is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere.
The CDM is a mechanism established by Article 12 of the Kyoto Protocol for project-based emission reduction activities in developing countries. The CDM is designed to meet two main objectives: to address the sustainable development needs of the host country, and to increase the opportunities available to Parties to meet their reduction commitments. CDM reductions are called Certified Emission Reductions (CERs).
means the removal, limitation, reduction, avoidance, sequestration or mitigation of one metric ton of emissions of greenhouse gases from the atmosphere generated by the Project and approved by the Designated Operational Entities under the Relevant Rules.
Emissions trading is an innovative system that takes advantage of market forces and provides an economic basis for lowering emissions. It will make sure that emissions are cut where it is most cost-efficient, thereby ensuring that reductions are made at the lowest possible cost to the economy and that innovation is fostered. This allows the Kyoto signatories to achieve their Kyoto targets at the least possible cost and ecologically effective action is implemented economically.
In the greenhouse gas market, the European Union Emissions Trading Scheme (EU ETS) is a cap and trade program that went into effect January 1, 2005 for the 25 EU member states. More than 12,000 installations now have a cap on CO2 emissions, and trading of allowances has begun. The second phase will be in effect from 2008 – 2012 to coincide with the Kyoto Protocol. Subsequent 5 year phases are expected.
The Kyoto Protocol is another greenhouse gas cap and trade program that specifies the level of emission reductions, the deadlines, and methodologies that signatory countries (countries who have signed the Kyoto Protocol) are to achieve. The first phase of the Kyoto Protocol is 2008 – 2012. Flexible mechanisms have been introduced to help address the reduction needs of participating countries.
JI is a project-based mechanism developed under the Kyoto Protocol, designed to assist Annex 1 countries in meeting their emission reduction targets through joint projects with other Annex 1 countries, meaning that JI projects can only be implemented between capped industrialised countries. One or more investors (governments, companies, funds, etc.) will agree with partners in a host country to participate in project activities which generate Emission Reduction Units (ERUs), in order to use them for compliance with targets under the Kyoto Protocol.
A voluntary greenhouse gas (GHG) emission reduction market is one which exists outside of any regulatory mandate.
Emitters in a voluntary market reduce their greenhouse gas emissions or invest in GHG emission reduction projects for a variety of reasons.
• It's the right thing to do
• They believe a regulated market is in their future and want to be prepared
• Their shareholders have filed resolutions in regards to climate change risk
• In response to information, scientific consensus or pressure by environmental groups
• Positive public relations