The carbon value chain: emissions trading and the clean development mechanism

摘要

The Kyoto Protocol, an international agreement, was adopted in 1997 to assist parties to the United Nations Framework Convention on Climate Change (UNFCCC). With this adoption, capital is flowing into developing countries to build a programme of cost-effective emission reductions. The Protocol covers more than 55 percent of global greenhouse gas (GhG) emissions and legally binds 35 industrialised countries to strict mandatory reductions targets. The overall reduction target accepted by industrialised countries is 5.2 percent below 1990 levels to be reduced by 2012 and negotiations are presently underway to determine what scheme and which targets, if any, should be adopted post-2012. The Kyoto Protocol provides for three 'flexibility mechanisms' which may be employed by countries, businesses and individuals to assist in the reduction of emissions. The most developed mechanism is the Clean Development Mechanism (CDM). Under the CDM, investments may be made in GhG reduction projects in developing countries. The resulting Certified Emission Reductions (CERs) can be traded internationally among countries or even, to some extent, in other markets such as the EU Emissions Trading Scheme (EU ETS). The CDM has an extensive pipeline of projects potentially able to produce 2 billion CERs by the end of 2012.