Joint Implementation
The sources of Kyoto credits are the Clean Development Mechanism (CDM) and Joint Implementation (JI) projects. The CDM allows the creation of new carbon credits by developing emission reduction projects in non-annex I countries, while JI allows project-specific credits to be converted from existing credits within annex I countries. CDM projects produce Certified Emission Reductions (CERs), and JI projects produce Emission Reduction Units (ERUs), each equivalent to one AAU. Kyoto CERs are also accepted for meeting EU ETS obligations, and ERUs will become similarly valid from 2008 for meeting ETS obligations (although individual countries may choose to limit the number and source of CER/JIs they will allow for compliance purposes starting from 2008). CERs/ERUs are overwhelmingly bought from project developers by funds or individual entities, rather than being exchange-traded like allowances.