What is the Kyoto Protocol?

The Kyoto Protocol is an international agreement between 182 Parties of the United Nations Framework Convention on Climate Change (UNFCCC). The Kyoto Protocol was agreed upon at the third Conference of the Parties (COP3) in December 1997 in Kyoto, Japan, and entered into force on February 16th, 2005. Its first commitment period ends in 2012.

The key point of the Kyoto Protocol is the binding targets it sets for the 37 industrialised countries and the European community for reducing greenhouse gas (GHG) emissions. The signing countries agreed to reduce their greenhouse gas emissions by at least 5% compared to the 1990 level, calculated as an average over the five-year period 2008-2012. Several of the world's largest CO2 emitters, such as the USA and developing countries including Brazil, India and China, have not committed themselves to fixed targets to reduce greenhouse gas emissions. The GHGs included in the Protocol are Carbon dioxide, methane, nitrous oxide and the industrial gases HFCs, PFCs and SF6.

While the UNFCCC encourages the industrialized countries to stabilize or even reduce GHG emissions, the Kyoto Protocol commits them to do so. Granting that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere, the countries committed to the Protocol have differing obligations; thus, the heavier burden is imposed on the developed nations.

The Flexibility Mechanisms

The Kyoto Protocol offers three market-based flexibility mechanisms through which the committed countries can reach their reduction goals. The Flexibility Mechanisms are:

• Emissions trading. The countries may trade the quotas they have been allocated, meaning that one country, e.g. Denmark, can buy emission quotas from another country, e.g. Finland, if it is less expensive to reduce emissions in Finland than in Denmark. That is, if Finland doesn't use its quotas. Thus, emissions are reduced at the lowest cost possible.
• Joint Implementation (JI). Through the Joint Implementation, a developed country can receive "emissions reduction units" when it helps to finance emission reducing projects in another developed country (realistically, the recipient state will be a country with an economy in transition).
• The Clean Development Mechanism (CDM). Through the Clean Development Mechanism, developed countries may finance their emission reduction or removal projects in developing countries and receive credits for doing so which they may apply towards meeting mandatory limits in their own emissions.

For both JI and CDM projects, independent bodies must verify that the projects do in fact lead to actual emission reductions prior to them being incorporated in the emissions account. The aim of the mechanisms is to encourage green investment and help the Parties meet their emission targets in a cost-effective way.

Globally, the Kyoto Protocol is historically momentous. It is the first international agreement with specific obligations for the reduction in greenhouse gas emissions. However, it is only the first step towards a truly global emission reduction treatment that will stabilize our current situation.

When the first commitment period of the Kyoto Protocol ends in 2012, a new international framework must have been negotiated and ratified. This will need to live up to the emission reductions that are indicated necessary by the Intergovernmental Panel on Climate Change (IPCC).