The Earth has been getting warmer over the last decades. Most experts agree that changing climate is a result of human activities, mainly due to the increased emissions of so-called greenhouse gases (GHG) and increased deforestation. If these trends continue, climate change will have direct consequences for the planet. Given the enormity of the potential damage, the world's governments signed, in 1992, the United Nations Framework Convention on Climate Change (UNFCCC) and, in 1997, the Kyoto Protocol.

The Kyoto Protocol requires industrialized countries (called Annex 1 countries) to reduce their total emissions of greenhouse gases during the 2008-2012 period by 5.2 percent compared to the reference year 1990. Emissions of six GHGs are covered by the Kyoto Protocol: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF₆).

Besides reducing emissions in their own countries, the Kyoto Protocol includes certain "flexibility mechanisms" intended to help industrialized countries meet their commitments at a lower cost. One of these is the Clean Development Mechanism (CDM/JI). The CDM/JI also provides an opportunity for developing (i.e. non-Annex 1) countries to participate in the process of GHG emission reductions. Thus, the CDM/JI serves two purposes:

• It assists non-Annex 1 countries in achieving sustainable development while taking measures intended to stabilize the concentrations of GHG in the atmosphere;
• It helps Annex 1 countries meet their quantified GHG emission commitments.

In order to qualify under the CDM/JI, emission reductions resulting from the implementation of registered projects need to be real, measurable, and long term. Furthermore, each tonne reduction of carbon-dioxide-equivalent-emissions, once verified and certified, results in the issuance of a CER (Certified Emissions Reduction). The purchase and sale of CERs constitutes a CDM/JI transaction.