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The central feature of the Kyoto Protocol is its requirement that countries limit or reduce their greenhouse gas emissions. The Kyoto protocol has been signed by 37 industrialised countries and the European community and requires an average reduction of Greenhouse Gas Emissions of 5% against 1990 levels between 2008 and 2012. Though it is the intention of the protocol that countries reduce their emissions mainly through national measures, three market-based mechanisms make it possible to reduce emissions outside the country; emission trading, Clean Development Mechanism (CDM) and Joint Implementation (JI).

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