Clean Development Mechanism

Clean Development Mechanism allows industrialized countries (Annex I Countries - parties to Kyoto Protocol), to implement emission reduction project activities in developing countries in exchange for certified emission reductions (CERs). For example, if a Japanese company earned CERs by investing in a wind power plant project in China, the credit will be allocated to the Japanese company. The company can sell this credit to the Japanese government or other industrialized countries.

Joint Implementation

The concept of Joint Implementation (JI) is similar to CDM. The differences are that JI projects are implemented between industrialized countries (Annex I Countries), and the reduction amount is counted as Emission Reduction Units (ERUs).

Emission Trading

Annex I parties to Kyoto Protocol have the right to emit GHGs below their target level (some percentage below the 1990 level) in the first commitment period between 2008 and 2012. Emission Trading allows industrialized countries to purchase units, such as CER and ERU, from other industrialized countries and use them towards their emission reduction targets. Only Annex I Parties to the Kyoto Protocol may participate in emission trading.

CDM is a new business opportunity in developing countries. CDM aims to help developing countries achieve sustainable development and contribute to GHG reduction. This will not only provide climate-friendly technologies, but also technical transfer and job creation in those countries. A 2% levy on CDM projects will be utilized to support developing countries in their efforts to cope with the impacts of climate change.

In order for CDM/JI projects to be qualified, the proposed project activity must go through the validation and verification process and meet certain requirements set by UNFCCC. These processes must be validated and verified/certified by a third party organization - a Designated Operation Entity (DOE).

For detail information of