Introduction: Offsets under the Kyoto Protocol
The Clean Development Mechanism has been referred to several times already in this book. It is a precocious institution with a serious claim to being the jewel in the crown of the climate change regime. It has also attracted a fair amount of criticism from the wing of environmentalism that does not have faith in market-based solutions to environmental problems. Whatever one thinks of the CDM, it repays close study because of its conceptual richness and innovation and its diversity of application around the world.
Article 12 of the Kyoto Protocol establishes the CDM as a mechanism to enable non-Annex I parties to achieve sustainable development. In the process, the mechanism should help Annex I parties to comply with their emission reduction commitments under the Protocol. This is the order in which the CDM’s benefits are presented in Article 12(2): sustainable development for developing countries first; facilitation of developed countries’ compliance with emission caps second.