The Emissions Trading Scheme
For countries that are signatories to the Kyoto Protocol and with legally binding 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 allowed 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 mechanisms in order to balance the additional emissions. This is where the CERs, ERUs and Removal Units from Carbon sinks (RMUs), etc. play their role.