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Kyoto Protocol
To reduce greenhouse gas (GHG) emissions and to fight global warming, the international community put in place the Kyoto Protocol that now applies to over 170 countries globally and over 55% of global GHG emissions. This international treaty came into being on February 16th 2005. According to the Protocol, industrialized countries (Annex I countries) have to reduce their greenhouse gas emissions by an average of 5% less than their 1990 levels by 2012. For EU15, the reduction target is 8%.
The Kyoto Protocol comprises of 3 “flexible mechanisms” that allow developed economies to meet their GHG emission limitation by purchasing GHG emission reductions from elsewhere. These are:
- Emissions trading
This allows the international transfer of nationally allocated emission rights between different Annex I countries.
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The Clean Development Mechanism (CDM)
This allows the creation of Certified Emission Reduction (CER) credits through emission reduction projects in developing countries (non-Annex I countries). CERs will be transferable to industrial countries where they can be applied toward emissions reduction targets. One CER represents one ton of CO2 avoided.
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The Joint Implementation (JI)
This allows the creation of emissions reduction units (ERU) through transnational investment between Annex 1 countries and/or companies. In practice, this will likely mean facilities built in Eastern Europe and the former Soviet Union (the “transition economies”) supported by Western countries. ERUs can be used for compliance toward emissions reduction targets. One ERU represents one ton of CO2 avoided.
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