Flexibility mechanisms

Flexible mechanisms, also sometimes known as Flexibility Mechanisms or Kyoto Mechanisms), refers to Emissions Trading, the Clean Development Mechanism and Joint Implementation. These are mechanisms defined under the intended to lower the overall costs of achieving its emissions targets. These mechanisms enable Parties to achieve emission reductions or to remove carbon from the atmosphere cost-effectively in other countries. While the cost of limiting emissions varies considerably from region to region, the benefit for the atmosphere is in principle the same, wherever the action is taken.

Much of the negotiations on the mechanisms has been concerned with ensuring their integrity. There was concern that the mechanisms do not confer a "right to emit" on Annex 1 Parties or lead to exchanges of fictitious credits which would undermine the Protocol’s environmental goals. The negotiators of the Protocol and the Marrakesh Accords therefore sought to design a system that fulfilled the cost-effectiveness promise of the mechanisms, while addressing concerns about environmental integrity and equity.

To participate in the mechanisms, Annex 1 Parties must meet the following eligibility requirements:

The Emissions Trading-mechanism allows parties to the Kyoto Protocol to buy 'Kyoto units'(emission permits for greenhouse gas) from other countries to help meet their domestic emission reduction targets.

The Protocol defines two project-based mechanisms that allow Annex I countries to meet their GHG emission reduction commitments by acquiring GHG emission reductions "credits." The credits are acquired by an Annex I country financing projects that reduce emissions in non-Annex I countries or other Annex I countries, or by purchasing credits from Annex I countries with excess credits. The project-based mechanisms are the Clean Development Mechanism (CDM) and Joint Implementation (JI).

The project-based mechanisms allow Annex I countries with efficient, low GHG-emitting industries, and high prevailing environmental standards to purchase carbon credits on the world market instead of reducing greenhouse gas emissions domestically. Annex I countries typically will want to acquire carbon credits as cheaply as possible, while non-Annex I countries want to maximize the value of carbon credits generated from their domestic greenhouse gas reducing projects.

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