The Kyoto protocol
The Kyoto Protocol sets a binding target for industrialised countries to reduce their greenhouse gases emissions by 5.2% of 1990-levels by 2012. The Kyoto Protocol does not set binding targets for developing countries to reduce their emissions.
In response to growing concerns over the impact of climate change, the Kyoto Protocol was adopted by the international community in 1997. The Kyoto Protocol sets a binding target for industrialised countries, the so called Annex 1 countries, to reduce their aggregate emissions of greenhouse gases (GHG) by 5.2% of 1990-levels by 2012. Developing countries, or non-Annex 1 countries, do not have an obligation to reduce their emissions under the Kyoto Protocol.
To help Annex 1 countries achieve their emission reductions targets in a cost effective way, the Kyoto Protocol allows for the use of three flexible mechanisms:
1. Emissions Trading – a ceiling (cap) on emissions combined with international trade in carbon credits (Assigned Amount Units) between countries with commitments under the Kyoto Protocol to limit their emissions.
2. The Clean Development Mechanism (CDM) – Investments in projects that reduce emissions in countries without obligations to reduce their emissions under the Kyoto Protocol. The emission reductions generated by CDM projects are called Certified Emission Reductions (CERs). CDM projects are aimed not only at reducing GHG emissions but also at promoting technology transfer, capacity building and sustainable development in the country where the investments are made.
3. Joint Implementation (JI) – Investments in projects that reduce emissions in another industrial country with a commitment to reduce emissions under the Kyoto Protocol. JI projects create Emission Reductions Units (ERUs).
The rationale behind the flexible mechanisms is that climate change is a global problem and that it does not matter where the actual emission reductions take place. The flexible mechanisms were introduced to ensure that environmental investments take place where they will achieve the highest marginal benefit.
For more information on the Kyoto Protocol, please visit the UNFCCC's website.
