"The European Commission says it is standing by a call to overhaul U.N.-led carbon trading rules to make it more difficult for developing nations to earn offsets credits from cutting greennhouse gas emissions. At present, rich countries can meet their own carbon emissions limits under the Kyoto Protocol by investing in clean energy projects in the developing world.

That scheme, called the Clean Development Mechanism (CDM), needs reform after 2012 when the first round of Kyoto expires, said Peter Zapfel, a senior official in the EU executive body's environment department."You have the CDM in one corner, which is voluntary, per project, with credits for everything you reduce," Zapfel said on the sidelines of a carbon markets conference in Germany. "And then in the other corner, you have ... the EU carbon market, which has several sectors under one arrangement, they're all mandatorily covered, and they actually have to reduce emissions and respect the cap before they can have free allowances." [Reuters News/Factiva] writes.

In another story, [Thaindian News/Factiva] reports that "India will sign a memorandum of understanding (MoU) with Denmark for co-operation in the field of clean development mechanism projects aimed at reducing carbon dioxide emissions. A cabinet meeting [held] Friday, chaired by Prime Minister Manmohan Singh, cleared the proposal Finance Minister P. Chidambaram told reporters. "The MoU will facilitate exchanging information between the two countries for clean development projects through their designated agencies," Chidambaram said.

Clean development mechanism is one of three flexible mechanisms of the Kyoto Protocol under the UN Framework Convention on Climate Change, an international agreement to reduce the emission of greenhouse gases that binds industrialised countries to specific reduction targets. The Kyoto Protocol came into force February 2005."

[Australian Financial Review/Factiva] also reports, "Indonesia, a significant carbon dioxide emitter, has launched Clean Development Mechanism - a green registration scheme that, through the Kyoto Protocol, lets rich nations like Australia balance out carbon emissions in the emerging world. According to Baker & McKenzie lawyer Paul Curnow, the scheme has 'huge potential in biomass, hydro-electricity and geothermal energy', while Federal Government climate policy adviser Ross Garnaut, writing in a recent discussion paper, singled out the globe's largest archipelago as being a potential source of credits."

Meanwhile, [Agence France Presse/Factiva] writes, "A senior Japanese official on Monday criticised calls to introduce a cap-and-trade plan for greenhouse gas emissions, saying that the country's own "sectoral" approach was gaining support. Japan is hoping to shape the course of negotiations on a new climate treaty, which would cover the period after the Kyoto Protocol's obligations expire in 2012, when it hosts July's summit of the Group of Eight rich nations.

Japan earlier this year launched a panel to discuss introducing emissions trading after the country's powerful business lobby, citing global trends, dropped objections. But Takao Kitabata, the vice minister of economy, trade and industry, said Monday that emissions trading amounted to "a system about markets and money." "It doesn't provide a prescription on what to do," he told reporters. Kitabata, the ministry's highest-ranking bureaucrat, said Japan instead "can take the leadership" on the sectoral approach."