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Emissions
Trading (ET) - (Article 17, Kyoto Protocol)
ET is the only administrative based mechanism
of the three Kyoto mechanisms; JI and CDM are both project based.
Under ET, countries
are allowed to transfer parts of their allowed emissions (assigned
amount units, or AAUs). An annex I country can acquire units from
another annex I party and use the acquired units towards meeting her
emissions targets under the Kyoto protocol.
For
instance, an annex
I nation (with emission commitment in annex B of the Kyoto Protocol) that
that has met and exceeded her emission reduction target, can sell
units to another annex I country (with emission commitment in annex B of
Kyoto Protocol) and has not met her emission target.
Only Annex I
Parties to the Kyoto Protocol with emission limitation and reduction
commitments inscribed in Annex B to the Protocol may participate in
emission trading.
The units
which may be transferred under emissions trading, each equal to one metric
tonne of emissions (in CO2-equivalent terms), may be in the
form of:
-
An
assigned amount unit (AAU) issued by an Annex I Party on the basis of
its assigned amount.
-
A removal
unit (RMU) issued by an Annex I Party on the basis of land use, land-use
change and forestry (LULUCF) activities under Articles 3.3 and 3.4 of
the Kyoto Protocol.
-
An
emission reduction unit (ERU) generated by a joint implementation
project under Article 6 of the Kyoto Protocol.
-
A
certified emission reduction (CER) generated from a clean development
mechanism project activity under Article 12 of the Kyoto Protocol.
Transfers
and acquisitions of these units are to be tracked and recorded through the
registry systems under the Kyoto Protocol. These include a national
registry to be established and maintained by each Annex I Party.
Parties may
also authorize legal entities (e.g. businesses, non-governmental
organizations and other entities) to participate, under their
responsibility, in emissions trading. Accounts may be created in national
registries to provide for such participation by legal entities.
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