A central element of the Kyoto Protocol is the provision for four international mechanisms that allow for flexibility in achieving GHG emission reductions schedule for the 2008-2012 time period. As a group of instruments, the four mechanisms: bubble policy, joint implementation(JI), clean development mechanism (CDM), and international emissions trading (IET) provide for transfers of emission rights or reduction credits between nations. The principle supporting these mechanisms is found in the UNFCCC, which called for cost-efficient policies to solve a global problem.
It is generally conceived that during the first commitment period (2008-2012) the "bubble policy" will only be implemented by the EU Member States in achieving an overall reduction of 8 percent. At the European level, Member States have already agreed on differentiated targets within the EU "bubble" to achieve the shared reduction commitment (see related article). The remaining three flexibility mechanisms outlined in the Kyoto Protocol require further elaboration and negotiations concerning their actual implementation. Under the Kyoto Protocol, CDM is defined and the crediting of certified emission reductions may begin as soon as 2000, JI requires the development of further guidelines, and IET is endorsed but relevant implementation issues are not defined.
The official formulation of Joint Implementation (JI) is based on the 1992 UNFCC Convention, Article 4.2a, wherein countries included in Annex I may "implement such policies and measures jointly with other parties and may assist other Parties in contributing to the achievement of the objective of the Convention…" Based on this, the Joint Implementation concept has evolved based on discrete emission reduction units which could be credited to an investor country for reduction projects realised in a host country. Reduction credits would be based on actual, project-related avoidance, reduction, or sequestration of GHGs. In this way the reduction of global GHGs could be reduced in a cost-effective manner.
The Clean Development Mechanism is a similar instrument, but based on agreements between Annex I and non-Annex (or developing) countries. Both JI and CDM offer possibilities for project-based emission reduction "credits," referred to as "emission reduction units" for JI and "certified emission reductions" for transfer of credits from non-annex I countries envisioned in CDM.
International Emissions Trading (as well as the bubble policy) rely not on the transfer of reduction "credits" but rather on the trading of emission "rights" or allowances. In such a scenario, transfers between countries would be based on a "purchase" of emission rights from those countries whose emissions are below there national quotas.
COP-5 in Bonn, Germany and the planned November 2000 conference in The Hague, The Netherlands, will attempt to outline the rules through which flexible mechanisms can be applied. Discussions between industrialized countries relating to the implementation of measures under the Kyoto mechanisms and, in particular, to the issue of additionality and baseline determination for CDM and JI projects are still not solved. Additional controversial issues have arisen regarding the structure of such a market and rules governing it:
Annex I: Annex I to the UNFCCC contains a list of industrialized country Parties that have special commitments to limit their emissions of greenhouse gases under the Convention (i.e. the 24 original OECD countries, the EC and 11 countries undergoing the process of transition to a market economy).
Annex II: Annex II to the UNFCCC lists the original 24 OECD member countries and the European Community. These industrialized countries have additional financial obligations under the Convention.
Annex B: Annex B to the Kyoto Protocol lists those 39 countries that have taken on quantified emission limitation and reduction commitments (QELRCs) under the Protocol.
Additionality: (environmental additionality): emission reductions which would not have been achieved without undertaking specific project investments (generally used in the context of joint implementation and clean development mechanism). (financial additionality): financing of activities implemented jointly (JI or CDM) should be in addition to current official development assistance and commitments to the UNFCCC financial mechanism.
Bubble: one form of flexibility mechanisms in which differentiated commitments are taken between a group of countries with the goal of achieving a common reduction goal, e.g. EU Bubble.
Ceilings: a concept derived from Articles 6 and 17 of the Kyoto Protocol which state that achieving reductions commitments through flexible mechanisms should be supplemental to domestic actions. Ceilings would place limitations on the total reduction achieved abroad through flexible mechanisms which would count toward national commitments.
CDM: Clean Development Mechanism: one form of flexibility mechanisms defined under Art. 12 of the Kyoto Protocol; permits the acquisition by Annex I Parties of certified emission reduction credits (CERs) accruing from project activities in developing countries to contribute to compliance with part of their QELRC commitments under Art. 3.
COP: Conference of Parties: supreme body of the Convention consisting of all Parties to the UNFCCC.
Flexibility mechanisms or Kyoto mechanisms: international economic instruments under the Kyoto Protocol, which allow transfers/ acquisitions of credits for climate change mitigation and of emission allowances among various groupings of Protocol Parties: emission "bubbles" for groups of Parties (Art. 4), joint implementation (Art. 6), clean development mechanism (Art. 12), international emission trading (Art. 17).
GHGs: Greenhouse gases: those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and re-emit infrared radiation. GHGs regulated under the Kyoto Protocol include: CO2, CH4, N2O, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and SF6.
IET: international emission trading: one form of flexibility mechanisms which allow for the transfer or acquisition of parts of assigned amounts under Art. 17 of the Kyoto Protocol.
JI: Joint Implementation: one form of flexibility mechanisms which allow for transfer or acquisition of emission reduction units (ERUs) resulting from climate change mitigation projects under Art. 6 of the Kyoto Protocol.
QELRC: quantified emission limitation and reduction commitment.
Sink: any process, activity or mechanism which removes a greenhouse gas, an aerosol or a precursor of a greenhouse gas from the atmosphere.
Supplementarity: the term supplemental is used in Articles 6 and 17 of the Kyoto Protocol to describe the role that flexible mechanisms should play in relation to domestic actions for the purpose of achieving QELRCs. Quantitative limitations (ceilings) on the quantity of emissions reductions that can be achieved internationally have yet to be made at the global level.
UNFCCC: United Nations Framework Convention on Climate Change: adopted in New York on 9 May 1992; entered into force on 21 March 1994.
Sources: Hambleton (1998); Klarer, Swisher, Kolehmainen (1999), and UNFCCC and Kyoto Protocol.
Hambleton, Anne. "An Annotated Glossary of Commonly Used Climate Change Terms" The Center for Sustainable Development in the Americas, 1998.
Klarer, Swisher, and Kolehmainen. "Synthesis Study of the National AIJ/JI/CDM Strategy Studies Program" World Bank, Swiss AIJ Pilot Program, and Ministry of Environment of Finland, 1999.
United Nations Framework Convention on Climate Change and the Kyoto Protocol to the UNFCCC. See www.unfccc.de