Greenhouse gases mix uniformly in the earth's atmosphere. Unlike sulphur dioxide or low level ozone, carbon dioxide and other greenhouse gases have the same impact on climate everywhere in the world. It does not matter, therefore, where one begins to reduce net emissions. This fact provides the economic justification for international cooperation on climate change projects and project-based emissions trading. International cooperation makes economic sense because emissions reductions in developing countries generally costs less than in industrialized countries. The difference between marginal reduction cost for the investor (industrialized country) and the host (developing country) is the 'surplus'. The host country and the investor country can share the surplus so that both benefit - the investor by reducing emissions more cost effectively than could be done in the investor's home country and the host by receiving additional finance that allows it to implement a greenhouse gas reduction project that would otherwise not be viable. How? The industrialised country starts by keeping a regularly updated inventory of its emissions. A national target for reduction of these emissions is set within the Kyoto Protocol. The industrialised country may then chose to allocate its national target across a number of domestic emitters. The domestic emitter can then meet these targets through one of three methods: Mitigation activities within the country; Through the Joint Implementation Mechanism (another carbon trading mechanism within the Kyoto Protcol); and Through the CDM - where the emitter can invest in a project in a developing country (thus gaining Certified Emissions Credits for themselves) or buy CERs from someone who has invested in such a project. Requirements on the host country are fairly straightforward. For a host country to be eligible to participate in the CDM, it must: Ratify the Kyoto Protocol; and Designate a national authority to provide official host country approval of a project. With the Designated National Authority (DNA) in place, the Clean Development Mechanism (CDM) can start to operate in a host country. It is a project-based mechanism and is driven by market forces - relying on potential investors finding suitable investment opportunities (projects) in host countries. The DNA of a host country will be able to assist the matching of investors with suitable CDM project opportunities developed within the host country.