Project-Based Mechanism

A project-based mechanism is a carbon-market instrument that issues tradable credits for emission reductions or removals achieved by a specific project measured against a counterfactual baseline. Each credit represents one tonne of CO2-equivalent avoided or removed, subject to additionality, so the reduction would not have happened without the credit revenue. The Kyoto Clean Development Mechanism and Joint Implementation were the original treaty examples; the Paris Agreement Article 6.4 mechanism is the successor. Project-based credits differ from cap-and-trade allowances, which are issued top-down against a fixed cap rather than earned project by project against a baseline.