What is it?
The Kyoto Protocol of the United Nations Framework Convention on Climate Change is an international environmental agreement which targets greenhouse gas emissions. The Kyoto Protocol was negotiated at the third Conference Of the Parties in Kyoto, Japan, December 1-11, 1997 and the Parties of the UNFCCC agreed to a historic protocol to reduce greenhouse gas (GHG) among the member countries.
The main goal of the Kyoto Protocol under the UNFCCC is to limit further increase in GHG emissions. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries. On an average this emissions target equal a five per cent reduction compared to the 1990 emissions levels over the first commitment period 2008-2012. The major distinction between the Kyoto Protocol and the the UN convention is that while the Convention encouraged industrialized countries to stabilize GHG emissions, the Protocol commits the Parties to undertake emissions reduction.
The Kyoto Protocol recognize that the developed countries are the main contributors to the current atmospheric GHG emissions, and that developed countries have higher financial resources to undertake emission reductions. As a result, at the UNFCCC launched the idea of "common but differentiated responsibilities". The world was divided into two categories, Annex I and non-Annex I respectively, where only the Annex I regions (industrialized countries) were confronted by reduction requirements.
The criterion for the Kyoto Protocol to enter into force was that 55 Annex I parties responsible for at least 55 % of the 1990 Carbon Dioxide Annex I emissions had ratifyed the protocol. This goal was achieved in November 2004 after Russia ratified the agreement.
1 Emissions Targets
1.1 The Annex I Parties quantified emission reduction commitment
2 Flexible Mechanisms
2.1 International Emissions Trading
2.2 Joint Implementation
2.3 Clean Development Mechanism
3 Compliance and Enforcement
3.1 The suspension mechanism
3.2 The commitment period reserve (CPR)
5 Entry Into Force
7 External Links
Emissions TargetsThe emissions target under the Kyoto protocol, according to a press release from the UN's environmental programme
The Kyoto Protocol is an agreement under which industrialized countries will reduce their collective emissions of greenhouse gases by 5,.2 % compared to the year 1990.The goal is to lower overall emission of six greenhouse gases – carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, HFCs and PFCs – calculated as an average over the five – year period of 2008 – 12.
The Annex I Parties quantified emission reduction commitmentAustralia - 108
Austria - 92
Belgium - 92
Bulgaria - 92
Canada - 94
Croatia - 95
Czech Republic - 92
Denmark - 92
Estonia - 92
European Community - 92
Finland - 92
France - 92
Germany - 92
Greece - 92
Hungary - 94
Iceland - 110
Ireland - 92
Italy - 92
Japan - 94
Latvia - 92
Liechtenstein - 92
Lithuania - 92
Luxembourg - 92
Monaco - 92
Netherlands - 92
New Zealand - 100
Norway - 101
Poland - 94
Portugal - 92
Romania - 92
Russian Federation - 100
Slovakia - 92
Slovenia - 92
Spain - 92
Sweden - 92
Switzerland - 92
Ukraine - 100
United Kingdom of Great Britain and Northern Ireland - 92
United States of America - 93
The numbers above are given as a percentage compared to 1990, where the 1990 emissions level is indexed as 100.
The framework for the emissions targets includes the following provisions
The first commitment period (2008 - 2012): Emissions targets are to be reached over a five-year budget period rather than by a single year. Thus allowing emissions to be averaged across a budget period increases flexibility by helping to smooth out short-term fluctuations in economic performance or weather, either of which could spike emissions in a particular year.
The parties rejected budget periods beginning as early as 2003, as neither realistic nor achievable. Having a full decade before the start of the binding period will allow more time for companies to make the transition to greater energy efficiency and/or lower carbon technologies.
The emissions targets include all six major greenhouse gases: carbon dioxide, methane, nitrous oxide, and three synthetic substitutes for ozone-depleting CFCs that are highly potent and long-lasting in the atmosphere.
Activities that absorb carbon, such as planting trees, will be used as offsets against emissions targets. "Sinks" were also included in the interest of encouraging activities like afforestation and reforestation. Accounting for the role of forests is critical to a comprehensive and environmentally responsible approach to climate change. It also provides the private sector with low-cost opportunities to reduce emissions.
 Flexible MechanismsIn order to increase the cost effectiveness of reaching the emission target, the Kyoto Protocol consists of some flexible provisions, the so called “Kyoto mechanisms”. These mechanisms refer to international Emission Trading (IET), Joint Implementation (JI) and The Clean Development Mechanism (CDM).
 International Emissions TradingUnder the Kyoto Protocol the Annex I parties initial endowments of emissions permits is defined as Assigned Amounts(AA). Through the trading mechanism Annex I Parties can acquire or sell Assigned Amount Units (AAU) from another Party. The main principle behind the trading system is that an increase in emissions from one Party have to be offset by another Party's reduction so that the aggregated emissions level remain constant. From an economic perspective emissions trading will contribute to reduce the Parties costs of reaching the emissions target and thereby increase the overall economic efficiency. The logic behind this is that some Parties can reduce their emissions at a lower cost than others, and provided that the market price for emissions permits exceeds the abatement costs, trading will provide a strong a powerful economic incentive to cut emissions.
The final rules and guidelines -in particular for verification, reporting, and accountability was decided upon in Bonn and Marrakesh.
