The Kyoto Protocol is an international agreement that aims to reduce emissions of greenhouse gases by 5.2% compared with 1990 levels during the commitment period (2008-2012). Developed countries with commitments under the Kyoto Protocol to limit or reduce GHG emissions (Annex I Parties) must meet their targets primarily through national measures. However, to help these countries meet their targets in a cost-effective way, the Kyoto Protocol introduced three market-based mechanisms, thereby creating what is now known as the “carbon market”. The so-called “flexible” mechanisms are: Emissions Trading, the Clean Development Mechanism (CDM) and Joint Implementation (JI). The CDM allows a country to implement an emission-reduction project in developing countries that can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets. The CDM stimulates both emission reductions and sustainable development through investment and technology transfer. Therefore, it is very important to analyze its contribution to both objectives. While the contribution of CDM to emission reductions at minimum cost seems positive, its contribution to sustainable development has been often relegated to the background. New mechanisms will replace or coexist with the CDM in the post Kyoto period (2013-2020), and it would be desirable that they could contribute to sustainable development and biodiversity conservation more effectively than the CDM.
Greenhouse Gas (GHG); Global Warming Potential (GWP); UNFCCC; Clean Development Mechanism (CDM); Certified Emission Reduction (CER); Least Developed Country (LDC)