This report argues that, whilst the global carbon mechanisms have succeeded in channelling billions of Euros towards low-carbon investments in developing countries, they cannot deliver what is needed in the future without support, including reforms and involvement of North America.

The report indicates that the Clean Development Mechanism itself has triggered more than 4000 emission- reducing projects in developing countries and is likely to save up to 2 billion tonnes of emissions reductions by 2012. Other mechanisms under the Kyoto Protocol, including emerging Green Investment Schemes, show significant promise, but this report stresses that many of these potential gains are at peril unless governments act to restore the balance in the markets and learn the emerging lessons.

Three fundamental problems that must be tackled are identified and analysed: an excess of supply over demand will mean low prices in the market without government action; there must be reforms to improve the efficiency and environmental performance of the existing mechanisms; and, the Global Carbon Mechanisms are and will continue to be a central pillar in the global response to climate change to 2020, but are not sufficient on their own. They need to be complemented by other actions to support the required cuts in carbon emissions.