Behind the concept

1 June 2003

The flexible mechanisms of the Kyoto protocol -- increasingly referred to as flex mex -- are simple in concept but complex to explain. Joint Implementation (JI) is a mechanism that allows industrialised countries to contribute to their greenhouse gas emission reduction targets by investing in emissions reduction projects in other countries and receiving credits called Emission Reduction Units (ERUs). This is advantageous if mitigation costs are lower than those for national action.

The Clean Development Mechanism (CDM) refers to climate change projects undertaken in a developing country. They lead to reductions in greenhouse gas emissions and contribute to the host country's sustainable development. Credits are awarded for these reductions -- Certified Emission Reductions (CERs) and can be used to contribute to the emission reduction commitments of industrialised countries.

International Emissions Trading (IET) allows the trade of emission rights, the so-called Assigned Amounts, which entitle participating countries to emit a specified quantity of CO2 but are also an emissions cap. Emission reduction credits from JI and CDM facilitate compliance with the emissions caps at least cost. In other words, market forces are applied so that emissions are saved where it is cheapest to do so.