Flexibility mechanisms

Climate policy includes measures known as flexibility mechanisms. For example, the parties to the Kyoto Protocol may use such mechanisms to complement their national emission reduction measures. The purpose of flexibility mechanisms is to promote the cost-efficiency and flexibility of emission reductions. Target countries also profit, by gaining funding. According to the Kyoto Protocol, however, a country may not fulfil its emission reduction targets through flexibility mechanisms alone. In the main, it must live up to its obligations under the Protocol by taking emission reduction measures at national level.

The Kyoto Protocol includes three flexibility mechanisms

  • Joint Implementation (JI) allows an industrial country to fund emission-reduction or carbon sink projects in another industrial country.
  • Secondly, the Clean Development Mechanism (CDM) allows an industrial country to implement emission-reduction projects or install carbon sinks, in accordance with the principles of sustainable development, in developing countries. Such projects earn saleable certified emission reduction (CER) credits, which the industrial country can then use.
  • International Emissions Trading (IET) allows countries that are exceeding their emission targets to buy emission units from countries whose emissions have not reached the limit permitted for them.

Use of such mechanisms will be limited during the second commitment period of the Kyoto Protocol in 2013–2020. Countries with no binding targets during the second commitment period are not allowed to use these mechanisms. However, countries participating in the second commitment period do have immediate access to the Clean Development Mechanism. Later on, they can also use the Joint Implementation and International Emissions Trading mechanisms.

As part of their climate policy, the EU and other countries make use of other flexibilities as well.

Use of flexibility mechanisms in Finland

The Ministry of the Environment is responsible for Joint Implementation and International Emissions Trading. The Ministry for Foreign Affairs oversees the Clean Development Mechanism, and the Ministry of Employment and the Economy takes care of coordinating the emission allowance procurement programme. Finland will begin preparing a flexibility strategy in connection with the updated Climate and Energy Strategy.

Finland has also purchased emission units through international carbon funds, for example by investing in the Baltic Sea Region Testing Ground Facility (TGF), the World Bank's Prototype Carbon Fund (PCF) and the Asia Pacific Carbon Fund (APCF).

Launch of projects

Businesses have been able to participate in flexibility mechanism projects, acquiring emission units generated through these. Businesses participating in the EU Emissions Trading System can use these units to augment their emission quotas. They can also resell emission units.

Projects are approved by the Ministry of the Environment (JI projects), or the Ministry for Foreign Affairs (CDM projects), upon application. Applications for the authorisation and approval of Joint Implementation (JI) projects should be made to the Ministry of the Environment. It is advisable to contact the ministry before submitting such an application.

Retaining emission units in a holding account, and transferring them through International Emissions Trading (IET), requires authorisation. Businesses participating in IET and which have a greenhouse gas emissions permit, as well as legal persons authorised to participate in a Joint Implementation project or a Clean Development Mechanism project, do not need separate authorisation for their holding account.

Such authorisation is granted to a legal person on the basis of a free-form application delivered to the Ministry of the Environment. The application must include the applicant's name, domicile, contact information and business ID.

Applications should be delivered to the Registry of the Ministry of the Environment by emailing them to kirjaamo@ym.fi. Authorisations are granted free of charge.

Further information

Outi Honkatukia, Senior Environmental Adviser, tel. +358 295 250 272, firstname.lastname@ym.fi

Published 2013-07-30 at 10:59, updated 2019-03-29 at 8:34