The concept of carbon markets has evolved over time. Here's a deeper dive into some key milestones:

1997: THE KYOTO PROTOCOL AND THE CLEAN DEVELOPMENT MECHANISM (CDM)

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The Kyoto Protocol, adopted in 1997, was a landmark international treaty aimed at reducing greenhouse gas emissions. It established a binding emission reduction target for 37 industrialized countries (Annex I countries) for the period 2008-2012. A key feature of the Kyoto Protocol was the Clean Development Mechanism (CDM). The CDM allowed developed countries (Annex I) to invest in emission reduction projects in developing countries (non-Annex I). These projects could generate tradable emission reduction credits, called Certified Emission Reductions (CERs), which Annex I countries could use to meet their Kyoto Protocol targets. The CDM aimed to promote sustainable development in developing countries while providing Annex I countries with a flexible compliance option.

2005: THE KYOTO PROTOCOL COMES INTO EFFECT

The Kyoto Protocol formally entered into force in 2005, marking a significant step towards international cooperation on climate change.

2015: THE PARIS AGREEMENT AND THE SUSTAINABLE DEVELOPMENT MECHANISM (SDM)

In 2015, the Paris Agreement was adopted, replacing the Kyoto Protocol. The Paris Agreement took a different approach, focusing on national commitments to reduce emissions rather than binding targets for specific countries. Under the Paris Agreement, all countries are required to submit Nationally Determined Contributions (NDCs) outlining their plans for reducing emissions. The Paris Agreement also introduced the concept of the Sustainable Development Mechanism (SDM). The SDM is envisioned as a future framework for international carbon trading under the Paris Agreement. However, the specific rules and regulations for the SDM are still under development.