The Kyoto Protocol

The Kyoto Protocol was agreed at Kyoto on the 11 December 1997 in accordance with the Berlin Mandate given at the first Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) held in Berlin from 28 March to 7 April 1995.

It contains the outline of policies and measures that each Party included in Annex I will undertake in achieving its quantified emission limitation and reduction commitments. Annex I countries are those countries listed in the Annex to the Kyoto Protocol which have a quantified emission limitation or reduction commitment under Article 3 of the Protocol. The Kyoto Protocol came into force on 16 February 2005.

The Greenhouse Gases which are regulated under the Protocol are Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), and Sulphur hexafluoride (SF6).

Article 2 of the Protocol lays out what each party shall do in achieving its quantified emission limitation and reduction commitments in order to promote sustainable development. It lists out various kinds of policies and measures.

Under Article 3, the Parties included in Annex I agree that they will reduce their emissions of Greenhouse Gases. They agree that they will do this individually or jointly, and that they will reduce such gases by at least 5 percent below 1990 levels in the first commitment period from 2008 to 2012.

The Annex I countries have agreed that they will ensure that their "aggregate anthropogenic carbon dioxide equivalent emissions of the 6 greenhouse gases do not exceed their assigned amounts". "Anthropogenic" means caused by humans, and "carbon dioxide equivalent" means that the other 5 Greenhouse Gases are measured and multiplied by their Global Warming Potential to give a value in Carbon Dioxide equivalent.

Once each country has agreed the quantity of their emission reductions (the quantities and percentage reductions for each country are given in the Appendix B of the Kyoto Protocol) they make their annual National Allocation Plans and give their installations their Assigned Amounts Units.

Under their National Allocation Plans each country allocate quotas, or Assigned Amount Units, to all their installations which are emitting Greenhouse Gases. The countries agree that they will calculate these emissions and the emissions reductions based on their quantified emissions limitation and reduction commitments.

They agree that the net changes in greenhouse gas emissions by sources and removals by sinks resulting from direct human-induced land-use change and forestry activities (limited to afforestation, reforestation and deforestation since 1990), measured as verifiable changes in carbon stocks in each commitment period, shall be used to meet the commitments under this Article of each Party included in Annex I.

This means that each country has to measure all the sources of their emissions, mainly from burning fossil fuels, but also various forms of methane emissions, and so on, and then they have to measure all the absorption of Greenhouse Gases which their forests are doing, and then they have provide the UNFCCC with a national report on what their net Greenhouse Gas emissions are every year by subtracting the absorption by their forests from their national emission from burning fossil fuels and other sources.

Every year these amounts have to be calculated to see whether the Annex I country is meeting its commitments.

Any Party included in Annex I may use 1995 as its base year for hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride, for the purposes of the calculation.

Article 3 also decides that Assigned Amount Units (AAUs), Emission Reduction Units (ERUs), Removal Units (RMUs), or Certified Emission Reductions (CERs) acquired by one Party from another Party can be added to their Assigned Amount Units.

It also decided that the Meeting of Parties to the Kyoto Protocol should look into what actions are necessary to minimize the adverse effects of climate change, and the impacts of response measures on Parties, and that they would for example establish funds, create insurance and transfer of technology to minimise the effects both of climate change, and of dealing with climate change. These actions were partly included because many countries including oil producing countries and coal producing countries like Australia would suffer by having to reduce exports of their fossil fuels. Developing countries are also going to suffer from the impacts of climate change such as sea level rise and desertification. Activities coming in this last category are generically referred to as "adaptation" measures.

Assigned Amount Units (AAUs) are emission reductions quotas allocated to installations in Annex I countries.

Emissions Reduction Units (ERUs) are emissions reductions achieved in various project activities, such as for example in Joint Implementation Activities in Eastern Europe, or in Annex I countries where emissions reductions are generated specifically to trade, and are verified accordingly.

Removal Units (RMUs) are emission reductions achieved through forestry where Greenhouse Gases in the atmosphere are removed through the sequestration of Carbon Dioxide in trees as they grow.

Under Article 6 the Annex I Parties agree specifically that for the purpose of meeting their commitments any Party included in Annex I may transfer to, or acquire from, any other such Party AAUs, ERUs RMUs or CERs.

These various certificates are acquired by entering into a transaction through one of the various trading platforms or emissions registries set up by governments and private market players in many countries.

Every sale or purchase of such an emission reduction certificate has to be registered with the national registry where the buyer is located. Once the transaction is registered with the national registry, the installation can count that certificate towards its AAUs, in other words it will have more emission space.

In the case of CERs the developing countries have their registries in the UNFCCC system, and they do not yet have registries in their home country separately. This is because they do not have reduction commitments, and so they do not need to create a market for emissions reductions in their own country yet.

The CERs from any developing country are transferred through the UNFCCC holding accounts to the relevant national registries of the buyer. The CERs are tracked through the UNFCCC transaction log, and the linking Directive for example with the EU Emission Trading System ensures that each certificate is traceable and there is no double counting.

Under Article 10 all Parties, not only Annex I Parties, agree to formulate regional programmes to improve the quality of national inventories, and to formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change.

Under Article 11 the developed country Parties and other developed Parties included in Annex I to the Convention agree to provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties in advancing the implementation of existing commitments under Article 4, paragraph 1(a), of the Convention that are covered in Article 10 of the Protocol mentioned above.

This provision is relatively controversial as the financing mechanism of the UNFCCC is not a democratically accountable body with the right to allocate per capita emission rights, tax GHG emissions world-wide, or in any other way force countries to transfer resources to non-polluters in an equitable and sustainable manner. Instead the GEF was created as a body with no teeth, into which Annex I countries periodically pay money to keep least developing countries and other special interest groups happy. Specifically under Article 11, Annex I countries have to create funds to help developing countries create their national greenhouse gas reporting systems, and they have to transfer clean technologies. The last commitment is very difficult to get any movement on, as all these technologies are in the private sector and the governments are not willing to force their companies to pass on the benefits of these technologies free.

Article 12 defines the Clean Development Mechanism. The purpose of the Clean Development Mechanism is to assist Parties not included in Annex I

  • in achieving sustainable development and
  • in contributing to the ultimate objective of the Convention, and
  • to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.

Under the Clean Development Mechanism Parties not included in Annex I will benefit from project activities resulting in Certified Emission Reductions because they will be able to benefit from sustainable projects in their own country; Parties included in Annex I may use the Certified Emission Reductions accruing from such project activities to contribute to compliance with part of their quantified emission limitation and reduction commitments under Article 3, as explained above.