The inclusion of emissions trading in the Kyoto Protocol reflects an important decision to address climate change through the flexibility of market mechanisms. The Conference rejected proposals to require all Parties with targets to impose specific mandatory measures, such as energy taxes. A number of countries, including Australia, Canada, Japan, New Zealand, Russia, Ukraine, and the United States, reached a conceptual agreement to pursue, through an umbrella group, the implementation of a trading regime. Such a group could further contribute to cost-effective solutions to this problem.
for a critical view of the emission trading system see: Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power
 Joint ImplementationThe logic behind Joint Implementation (JI) is that Annex I countries (countries with emissions reductions obligations according to the Kyoto Protocol)can obtain “emission reduction units” called ERU for projects in another Annex I countries, given that it contributes to emission reduction which would otherwise not take place. The net reduction in emission will be transformed into a credit, which can be used to increase the domestic emissions. Joint Implementations can be seen as an alternative or substitute to emissions trading, and will contribute to cost reductions, technology transfers etc. The emissions reductions from Joint Implementations have to be well documented and as a result such projects can be entail both high transactions costs and uncertainty.
Additional details may be agreed upon by the Parties at future meetings.
Clean Development MechanismAnother important market-based component of the Kyoto Protocol is the so-called Clean Development Mechanism (CDM). The CDM embraces the concept of joint implementation for credit in developing countries. With the Clean Development Mechanism, developed countries will be able to use certified emissions reductions from project activities in developing countries to contribute to their compliance with greenhouse gas reduction targets.
This Clean Development Mechanism will allow companies in the developed world to enter into cooperative projects to reduce emissions in the developing world-such as the construction of high-tech, environmentally sound power plants-for the benefit of both parties. The companies will be able to reduce emissions at lower costs than they could at home, while developing countries will be able to receive the kind of technology that can allow them to grow more sustainably. The CDM will certify and score projects. The CDM can also allow developing countries to bring projects forward in circumstances where there is no immediate developed country partner.
Under the Clean Development Mechanism, companies can choose to make investments in projects or to buy emissions reductions. In addition, Parties will ensure that a small portion of proceeds are used to help particularly vulnerable developing countries, such as island states, adapt to the environmental consequences of climate change.
Importantly, certified emissions reductions achieved starting in the year 2000 can count toward compliance with the first budget period. This means that private companies in the developed world will be able to benefit from taking early action.
The Protocol advances the implementation by all Parties of their commitments under the 1992 Framework Convention on Climate Change. For example, the Protocol identifies various sectors (including the energy, transport, and industry sectors as well as agriculture, forestry, and waste management) in which national programs should be developed to combat climate change. The Protocol also provides for more specific reporting on actions taken.
Securing meaningful participation from key developing countries remains a priority for the United States. The Administration has stated that without such participation, it will not submit the Kyoto Protocol to the Senate for advice and consent to ratification.
edit Compliance and EnforcementA serious problem which can limit the effect of environmental agreements such as the Kyoto Protocol is a situation where member countries do not comply with some well defined rules. Non-compliance refers to a situation where a Party fails to fulfill its emission obligations. The Protocol contains several provisions intended to promote compliance. These include the The restoration rate rule, the suspension mechanism and the commitment period reserve rule.
 The suspension mechanismThe suspension mechanism can be seen as a further consequence of non-compliance. Besides the restoration rate rule, the parties of the UNFCCC came to the understanding that a non-complying Party would no longer have the right to sell AAUs under article 17) until the Party has restored the unbalance. This implies that the suspension is of limited duration, all depending on the Party’s ability to restore the deficit.
 The commitment period reserve (CPR)In Marrakech (2001) the COP decided to place restrictions on the sale of permits through the so called commitment period reserve rule. The motivation behind this rule is to deter overselling, i.e. situation where a party sells AAU’s even though it is in non-compliance.
Effective procedures and a mechanism to determine and address noncompliance are to be decided at a later meeting. For both environmental and competitiveness reasons, the United States will be working on proposals to strengthen the compliance and enforcement regime under the Protocol.
edit BankingEven though banking is not defined as a flexible mechanism, it can in many ways contribute to cost reductions among the Annex I Parties. The first “commitment period” under the Kyoto - Protocol refers to the period 2008 – 2012. Banking can be defined as a component that allows firms to store emission reduction credits for future use. The banking mechanism under the Kyoto Protocol refers to a situation where agents can store quotas in the first commitment period (2008 – 2012) and use it in a succeeding Kyoto agreement.
The economic intuition behind this system is quite simple, as an alternative to sell surplus permits in the market, firms can bank the surplus and use it in a future agreement. This incentive can be motivated by the belief that the future would bring about a stricter environmental regime, and therefore a higher future quota price etc.
edit Entry Into ForceThe Kyoto Protocol opened for signature in March 1998. To enter into force, it must be ratified by at least 55 countries, accounting for at least 55 percent of the total 1990 carbon dioxide emissions of developed countries. This goal was achieved after the ratification of Russia, and the protocol entered into force in November 2004. The US has still refused to ratify the protocol. US ratification will require the advice and consent of the Senate.
edit CitationThis fact sheet was prepared by the White House Task Force on Climate Change, this fact sheet was released by the U.S. Government in October 1999 at the Fifth Conference of the Parties to the United Nations Framework Convention on Climate Change in Bonn, Germany. It appears on the US EPA website on the page Fact Sheet on the Kyoto Protocol, October 1999.