KYOTO PROTOCOL

Introduction
• The Kyoto Protocol is a protocol to the United Nations
Framework Convention on Climate Change (UNFCCC), aimed
at fighting global warming
• The UNFCCC is an international environmental treaty with the
goal of achieving the "stabilization of greenhouse gas
concentrations in the atmosphere at a level that
would prevent dangerous anthropogenic interference with
the climate system.“
• The Protocol was initially adopted on 11 December 1997
in Kyoto, Japan, and entered into force on 16 February 2005
• As of September 2011, 191 states have signed and
ratified the protocol
Participation in Kyoto Protocol as of 2011

Brown = Countries that have signed and ratified the treaty

(Annex I & II countries in dark brown)
Blue = No intention to ratify at this stage.
Dark blue = Canada, which withdrew from the Protocol in December 2011.
Grey = no position taken or position unknown
 Objectives
• Under the Protocol, 37 countries ("Annex I countries") commit
themselves to a reduction of four greenhouse gases (GHG)
(carbon dioxide, methane, nitrous oxide, sulphur
hexafluoride) and two groups of gases (hydro
fluorocarbons and per fluorocarbons) produced by them, and
all member countries give general commitments
• At negotiations, Annex I countries (including the US)
collectively agreed to reduce their greenhouse gas emissions
by 5.2% on average for the period 2008-2012.
• Since the US has not ratified the treaty, the collective
emissions reduction of Annex I Kyoto countries falls from
5.2 % to 4.2% below base year
 Objectives
• Each Annex I Party has a binding commitment to limit or reduce GHG emissions
and innovative mechanisms have been established for Parties to facilitate
compliance with this commitment.
Other commitments include:
• Each Annex I Party must undertake domestic policies and measures to reduce
GHG emissions and to enhance removals by sinks;
• In implementing these policies and measures, each Annex I Party must strive to
minimize any adverse impact of these policies and measures on other Parties,
particularly developing country Parties;
• Annex I Parties must provide additional financial resources to advance the
implementation of commitments by developing countries;
• Both Annex I and non-Annex I Parties must cooperate in the areas of:
(a) The development, application and diffusion of climate friendly technologies;
(b) Research on and systematic observation of the climate system;
(c) Education, training, and public awareness of climate change;
(d) The improvement of methodologies and data for GHG inventories
 2012 Emission Targets

Austria – 87% Liechtenstein – 92%

Lithuania – 92%
Belarus – 95%
Belgium – 92.5% Luxembourg – 72%
Bulgaria – 92% Netherlands – 94%
Canada – 94% New Zealand – 100%
Croatia – 95% Norway – 101%
Czech Republic – 92% Poland – 94%
Denmark – 79% Portugal – 127%
Estonia – 92% Romania – 92%
Finland – 100% Russian Federation – 100%
France – 100% Slovakia – 92%
Germany – 79% Slovenia – 92%
Greece – 125% Spain – 115%
Hungary – 94%
Iceland – 110% Sweden – 104%
United Kingdom – 87.5%
Ireland – 113%
Italy – 93.5% United States of America – 93%
 The Kyoto Mechanisms
1. International Emissions Trading (IET)

• Under this mechanism, an Annex I Party may transfer Kyoto units to or

acquire units from another Annex I Party.
• Emissions trading does not affect the total assigned amount of Annex I
Parties collectively; rather, it re-distributes the assigned amount among
them.
• A Party may acquire an unlimited number of units.
• The number of units that a Party may transfer to other Parties
is limited by the Party’s commitment period reserve (CPR).
• The CPR is the minimum level of units that a Party must hold in its
national registry at all times. The requirement for each Party to maintain a
CPR prevents a Party from over-transferring units, and thus impair its
ability to meet its commitments
 The Kyoto Mechanisms
2. Joint implementation (JI)

• It is a project-based mechanism by which one Annex I Party can invest in a project

that reduces emissions or enhances sequestration in another Annex I Party, and
receive credit for the emission reductions or removals achieved through that
project.
• The unit associated with JI is called an emission reduction unit (ERU).
• The total projected emission savings from JI by 2012 are about one tenth that of
the CDM.
• Russia accounts for about two-thirds of these savings, with the remainder divided
up roughly equally between the Ukraine and the EU's New Member States.
 The Kyoto Mechanisms
3. Clean Development Mechanism

