The Clean Development Mechanism (CDM) and the Joint Implementation (JI) are two of the so-called Flexible Mechanisms of the Kyoto Protocol (Article 12). The third mechanism of the Kyoto Protocol is Emissions trading.

The CDM and the JI are project based mechanisms, in other words, they are meant to promote projects in another country which lead to reduced emissions of greenhouse gases, compared to what would have happened in the absence of the project. In case of the JI projects, both countries must have a reduction commitment under the Kyoto Protocol. The CDM projects happen in countries without a reduction commitment (“non-Annex-I”).These virtual reductions become a certified product of the project and can be bought and used by industrialised countries (“Annex-I”) to fulfil their targets under the Kyoto Protocol. A share of the proceeds will go into a fund that will pay for measures to alleviate climate change impacts in developing countries. More on CDM .....