Perhaps the most remarkable property of the Kyoto Protocol is its mere existence, despite the seemingly insurmountable differences between various (groups of) Annex-1 countries and between those and non-Annex-1 parties still existing by December 8, the start of the high-level meeting of COP3 in Kyoto. The closing sentence of US vice president Al Gore (not included in the write-up of his opening address) seemingly restored some hope of reaching an agreement by instructing the US delegation to show more flexibility in the negotiations. Indeed, in the following days various sets of reduction targets for the main Annex-1 players US, Japan and EU were circulated, that migrated substantially from their initial positions (US 0%, Japan 2.5% and EU 15%).

As everyone knows by now, the final result implies a 5% reduction for Annex-1 on aggregate; 6% reduction for Japan, 7% for the US and 8% for the EU. Australia negotiated a +8% target, while Norway accepted +1% and Switzerland went along with the EU target of -8%. Canada’s -6% is slightly less stringent than the US.

Of the non-OECD Annex-1 Parties (former Soviet republics and countries in Central and Eastern Europe) the two biggest, Russia and Ukraine, negotiated a stabilization. With a few exceptions going for -5 to -6%, the others conceded to the EU target of 8%.

Main Elements of the Protocol

Following the Berlin Mandate adopted at COP1, the Protocol sets legally binding targets. These relate to emissions of all six (families of) known greenhouse gases not bound by the Montreal Protocol. Besides CO2, CH4 and N2O, the other three gases in the basket are HFCs (hydrofluorocarbons; replacements for the ozone depleting substances banned under the Montreal Protocol), PFCs (perfluorocarbons; primarily from aluminum production) and SF6 (sulphur hexafluoride; an excellent thermal and electric insulating gas). All gases are recalculated into CO2 equivalents, following IPCC guidelines. For the latter three gases the year 1995 may be chosen as base year to overcome the worst data problems and to account for the HFCs that grew strongly in recent years. The commitments made relate to the average for the period 2008-2012, so that the sum over that period shall not exceed five times the limit fixed by the Protocol.

Emissions/sinks associated with land-use changes are also covered in the Protocol, for the time being only those associated with reforestation, afforestation and deforestation activities since 1990. Net emissions, positive or negative, are part of the future commitment. For the base year from which to calculate the future limits, only positive net emissions are to be included, no net sinks.

As the list of commitments shows, a certain level of differentiation is adopted, although the rationale is not always very clear. The EU strongly urged the US and Japan to accept similar reduction targets for all, reflecting its notion of a “similar effort”. However, as is well known the baselines are already very different: for example today the US emits some 13% more than in 1990, while the EU total falls 2% below the 1990 level. Likewise, projections for 2010 end up very different. In addition the EU will retain the internal differentiation principle, permitted by the Protocol.

Flexibility is the name of the game in the Kyoto Protocol: besides the already mentioned commitment period and differentiation, several internationally cooperative instruments are adopted to that end. Emission trading between Annex-1 parties is allowed, but also banking of unused “permits” to help meet commitments in future periods. Although the term Joint Implementation (JI) is no longer used, the Clean Development Mechanism (CDM) is introduced that essentially builds on the JI concept. Projects implemented between Annex-1 and non-Annex-1 Parties can, subject to many -as yet undecided- rules and regulations, lead to crediting of part of the resulting emission reduction to assist the Annex-1 Party involved to comply with its commitment. CDM projects can start from the year 2000, and agreed credits can be “saved” by the Annex-1 country. Similarly, Annex-1 countries can exchange emission reduction units arising from projects in other Annex-1 countries, but logically only from 2008 onwards. Contrary to earlier expectations, reflected by many activities implemented jointly under the pilot phase, early starting JI projects with crediting in Central and Eastern Europe are thus no option under the Protocol.

A draft article allowing for strictly voluntary participation by non-Annex-1 Parties was dropped when members of the “G-77 and China Group” of developing countries challenged it as being in conflict with the Berlin Mandate. Clearly this decision is not favorable for the US position, as the US Senate had ruled before Kyoto that ‘meaningful participation by developing countries’ is required before ratification can be considered.

The Protocol will not enter into force until at least 55 UNFCCC Parties have signed up and ratified, and provided the signatories represent at least 55% of the base year emissions of all Annex-1 Parties. This to ensure a meaningful level of participation, while reducing the risk of just a few Parties to block the process.

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