Kyoto Pact
The Kyoto pact, which was rejected by the United States, commits three dozen industrial countries that signed on to cut emissions by an average of 5 per cent below 1990 levels in the next five years. One of the reasons Washington did not sign on was because the pact did not set targets for fast-developing countries like China and India. The US will come up with its own plan to cut global-warming gases by mid-2008, and won’t commit to mandatory caps at the UN climate conference in Bali, Indonesia. The United States is the only major industrial country to have rejected the 1997 Kyoto pact.

Carbon trading
The Clean Development Mechanism is an arrangement under the Kyoto Protocol that allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. The most important factor of a carbon project is that it establishes that it would not have occurred without the additional incentive provided by emission reductions credits.