Kyoto Protocol is an international treaty, agreed in December
of 1997 as a subsidiary Protocol to the United Nations Framework
Convention on Climate Change of 1992 (UNFCCC). The Kyoto
Protocol sets a binding target for industrialized countries
(Annex 1 countries) to reduce their emissions of greenhouse
gases by an initial aggregate of 5.2% against 1990 levels
over the period 2008 – 2012. This spread of years
is known as the “first commitment period”. The
Protocol finally entered into force in 2005.
is recognized that industrialized countries are largely
responsible for the historic build up of greenhouse gases
in the atmosphere, and that developing countries need to
expand their economies in order to meet social and develop¬ment
objectives. Therefore, China, India and other developing
countries do not have quantified, binding emission reduction
commitments for the period from 2008-2012. However, it was
agreed that they still share a ‘common but differentiated
responsibility’ to reduce emissions.
of the international climate regime is to achieve “stabilization
of greenhouse gas concentrations in the atmosphere at a
level that would prevent dangerous anthropogenic (human)
interference with the climate system”. National emissions
reduction obligations under the Kyoto Protocol range from
8% for the European Union to 7% for the United States, 6%
for Japan, 0% for Russia and permitted increases of 8% for
Australia and 10% for Iceland. These figures exclude international
aviation and shipping.
of July 2009, 186 countries had ratified the protocol. Of
these, 38 industrialized countries (plus the EU as a party
in its own right) are required to reduce their emissions
to the levels specified for each of them in the treaty.
145 developing countries have ratified the protocol, including
Brazil, China and India, but have no reduction obligation.
The United States is the only industrialized country not
to have ratified the Protocol, and Kazakhstan is the only
other signatory not to have ratified the agreement so far,
although the Kazak government has recently signaled its
intention to ratify.
To combat climate change it does not matter where emissions
are reduced, it is the overall global reduction that counts.
As a result the Kyoto Protocol has taken a strong market
approach, recognizing that it may be more cost-effec¬tive
for Annex I parties to pay for emissions reductions in other
countries, for example in the developing world or other
countries where there is a large potential for cost-effective
reductions. Industrialized countries therefore have the
ability to apply three different mechanisms with which they
can collaborate with other parties. These are Joint Implementa¬tion
(JI), the Clean Development Mechanism
(CDM) and Emissions Trading.
Under the International Emissions Trading provisions, Annex
I countries can trade so called “Assigned
Amount Units” (AAU’s) among themselves.
These are allocated to them on the basis of their overall
emissions reduction targets. The emissions trading scheme
also sees this activity as “supple¬mental to domestic
parties that reduce their emissions below the allowed level
can then trade some part of their surplus allowances to
other Annex I parties. It is unlikely that there will be
very many Annex I parties who will be sellers of AAU’s,
and an equally small number of buyers, at least in the first