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Solar cookers
(Photo: KfW Bildarchiv)

The Kyoto Protocol created the first two internationally recognized project based mechanisms: Joint Implementation (JI) and the Clean Development Mechanism (CDM). The CDM and JI serve to promote bilateral cooperation. Such cooperation takes place not at state but at project level and involves private bodies (particularly businesses). This is why the CDM and JI are often subsumed under the term ‘project-based mechanisms’. Their projects must either reduce emissions or enhance the ability of (natural) carbon sinks to remove CO2 from the atmosphere and store it in biomass. Once a project has completed a pre-determined project cycle, the project developer receives emission reduction certificates in the amount of the emissions saved or of the carbon captured and stored. Examples of emission reduction projects include the construction of wind farms, more energy-efficient district heating systems and the installation of biomass-fuelled power stations. Sink projects – projects that increase the amount of carbon stored per unit area – comprise afforestation and reforestation activities.

The certificates created under both mechanisms can be used by industrialized countries to comply with their obligations under the Kyoto Protocol. JI allows mitigation projects in industrialized countries that have an emission reduction obligation under the Kyoto Protocol. The CDM is used for mitigation projects in developing countries that have no such obligation. In contrast to JI, the CDM was established to serve a second purpose: to assist developing countries in achieving sustainable development. Details of the current Kyoto Protocol commitment phase are laid out in the following.

The use of market-based mitigation instruments has also been proposed for the period beyond the Kyoto Protocol’s second commitment period (2013-2020). At the Conference of the Parties in Durban in 2011, a New Market Mechanism (NMM) was defined to complement the existing mechanisms. At the same time, various countries plan to introduce market-based instruments outside the UNFCCC, either as national policies or at subnational or regional level. Some have already done so. A Framework for Various Approaches (FVA) is under discussion to provide international oversight of this increasing spectrum of market-based mitigation instruments.

This section of the website provides detailed introductory information on the CDM, JI and the emerging new market-based mechanisms.

This section provides an overview of the operating modes of the CDM and JI as well as a brief introduction to the structure of the demand side of the carbon market. more

A look at the legal framework under which the CDM and JI were established. more

This section sketches the procedures that CDM and JI projects typically follow from inception to issuance of emission certificates. more

Small mitigation activities can be consolidated (bundled) under one Programme of Activity. The section describes this alternative modality available under both the CDM and JI. more

CDM projects need to determine a reference scenario against which emission reductions are calculated and they must demonstrate that the activity would not have occurred without the CDM. Standardized CDM Baseline allow a reference scenario to be established at the sectoral level together with a list of technologies that are automatically additional. more

What lies in store for market-based mitigation instruments in the near future? This section gives an introduction into the debate on the New Market Mechanism, Framework for Various Approaches and emerging carbon markets outside the UNFCCC. more

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