Table of Contents

The Kyoto Mechanisms and Global Climate Change: Coordination Issues and Domestic Policies

Foreword       ii

Executive Summary      iii

I. Introduction      1

A. The Benefits of Emissions Trading   1
B. The Kyoto Mechanisms   2
C. Implementation Issues   4
D. The Kyoto Mechanisms and Domestic Policies   5
E. Equity, Environmental Integrity, and Economic Efficiency   6

II. Proposed Rules for the Kyoto Mechanisms     9

A. Participation by Legal Entities   9
B. Substitution Among Mechanisms (Fungibility)   10
C. Supplementarity   12
D. Penalties, Enforcement, and Liability   13
E. International Review of Projects    15
F. The Need To Demonstrate Additionality   17
G. Approval by Annex B Parties   19
H. Date When Projects Can Begin To Generate Allowances   20
I. Eligibility of Sink Enhancement Projects   21
J. Levies on Transactions   21
K. Contribution to Sustainable Development   23

III. Coordination of the Kyoto Mechanisms with Domestic Policies    29

A. Potential Purchase and Use of Kyoto Mechanism Allowances by
          Legal Entities   25
B. Potential Sales of Kyoto Mechanism Allowances by Legal Entities   29
C. Coordination of Domestic Policies with the Rules of the Kyoto
         Mechanisms   31

IV. Conclusions    34

A. Proposed Rules for the Kyoto Mechanisms   35
B. Coordination of the Kyoto Mechanisms with Domestic Policies   36

Bibliography    37

Endnotes     39