Background and Purpose of the ConferenceTwo cornerstones of recent international climate policy are the second assessment report ofthe IPCC and the Kyoto Protocol to the UN Framework Convention on Climate Change.Scientific evidence presented in the IPCC report reveals that current emissions of greenhousegases have a tangible effect on the earths climate. According to the report, a massivereduction of global emissions is necessary to stabilise the global climate. The commitment ofindustrialised countries and transition economies as agreed upon in the Kyoto Protocol toreduce the emissions of the six main greenhouse gases by 5.2 per cent until 2008-2012 is onlya first step. Further steps are needed.Internal and external emissions trading, clean development mechanism and jointimplementation allow for more flexibility within and between countries in meeting thereduction commitments. Thus, these instruments offer the opportunity to lower the cost ofclimate protection. This in turn would not only ease the implementation of the Kyoto Protocolbut could also facilitate an international agreement on further emission reductions.The aim of the conference is twofold. Firstly, the conference should make politicians,business executives and the general public more aware of the need for and the potentials ofcost efficient climate policy instruments. Secondly, it offers a forum for economists andlawyers to discuss the economic and legal aspects of flexible instruments in climate policy.Prof. Dr. Wolfgang Franz (ZEW)