Flexible Mechanisms

Under the Kyoto Protocol member countries are able to lower the overall costs of achieving their emission targets using Flexible Mechanisms. These mechanisms allow parties to access cost-effective opportunities to reduce GHG emissions or remove Carbon from the atmosphere in other countries.                                       

1. Clean Development Mechanism (CDM):

Allows Annex 1 countries to implement activities that reduce emissions in non annex 1 countries and in return they will receive certified emissions reductions (CERs). These CER’s are used by Annex 1 countries to help meet emissions targets and assist developing countries who host parties achieve sustainable development.

A CDM project may involve, for example,

• Supplying a rural area with electricity through the use of solar panels
• Installation of energy efficient boilers

2. Emissions Trading:

This allows Annex 1 countries to purchase credits from other Annex 1 countries.

• Industries that emit GHG’s have an emissions allowance which represents a specific amount they are allowed to emit.
• Emissions can’t exceed this limit. Should they need to exceed their allowance, carbon credits must be purchased from other Annex 1 industries that have excess credits.
• In hindsight the buyer is being fined for polluting and the seller is benefiting from reducing their GHG emissions.

3. Joint Implementation:

Under Joint Implementation any Annex 1 country who has an emissions reduction commitment may invest in emission reducing projects in the territory of another Annex 1 country. The country who sets up the Carbon reduction project can then count the resulting emission reduction units towards meeting its own Kyoto target. An example of joint implementation:

• In 2003 Finland set up a bio-powered power plant in Estonia, replacing previous oil fuelled plant.
• Finland will receive the credit for the reduction in GHG emissions achieved when the new plant becomes operational.