The Kyoto Protocol defines three mechanisms to assist Annex I Parties in meeting their emission targets.

"Joint implementation" (Article 6) allows Annex I Parties to implement projects that reduce greenhouse gas emissions by sources, or enhance removals by "sinks", in the territories of other Annex I Parties, and to credit the resulting "emission reduction units" against their own emission targets. (The term "joint implementation" does not appear in Article 6, but it has entered into common usage as convenient shorthand).

The clean development mechanism (CDM) defined in Article 12 allows Annex I Parties to implement projects that reduce greenhouse gas emissions in non-Annex I Parties and has the additional goal of assisting non-Annex I Parties in achieving sustainable development and contributing to the ultimate objective of the Convention. Under the CDM, Annex I Parties may use "certified emission reductions" generated by project activities in non-Annex I Parties to contribute to compliance with their emission commitments. The CDM will be supervised by an executive board, and a "share of the proceeds" from project activities will be used to assist particularly vulnerable developing countries in meeting the costs of adaptation.

Emissions trading, as set out in Article 17, permits an Annex I Party to transfer part of its "assigned amount" (the amount of emissions the Party may emit during the commitment period) to another Annex I Party.

At COP 4, Parties agreed on a work programme to elaborate principles, modalities, rules and guidelines on all three mechanisms (with priority to be given to the CDM), with a view to taking decisions on these at COP 6 (see decision 7/CP.4).

Negotiations on the mechanisms have been conducted jointly by both subsidiary bodies. In addition, as part of the work programme agreed at COP 4, two technical workshops were held in Bonn in April 1999. Informal consultations were also convened in Kuala Lumpur in March 2000 and in Bonn in August 2000.

At SBSTA/SBI 13 part I (Lyon, Sept), Parties focussed their work on a "consolidated text on principles, modalities, rules and guidelines" for the mechanisms prepared by the Chairmen of the subsidiary bodies. A number of additional proposals were submitted by Parties and incorporated into this consolidated text during the session. Parties agreed to forward the resulting text (see FCCC/SBSTA/2000/10/Add.1) to part II of SBSTA/SBI 13, meeting in The Hague in November. They also invited the Chairmen of the subsidiary bodies to further consolidate the text, in consultation with Parties, before that session.

Key issues under negotiation include: the question of "supplementarity" (whether a limit should be placed on the use of the mechanisms); which projects should be eligible for the CDM (particularly whether sink projects such as reforestation, and nuclear energy projects, should be permitted); whether the "adaptation levy" applied to the CDM should be extended to all three mechanisms; who should be liable if a Party that has transferred a part of its assigned amount under emissions trading is found to be in non-compliance; and what the membership of the CDM executive board should be.

Informal consultations on the mechanisms took place in New Delhi, India, on 16-18 October.