Cap and Trade
Cap and trade is a market-based policy tool for protecting human health and the environment. A cap and trade program first sets an aggressive cap, or maximum limit, on emissions. Sources covered by the program then receive authorizations to emit in the form of emissions allowances, with the total amount of allowances limited by the cap. Each source can design its own compliance strategy to meet the overall reduction requirement, including sale or purchase of allowances, installation of pollution controls, implementation of efficiency measures, among other options. Individual control requirements are not specified under a cap and trade program, but each emissions source must surrender allowances equal to its actual emissions in order to comply. Sources must also completely and accurately measure and report all emissions in a timely manner to guarantee that the overall cap is achieved.

Carbon Offset
Carbon offsetting is the process of reducing greenhouse gas emissions by purchasing credits from others through emissions reductions projects, or carbon trading schemes. .

CDM
The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

A CDM project activity might involve, for example, a rural electrification project using solar panels or the installation of more energy-efficient boilers.
The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction or limitation targets.

Emissions Trading
Emissions trading is one of the Kyoto mechanisms. Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not "used" - to sell this excess capacity to countries that are over their targets.

Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the "carbon market."

Emissions trading schemes may be established as climate policy instruments at the national level and the regional level. Under such schemes, governments set emissions obligations to be reached by the participating entities. The European Union emissions trading scheme is the largest in operation.

Internal Credit System (Domestic CDM)
Large-sized companies may provide financial and technical support to small- or medium-scale companies to implement carbon dioxide emission reduction projects in Japan in exchange for emission credits under the Domestic CDM scheme. This mechanism is intended to promote additional emission reduction efforts within Japan, especially in the agricultural and consumer sectors, as well as efforts by small- or medium-sized companies in all sectors. Domestic CDM is also intended to encourage domestic investment of funds that may otherwise be spent outside of Japan to purchase Kyoto Credits.

Kyoto Protocol
The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012.
The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. 184 Parties of the Convention have ratified its Protocol to date. The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh in 2001, and are called the “Marrakesh Accords.”

Sustainable Development
Sustainable development has been defined in many ways, but the most frequently quoted definition is from Our Common Future, also known as the Brundtland Report:
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts:
・ the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and
・ the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."

UNFCCC
The United Nations Framework Convention on Climate Change (UNFCCC) sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. It recognizes that the climate system is a shared resource whose stability can be affected by industrial and other emissions of carbon dioxide and other greenhouse gases. The Convention enjoys near universal membership, with 192 countries having ratified.

Under the Convention, governments:
・ gather and share information on greenhouse gas emissions, national policies and best practices
・ launch national strategies for addressing greenhouse gas emissions and adapting to expected impacts, including the provision of financial and technological support to developing countries
・ cooperate in preparing for adaptation to the impacts of climate change

The Convention entered into force on 21 March 1994.

Voluntary Action Plan (VAP)
Japan Keidanren (Japan Business Federation) in 1997 produced the "Keidanren Voluntary Action Plan on the Environment," a program in which industries drafted plans in cooperation with industrial organizations from manufacturing and energy to distribution, transportation, finance, construction, and foreign trade. Keidanren has adopted as a common goal "to endeavor to reduce CO2 emissions from the industrial and energy-converting sectors in fiscal 2010 to below the levels of fiscal 1990."