The Kyoto Protocol presents a significant opportunity for Eastern European and Central Asian (ECA) countries to leverage investments in clean energy and the environment. Under the terms of the Kyoto Protocol, industrialized (Annex 1) countries have committed to reduce greenhouse gas emissions by an average of 5.2% compared with emission levels in 1990 over the period 2008-12; the first commitment period. Industrialized countries can achieve these targets through domestic action, or through three flexible mechanisms laid out in the Kyoto Protocol:

• International Emissions Trading (IET) between industrialized countries
• Joint Implementation Projects (JI) – where industrialized countries (or companies within those countries) can purchase greenhouse gas emission reductions from projects in other industrialized countries or economies in transition (Annex 1 countries)
• Clean Development Mechanism (CDM) – where industrialized countries (or companies within those countries) can purchase greenhouse gas emission reductions from projects in developing (Non Annex 1) countries. Developing countries have no quantified greenhouse gas (GHG) emission reduction targets during the first commitment period (2008-12).

The Status of Ratification of the Kyoto Protocol in ECA countries (as of October 11, 2007)

Kyoto Opportunity Eligible – Kyoto Protocol Ratified Kyoto Protocol Not Yet Ratified Countries eligible to participate in JI and International Emissions Trading Croatia, Romania, Bulgaria, Ukraine, Belarus, Czech Republic, Poland, Hungary, Slovak Republic, Latvia, Estonia, Slovenia, Russia  Turkey, Kazakhstan Countries eligible to participate in CDM Albania,Macedonia, Moldova, Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Bosnia, Montenegro, Uzbekistan, Turkmenistan, Serbia   Tajikistan

At a national level, eligibility criteria include ratification of the Kyoto Protocol and establishment of a national focal point for climate change; at a project level eligibility criteria include demonstrating that real, long-term, measurable emission reductions take place (so called ‘additionality’ test), applying an approved methodology, and completing project determination or registration with the UNFCCC.