Consider the following statements : 1. Clean Development Mechanism (CDM) in respect of carbon credits is one of the Kyoto Protocol Mechanisms. 2. Under the CDM, the projects handled pertain only to the Annex-I countries. Which of the statements given above is/are correct?

1. Statement 1: The Clean Development Mechanism (CDM) is defined in Article 12 of the Kyoto Protocol. It allows Annex B countries (industrialized) to implement emission-reduction projects in developing countries and earn Certified Emission Reduction (CER) credits (carbon credits). It is indeed one of the Kyoto Protocol Mechanisms designed to achieve cost-effective emission reductions. Statement 1 is correct. 2. Statement 2: Under the CDM, the emission reduction projects are undertaken in non-Annex I countries (developing countries), while the credits generated can be used by Annex-I countries to meet their emission targets. The statement that the projects handled pertain only to the Annex-I countries is incorrect; the projects are hosted in non-Annex I countries. Statement 2 is incorrect.