LIFE Climate Foundation Liechtenstein
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Clean Development Mechanism (CDM)
Climate protection projects of the Clean Development Mechanism belong to the so-called flexible mechanisms and are based on Article 12 of the Kyoto Protocol. The goal is to lower the costs of reaching the contractually established reduction goals and to enable developing countries to have an ecological, sustainable and economical development through the repective transfer of money and technology. They give industrial countries and their companies, in addition to emissions trading, the possibility to meet a portion of their reduction requirements through financing and realising climate protection projects in less developed countries. Only countries that have ratified the Kyoto Protocol, but are not listed in the Kyoto Protocol as industrialised countries can be considered as host countries for CDM projects. Next to the actual intention of reaching greenhouse gas reductions, CDM projects target sustainable development in host countries, which constitutes a positive side effect. The supervision of the projects takes place through the CDM Executive Board (EB), which after the successful conclusion of a CDM Project, also is responsible for issuing the respective emissions credits (Certified Emissions Reductions or CERs).
With the utilisation of CERs, companies in the European Economic Area can comply with a portion of their submission obligation in the framework of EU Emissions Trading.
Joint Implementation (JI)
In addition to the Clean Development Mechanism, Joint Implementation climate protection projects also belong to the flexible Kyoto mechanisms. They are based on Article 6 of the Kyoto Protocol and offer industrial countries the possibility to implement emissions reductions in another industrial country. With the implementation of such a project, a transfer of emissions credits (Emission Reduction Unit, ERU) results from one industrial country (host country) to the next (investor country).
The Emissions Trading Act regulates both project mechanisms. Hence, the legal requirements for it were created, so that private-sector undertakings from Liechtenstein can realise foreign climate protection projects under the Kyoto system and can participate through the Liechtenstein Emissions Trading Registry in worldwide trade with emissions allowances or credits.
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