The Clean Development Mechanism (CDM) and Joint Implementation (JI) standards provide rules for baselines, additionality, monitoring, reporting, verification, and certification of project-based emission reductions. CDM is created for projects in developing countries, while JI is intended for projects in developed countries. Projects intended to generate compliance credits (called Certified Emission Reductions or CERs) need to comply with the CDM/JI standard, governed by the Independent Executive Board of the United Nations Framework Conference on Climate Change (UNFCCC).
The CERs can also be bought for voluntary purposes. The certificates are recorded in an international registry system, with unique serial numbers, making each CER traceable to the project through which it was generated. The market credibility of these standards is high, but transaction costs are high as well, which limits adaptation to medium or large projects.