order that no overall impact
on a Party’s assigned amount is felt. Finally, CERs are the additions to assigned amount
referred to in Article 3.12. More information may be found on the assigned amount accounting page.
At COP 7 (Marrakesh, October/November 2001), as part of the Marrakesh Accords, Parties completed a
package of decisions on the mechanisms and recommended it to CMP 1 for adoption. These decisions are
largely based on agreement reached on many difficult political issues at COP 6 part II (Bonn, July
2001) in the form of the Bonn Agreements on the Implementation of the Buenos Aires Plan of
Action.
Since COP 7, further decisions have been taken in relation to the Kyoto mechanisms and much work has
been undertaken to implement them. For further information, see the web pages on the individual
mechanisms and on registry systems.
At its first session, the CMP (CMP 1) adopted the ‘Marrakech Accords’ as well as
all draft decisions recommended by the COP.
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