The document discusses sectoral crediting mechanisms (SCM), which allow crediting of emission reductions from policies and measures implemented at the sector level. It explains that an SCM works by setting a crediting baseline below business-as-usual emissions, generating credits for reductions below that level. Key challenges include defining sectors, estimating future emissions, and establishing credible baselines with limited data. Certain sectors like those with large emissions sources may be better suited to SCMs. Effective governance structures including a coordinating agency and regulatory oversight body are also discussed.