Flexible Mechanisms

The Kyoto Protocol is the first international document that uses market mechanisms to solve global environmental problems.

Emissions Trading

The Kyoto Protocol makes provision for an "emission trading" mechanism. The national emission reduction obligation under the Protocol is interpreted as a national emission quota. If a country does not use up its emission quota (or allowance) completely, it may transfer or sell the unused portion of this quota to another country. For example, many countries have expressed interest in buying a portion of Russia’s emission quota. The European Union is the first group of countries which have developed their own emission trading system.

Clean Development Mechanism (CDM)

A new economic instrument borne of the Kyoto Protocol, the Clean Development Mechanism (CDM), is generating interest as a tool for promoting the technologies of the future. The CDM was proposed by industrialized countries as a means of meeting their overall Kyoto Protocol obligations with greater flexibility. In essence, industrialized countries can earn 'credits' for their investments in emission reduction projects in developing countries which are then offset against their domestic emission obligations.

The developed country gains credits for the emissions reduced, while the developing country gains projects and help with capacity building, technology, environmental remediation and socio-economic development. The general rules to guide implementation of the CDM were agreed to in what is known as the Marrakesh Accords. However, the CDM has underperfomed to date.



WWF has led the development of the CDM Gold Standard (launched in December 2003), a rigorous, independent tool for those seeking to design CDM projects that benefit the host countries, as well as the buyers of carbon credits.

Joint Implementation (JI)

Developed countries and countries with economies in transition may jointly implement greenhouse gas emission reduction projects on the territory of one country and then ‘share’ the effect of these projects during the period 2008-2012 by way of transfers of ‘emission reduction units’ generated by such projects. Such arrangements are called Joint Implementation (JI) projects.