Emission reduction mechanism
In order to achieve the ultimate goal of the United Nations Framework Convention on Climate Change global greenhouse gas reduction, three emission reduction mechanisms have been agreed:
Clean Development Mechanism
The more developed countries will provide funding and technology for developing countries to develop the sustainable development programs. The former will receive Certified Emissions Reduction (CERs, dedicated to the Clean Development Mechanism) as motivation reward.
Under the supervision of the Supervisory Committee, developing countries can acquire and transfer Emission Reduction Units (ERUs) with each other.
Developing countries with higher emission reduction costs can invest in emission reduction projects in developing countries with lower emission reduction costs to reduce emission reduction costs and obtain emission reduction units; developing countries with lower emission reduction costs can obtain investment funds and advanced technology for emission reduction.
Units need more carbon emissions can purchase carbon rights from units with low carbon emissions in the carbon trading market.
All three allow for the transfer or acquisition of emission reduction units between the countries of the United Nations Framework Convention on Climate Change, but the specific rules and roles are different.
Forms of carbon trading
Carbon trading is divided into two types:
Refers to the transactions of ERUs generated under Caps (Cap), such as the EU Emissions Trading System’s “European Union Allowances” (EUAs) transactions. It is mainly the excess emission reduction exchange between countries that are incuded by the Kyoto Protocol, usually in spot trading way.