They countered that emissions reductions could be assured only through policies and measures harmonized among countries that set standards of behavior for companies and consumers. These market-based investment vehicles allow countries seeking emissions reductions important new flexibility. It establishes a new portfolio-based approach aggregating voluntary investments to fund new projects in developing countries. Emissions reduction credits will be divided among investors and hosts. Taken together, these three mechanisms let countries with targets earn credit for emissions reductions outside their borders.
Investors choose where, when and how emissions reductions are best achieved.
COP3 ended with many practical questions unanswered. The Kyoto Protocol offers only broad outlines of these new mechanisms. The Parties must still negotiate the necessary rules, guidelines, and criteria for implementation. This may not allow enough time to complete negotiations on implementation of the new mechanisms, delaying the introduction of emissions trading, joint implementation and the Clean Development Mechanism. If the flexibility mechanisms are unavailable to industrial countries, their governments may delay ratification of the Protocol and postpone measures needed to achieve domestic emissions reductions.