Additional revenue from carbon credits

Many environmental projects in developing and transition countries can be developed as greenhouse gas reduction projects under the Kyoto Protocol. There are two main instruments: the Clean Development Mechanism or Join Implementation. The emission reduction credits have to be accepted by the appropriate authorities, designated by the UNFCCC board. Once approved, the project becomes eligible for creating carbon credits (emission reduction certificates) which can be sold internationally into carbon markets.

To be eligible to qualify as a CDM project activity and receive certification of emission reductions, a project activity must satisfy the following criteria:

• The project activity must be undertaken by an Annex 1 Party in a developing country;
• The participation of both Parties must be voluntary and approved by each Party;
• The project activity must be of a type that results in emission reductions and contributes to the goal of sustainable development by producing real, measurable and long-term benefits related to the mitigation of climate change; and
• The emission reductions must be additional to any emission reductions that would occur in the absence of the certified project activity.

Voluntary emission reductions can be developed as an alternative from GHG reduction projects. The market for voluntary credits is smaller then the Kyoto compliance market, but developing fast, and can be more attractive for project owners for a number of reasons. However, the framework is less defined and more confusing then in the CDM/JI market, as there is no accepted, single standard yet.

Given the many complex legal, financial and technical issues in the Kyoto market and the complexity of the voluntary market, there are compelling reasons for working with the Global Carbon Exchange as a competent partner.

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