Markets

The International Kyoto Market Framework

International emissions trading markets initially emerged as a result of countries and organisations seeking ways to meet their Kyoto Protocol obligations. Other Kyoto flexibility mechanisms for reducing greenhouse gas emissions include the Clean Development Mechanism (CDM) and Joint Implementation (JI) projects.

Under emissions trading, a party may transfer some of the emissions under its assigned Kyoto Protocol amount (known as assigned amount units – AAUs) to another party that is finding it relatively more difficult to meet its emissions target. It may also transfer, in the same way:

• Certified Emissions Reductions (CERs)

• Emission Reduction Units (ERUs)

• Removal Units (RMUs)

that it has acquired through CDM or JI projects, or sink activities.

There are also state-based and commercial voluntary emissions trading schemes internationally, that seek to establish emission reduction targets or a position of carbon neutrality. Some organisations are therefore looking to originate, or trade, both Kyoto and non-Kyoto compliant allowances with varying economic and environmental additionality requirements.

More Information:

• New Zealand Emissions Trading Scheme (NZ ETS)

• Australian Carbon Pollution Reduction Scheme (Au ETS / CPRS)

• Offsetting

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