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This international treaty limits developed countries greenhouse gas emissions from 2008-12. The Kyoto Protocol to the United Nations Framework Convention on Climate Change is assigning mandatory targets for the reduction of the six most harmful greenhouse gases to signatory countries. It has been created with the aim of "stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system." "The Kyoto Protocol is an agreement under which industrialised countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990 (but note that, compared to the emissions levels that would be expected by 2010 without the Protocol, this target represents a 29% cut)." (press release from the United Nations Environment Programme) 169 countries have ratified the Protocol to date. Of these, 35 countries and the EU are required to reduce greenhouse gas emissions below levels specified for each of them in the treaty. The individual targets for Annex I Parties are listed in the Kyoto Protocol's Annex B. These add up to a total cut in greenhouse-gas emissions of at least 5% from 1990 levels in the commitment period 2008-2012, the first commitment period . Participating nations are separated into two general categories:
A project in any Kyoto Protocol Party can create carbon credits by certifiably demonstrating that it has reduced emissions below what they would otherwise have been (principle of "additionality"). This element of flexibility is expected to lead to emitters actively scouring the globe for the most economically cost-effective ways to reduce emissions. The six greenhouse gases specified in the Kyoto Protocol and convertible in CO2e units are:
Approximately 25 other gases, such as chloroform and carbon monoxide are defined as greenhouse gases, but only the above-mentioned six are released in sufficient quantities to justify regulation under Kyoto. The Kyoto Protocol agreement has been made under the United Nations Framework Convention on Climate Change (UNFCCC). It is underwritten by governments and is governed by global legislation enacted under the UN. Full text of the Kyoto Protocol (HTML version), (PDF version) http://unfccc.int
When the Kyoto Protocol was agreed in 1997, a total of 39 industrialised countries (referred to in treaty terminology as Annex B countries) were given specific emission limitations for the 2008 to 2012 period.
At present (December 2006) 169 countries and other governmental entities have ratified the Protocol, entitlements of more then 60% of total Annex I parties emissions in 1990. USA and Australia are the only major industrialised countries not to ratify Kyoto, although both countries were signatories.
list of countries who have ratified, accepted, approved, or accessed the Kyoto Protocol
The mechanism is expected to create an incentive for the proliferation of low-carbon technologies throughout the globe, promoting sustainable development and fostering investment in cleaner production modes, while allowing participants to invest in the most cost-effective abatement options. The Protocol includes three market - based mechanisms aimed at achieving cost-effective reductions, by allowing Annex I countries to collaborate with other parties. The underlying principle is that climate change is a global problem and therefore emissions reductions can be solved on a global scale, through the following mechanisms:
CDM's only apply to mechanisms that involves non-Annex I countries. The CDM allows Annex 1 countries or companies to buy "certified emission reductions" CER's generated from emission reduction projects in non-Annex 1 countries. The buyer receives credit against their reduction target. The CERs generated by such project activities can be used by Annex I Parties to help meet their emissions targets under the Kyoto Protocol. Article 12 also stresses that such project activities are to assist the developing country host Parties in achieving sustainable development and in contributing to the ultimate objective of the Convention (as stated by UNFCCC). CERs can be produced from projects initiated after 2000, and forward contracts have been enabled in 2003, while the actual trading commenced in 2005. Trading in CERs is now the second biggest part of the global carbon market. Most current projects are only contracted until 2012, but there is no specific end date for the mechanism itself.
CER units generated under the CDM will only be recognised when the reductions of greenhouse gas emissions are additional to any that would occur in the absence of the certified project activity.
Due to this mechanism, developing countries play a crucial role in the international carbon market. National governments and companies can invest in emission reduction projects in non-Annex I countries and receive carbon credits. Virtually all of the Non-Annex 1 countries have also set up their own Designated National Authorities to manage the Kyoto process (and specifically the "CDM process" these host government entities decide which GHG Projects they do or do not wish to support for accreditation by the CDM Executive Board).
JI is a similar mechanism to CDM, for transactions of carbon credits between Annex I countries. It allows Annex 1 countries to invest in emission reducing projects in another industrialised country, but the actual transfer of credits will only begin in 2008. The Kyoto treaty does not specify many details for JI. However, it is expected that many of the rules governing the CDM will apply. JI activities generate Emission Reduction Units (ERUs).
Under the CDM and JI mechanisms, only certain types and technologies for emission reduction projects are approved. Emission reductions can generally be classified under the following four categories:
Methodologies that have been approved by the CDM Methodology Panel may be found at: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html
Projects linked to Avoided Deforestation are currently being considered for integration under CDMs.
Countries that ratify Kyoto commit to reduce their GHG emissions and can engage in emissions trading to achieve their targets. Although the commitments are at national-level, in practice most countries will devolve their emissions targets to individual industrial entities. In fact, all Annex 1 countries have established Designated National Authorities to manage their GHG portfolios under Kyoto.
EU Emissions Trading Scheme (ETS)The European Union Emissions Trading Scheme (EU ETS) has been set up to help member countries to achieve their Kyoto commitments. It is allocating GHG emission limitations on a number of installations within specificindustry sectors in each country (approximately 11,000 installations throughout Europe), in the period from 2005 to 2012. It creates a market for carbon trading, by allowing emission targets to be met through trading of EU emission allowances (EUAs), and CDM and JI projects under Kyoto. It is therefore linked to Kyoto. National Allocation Plans (NAPs), developed by each member state, set the upper level of allowances to be issued (caps) on a national level. The Allocations have to be approved by the EU Comission. In the first period of the scheme 2005-2007, a total of 6.3 billion allowances were issued, each allowances representing the right to emitt 1 tonne of CO2 equivalent. Hence the EU ETS covers 44 % of all greenhouse gas (GHG) emissions in the EU. If installations do not meet their target for the sum of the years of the trading period, the penalty is €40/t CO2 on the shortfall in the 2005- 2007 period. In addition, the excess amount they emitted is deducted from their target for the subsequent trading period. |