The correct answer is Option 1: 1 only.

Statement 1: Clean Development Mechanism (CDM) in respect of carbon credits is one of the Kyoto Protocol Mechanisms.

This statement is correct. The Clean Development Mechanism (CDM) is indeed one of the Kyoto Protocol Mechanisms. The Kyoto Protocol is an international treaty established under the United Nations Framework Convention on Climate Change (UNFCCC) to address global climate change. The CDM was created as one of the flexible mechanisms under the Kyoto Protocol to help developed countries meet their emission reduction targets by investing in emission reduction projects in developing countries.

The CDM allows developed countries (referred to as Annex-I countries under the Kyoto Protocol) to invest in emission reduction projects in non-Annex-I countries. These projects generate Certified Emission Reductions (CERs) or carbon credits, which can be used by Annex-I countries to meet their emission reduction targets. The CDM aims to promote sustainable development in developing countries while also reducing global greenhouse gas emissions.

Statement 2: Under the CDM, the projects handled pertain only to the Annex-I countries.

This statement is incorrect. Under the CDM, the projects handled pertain to non-Annex-I countries, not Annex-I countries. Annex-I countries are the developed countries that have emission reduction targets under the Kyoto Protocol. The CDM allows these Annex-I countries to invest in emission reduction projects in non-Annex-I countries, which are typically developing countries.

The purpose of allowing Annex-I countries to invest in emission reduction projects in non-Annex-I countries is to facilitate technology transfer, capacity building, and sustainable development in those countries. By investing in projects that reduce emissions or promote clean energy in developing countries, Annex-I countries can gain carbon credits that count towards their own emission reduction targets.

In summary, statement 1 is correct, as the CDM is indeed one of the Kyoto Protocol Mechanisms. However, statement 2 is incorrect, as the projects handled under the CDM pertain to non-Annex-I countries rather than Annex-I countries.