The Kyoto Protocol - An international legally binding agreement under the United Nations Framework Convention on Climate Change (UNFCCC) to reduce greenhouse gas emissions. It has a flexibility mechanism (The CDM) in force till 2012 where credits can be earned for emission reduction projects.
This binding international legislation acts as a financial incentive for emissions reductions as these credits are traded for value on the emissions trading market.
For each tonne of C02 or equivalent that is reduced by a CDM project, the project developer will earn a carbon credit. Some gases are more potent than CO2 and thus a reduction of that gas will generate more carbon credits per tonne.
Kyoto Protocol Article 17 - Emissions Trading
"… The Parties included in Annex B may participate in emissions trading for the purpose of fulfilling their commitments under Article 3…” |
Kyoto Protocol Article 3
The Parties included in Annex I – (These are most developed countries excluding the USA) shall, individually or jointly, ensure that their aggregate carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts,
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Kyoto Protocol’s Annex A:
- Carbon Dioxide (CO2)
- Methane (CH4)
- Nitrous Oxide (N20)
- Hydrofluorocarbons (HFC’s)
- Perfluorocarbons (PFC’s) and
- Sulphur hexafluoride (SF6)
Annex B
Australia, Austria,
Belgium, Bulgaria,
Canada, Croatia, Czech Republic,
Denmark,
Estonia, European Community
Finland, France,
Germany, Greece,
Hungary,
Iceland, Ireland, Italy,
Japan,
Latvia, Liechtenstein, Lithuania, Luxembourg,
Monaco,
Netherlands, New Zealand, Norway,
Poland, Portugal,
Romania, Russian Federation,
Slovakia, Slovenia, Spain, Sweden, Switzerland,
Ukraine
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