The Kyoto Protocol was an international treaty which extended the 1992 United Nations Framework Convention on Climate Change that commits state parties to reduce greenhouse gas emissions. The treaty was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. As of January 2020, 192 states have signed and ratified the protocol.
United Nations Framework Convention on Climate Change
The United Nations Framework Convention on Climate Change is an international environmental treaty negotiated at the Earth Summit in Rio de Janeiro in 1992 and entered into force on 21 March 1994. The treaty’s objective is to “stabilize atmospheric concentrations of greenhouse gases at a level that would prevent dangerous human interference with the Earth’s climate system.”
The treaty established the intergovernmental panel on climate change, whose role is to assess scientific information relevant to climate change. The United States signed but did not ratify the convention and withdrew from it in November 2020.
The Doha Amendment to the Kyoto Protocol is an amendment to the Kyoto Protocol that extended its commitments until 2020. It was adopted at COP 18 in Doha, Qatar, on 8 December 2012 and entered into force on 5 February 2013. As of January 2020, 140 states had ratified the amendment.
The Doha Amendment commits parties to a second period of emission reductions from 2013 to 2020, known as the “commitment period.” It also sets a new target for developed countries to reduce their emissions by 18% below their 1990 levels. The Doha Amendment does not set any new targets for developing countries. However, it does include provisions for “nationally appropriate mitigation actions” that these countries can take to reduce their emissions.
The Protocol sets different targets for developed countries and developing countries. Developed countries are required to reduce their overall emissions by an average of 5% compared to 1990 levels over the five-year period 2008-2012 (referred to as the “first commitment period”). The U.S. target was 7% below 1990 levels, while the European Union committed itself to 8% below 1990 levels and other developed countries had targets ranging from 0% to 10% below 1990 levels.
The Kyoto Protocol establishes three “mechanisms” to help countries meet their targets. These are:
- The “emissions trading” system, which allows countries that have emissions below their targets to sell “credits” to countries that exceed their targets
- The “clean development mechanism”, which lets developed countries invest in projects that reduce emissions in developing countries as an alternative to more expensive emissions reductions in their own countries
- Joint implementation, which is similar to the clean development mechanism but applies to projects within industrialized countries
The Kyoto Protocol also includes provisions for “international consultation and dispute settlement”, and for review of the treaty every five years in order to assess progress towards its objectives.
Greenhouse Gas Emissions
Since the adoption of the Kyoto Protocol, global greenhouse gas emissions have risen by about 10%. This is due largely to increases in emissions from developing countries, which are not subject to binding targets under the Protocol. Per capita emissions in developed countries have declined since 1990, but their total emissions continue to increase due partly to population growth.
Emissions from developed countries were 14% below their 1990 levels in 2010, while those from developing countries were 34% above their 1990 levels. If current trends continue, global emissions will be about 55% above 1990 levels by 2030.
The Kyoto Protocol does not cover all greenhouse gases, and it does not set binding targets for all countries. However, it is seen as an important first step in addressing the problem of climate change. Climate change is a global problem that requires a global solution. The Protocol is one part of the international effort to find that solution.
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent amount of another greenhouse gas. Emissions trading is a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
The essential feature of an emissions trading system is that it sets a cap on overall emissions from covered sources and allows those sources to trade allowances (credits) representing their rights to emit specific quantities of pollutants. Under this approach, the total number of credits issued each year would decline over time, thereby reducing pollution in an economically efficient manner.
International Emissions Trading
International emissions trading is a way for countries to meet their emissions targets under the Kyoto Protocol. The idea is simple: countries that have emissions below their targets can sell credits to countries that exceed their targets. This provides an economic incentive for reducing emissions.
The use of international emissions trading has grown rapidly in recent years. In 2012, the value of all trades was about $33 billion.
Benefits of Carbon Credits
International emissions trading has a number of benefits:
- It allows countries to meet their emissions targets at the lowest possible cost
- It provides an incentive for innovation and investment in clean technologies
- It helps reduce greenhouse gas emissions in a cost-effective way
Carbon Credits Vs. Carbon Offsets
Carbon offsets are a way to reduce your carbon footprint by investing in projects that offset your emissions. For example, you could buy a carbon offset by investing in a project that reduces emissions in another part of the world.
The Kyoto Protocol has been a crucial factor in the development of carbon markets. The Protocol’s Clean Development Mechanism (CDM) has created a market for carbon credits, and its Joint Implementation (JI) mechanism has spurred the creation of a market for emission reduction units (ERUs).
The European Union’s emissions trading system is the largest carbon market in the world. It covers about 11,000 power plants and factories, and it traded about $38 billion worth of carbon allowances in 2012. The CDM and JI mechanisms have also been important in developing countries. For example, China is now the world’s largest producer of CDM credits.
Carbon Markets in China
In China, carbon markets are still in their early stages of development. However, the country has taken some important steps forward in recent years under the China Certified Emission Reduction (CCER) system.
In 2011, China launched seven regional pilot carbon markets in Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, and Shenzhen. These pilots are testing different approaches to carbon trading and will help inform the development of a national carbon market.
In 2013, China also established a national carbon registry and started trading carbon credits on the interbank market. This is an important step in developing a well-functioning carbon market.
The Future of Carbon Markets
The future of carbon markets will be shaped by a number of factors, including international negotiations on climate change, technological innovation, and the development of national carbon markets.
Technological innovation will also play a role in shaping the future of carbon markets. For example, the development of carbon capture and storage technologies could make it possible to trade carbon credits for negative emissions. Finally, the development of national carbon markets will be crucial in determining the future of the global carbon market. China’s recent progress in this area is a positive sign for the future of carbon markets.