• CDM credits may be generated from emission reduction projects or from afforestation and
reforestation projects in non-Annex I Parties.
• Unlike emissions trading and JI, projects under the CDM create new Kyoto units and their
acquisition by Annex I Parties increases both the total assigned amount available for those
Annex I Parties collectively and their allowable level of emissions.
• CDM projects result in three types of Kyoto units.
 Certified emission reductions (CERs) are issued for projects that reduce emissions
 Temporary CERs (tCERs)
 Long-term CERs (lCERs) both of which may be issued for projects that enhance removals
through afforestation and reforestation projects.
 Details of the agreement
• National emission targets exclude international aviation
and shipping
• Land use and forestry (‘sink’ activities) can be used in
meeting targets
• Common but differentiated responsibility
– Largest share of emissions originated in developed
countries
– Relatively low emissions in developing countries
– Share of emissions in developing countries will grow
to meet their social and development needs
– Per capita emissions
 Details of the agreement
• Financial Commitments:
– Developed countries have to pay billions of dollars
and supply technology to other countries for
climate related studies. E.g. The Adaptation Fund
• Enforcement:
– If a country is not in compliance with its emissions
limitation, it is required to make up the difference
during the 2nd commitment period plus an
additional 30%
– It will also be suspended from making transfers
under an emissions trading program
 Top 5 Emitters
Emissions as a percentage of the global total,
per capita emissions in tons of GHG per capita
– China 15%, 5.8
– United States 16%, 24.1
– European Union 11%, 10.6
– Indonesia 6%, 12.9
– India 5%, 2.1

Source: International Energy Agency (IEA, 2007,p.201)

 Negotiations
• Industrialized countries were committed to ‘take the
lead’ in reducing emissions
• They were required to stabilize their emissions at
1990 levels by 2000
• Failure to do so made Kyoto move to binding
commitments
• Developing countries were not subject to emission
reduction commitments in the first Kyoto
commitment period
• Clean Development Mechanism was designed to
limit emissions in developing countries
 Emission Cuts
–The G77 wanted strong uniform emission cuts across the
developed world
–However, countries such as the US made suggestions to
reduce their responsibility to reduce emissions (inclusion
of carbon sinks, ignoring historical emissions)
–Countries over achieving in their first period
commitments were allowed to ‘bank’ their unused
allowances for use in the subsequent period
–The EU suggested a ‘bubble’ commitment
–The US was obliged to cut back emissions more than
other countries
 Kyoto Protocol effect on MNEs
• For multinationals, the Kyoto Protocol’s entry into force
means new restrictions, a new source of income, or both
• Companies operating in industrialized countries will be
subject to the programs developed by those countries to
meet their Kyoto obligations.
• Companies with facilities in developing countries might be in a
position to take advantage of a new source of “carbon”
financing through the Clean Development Mechanism (CDM)
Example: Through their Southeast Asian subsidiaries,
companies such as Unocal have explored ways to use CDM
transactions to finance new clean energy projects.
 The Unresolved issues in Kyoto
• No details on specific policies and measures to meet
reduction targets
• No commitments from developing nations
• No details on implementing permits system including
penalties
• No details on funding mechanisms for developing
nations
• ‘bunkers fuels’ issue unresolved (i.e. The fuel used in
shipping and air travels)
 Recent Advances in Kyoto Protocol
• May 2011: Russia, Japan and Canada told the G8 they would
not join a second round of carbon cuts under the Kyoto
Protocol at United Nations talks and the US reiterated it would
remain outside the treaty. They argued that the Kyoto format
did not require developing countries, including China, the
world’s No. 1 carbon emitter, to make targeted emission cuts
• Aug 2011: The European Union, the major developing
countries, and most African and Pacific island nations
declared that they would like to see the Kyoto process
extended as a prelude to a more ambitious, binding
international agreement that would take effect by 2020
 United Nations Climate Change
Conference-Durban, 2011(1/2)

• A primary focus of the conference was to secure a global

climate agreement as the Kyoto Protocol's first commitment
period (2008–2012) was about to end
• Also expected to focus on finalising at least some of the
Cancun Agreements such as co-operation on clean
technology, as well as forest protection, adaptation to climate
impacts, etc
• Canada's environment minister Peter Kent announced his
country's withdrawal from the Kyoto Protocol
 Continued...(2/2)
• After two weeks of negotiations a deal was reached only on the last day,
Sunday 11 December, after a 60-hour marathon negotiation session.
Negotiators agreed to be part of a legally binding treaty to address global
warming

• The terms of the future treaty are to be defined by 2015 and become
effective in 2020.

• The agreement, referred to as the "Durban platform" includes developing

countries such as China and India, as well as the US which refused to sign
the Kyoto Protocol

• Green fund : The conference led to progress regarding the creation of a

Green Climate Fund for which a management framework was adopted.
The fund is to distribute US$100bn per year to help poor countries adapt
to climate impact
 India and Kyoto Protocol
• India will not sign any legally binding global agreement for
emission reduction as the country needs to eradicate poverty
through economic growth
• India argues that since the CO2 in the atmosphere is from
developed countries it is their responsibility to cut down the
emissions. However India will make all efforts to cut down on
green house gas emissions but that would be voluntary
• India being a developing country is still not stable enough to
take up global warming as the emission cuts will slow down its
development and cripple it economically