All Annex-I countries (except Belarus and Turkey) have legally binding green house gas emission reduction requirements under the Kyoto Protocol. The Clean Development Mechanism is one of the "flexibility mechanisms" of the Protocol to help these countries meet these targets. Instead of countries reducing emissions in their own companies, Annex I countries can buy emission reductions from non-Annex I countries. For example, a CDM project such as a company switching fuels from coal to biomass results in a reduction of 100,000 tonnes of carbon dioxide per year in the atmosphere. If an Annex I country buys these credits, they can count towards the country’s Kyoto reduction targets.
In the voluntary carbon market, carbon credits are purchased by companies or individuals in order to help reduce their impact on climate change. Companies may purchase carbon credits in order to become “carbon neutral” or “green” companies. Individuals may purchase offsets in order to offset their emissions from activities such as flying.