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The Emissions Trading Scheme
For countries that are signatories to the Kyoto Protocol and with legally bind-
ing emission targets, a tool to help them is the
Emissions Trading Scheme
.
This is a so-called cap-and-trade scheme, which means countries are al-
lowed a certain amount of emissions which should decrease over time to
achieve overall emission reduction. In the Kyoto scheme each allowance is
called an Assigned Amount Unit (AAU), equivalent to one tonne of carbon
dioxide. These allowances are tradable among countries. At the end of a set
period each country must hold the same amount of AAUs as it has emitted
tonnes of greenhouse gases. In case the country emitted more, they can add
to the AAUs offsets that have been created under the Kyoto Protocol mecha-
nisms in order to balance the additional emissions. This is where the CERs,
ERUs and Removal Units from Carbon sinks (RMUs), etc. play their role.
Accounting units
E R U
Emission Reduction Unit
Emission reduction from a JI project
A A U
Assigned Amount Unit
Emission allowance allocated to a
country under the Kyoto Protocol
C E R
Certified Emission Reduction
Emission reduction expected from
a Clean Development Mechanism
(CDM) project
R M U
Removal Unit
Emission reduction from land use,
land-use change and forestry activities
resulting from a CDM or a Joint
Implementation (JI) project
V E R
Voluntary Emission Reduction
Emission reduction from a voluntary
project not bound to any legal framework
or standard
( VER also means "Verified Emission Reduction", an acceptable unit for Chicago Climate
Exchange contracts, but not Kyoto )
Each one equals one tonne of CO
2
equivalent