Bosselman, Eisen, et al., Energy, Economics and the Environment (2006), selections from Chapter 16The “Rio Plus 5,” a special session of the U.N. General Assembly five years after the Rio Conference, ended without substantive commitments to GHG reductions. This led to the third conference of the parties (COP) to the U.N. Framework Convention on Climate Change (FCCC), held in Kyoto, Japan in December 1997, and the adoption of the “Kyoto Protocol.”ABA Section of Natural Resources, Energy and Environmental Law Special Committee on Climate Change and Sustainable Development1997 Annual ReportOn December 11, 1997, in Kyoto Japan, the Conference of Parties to the UN Framework Convention on Climate Change (FCCC) unanimously adopted the “Kyoto Protocol to the United Nations Framework Convention on Climate Change” (Kyoto Protocol). The FCCC concluded nearly two years of international negotiations involving various FCCC subsidiary bodies and resulted in an international agreement calling for binding obligations on Annex I Parties (developed countries) to reduce their greenhouse gas emissions at least five percent below 1990 levels by 2008-2012.The U.S. will have, during the first commitment period of 2008-2012, binding obligations to reduce its 1) carbon dioxide, methane and nitrous oxide emissions seven percent below 1990 levels and 2) hydrofluorocarbon, perfluorocarbon and sulfur hexafluoride emissions seven percent below 1990 or 1995 levels. The same base years or base periods apply to all Annex I Parties except for countries with economies in transition (EITs), which are allowed some flexibility in the selection of a base year or base period. The “assigned amounts” (targets) are set forth in Annex B to protocol and include the following:Iceland 110%Australia 108%Norway 101%Russia, Ukraine, New Zealand 100%Croatia 95%Japan, Canada, Poland, Hungary 94%U.S. 93%European Union (EU) collectively, Switzerland, other EITs 92%Targets and timetables and binding obligations. Known as Quantified Emission Limitations and Reduction Objectives (QELROs), the binding commitments and targets and timetables for Annex I parties are set forth in Article 3 and Annexes A and B. The key compromise was the EU as a bloc agreeing to a collective eight percent reduction under its so-called “bubble”(see Article 4 and discussion in I.A.2, infra), with the U.S. agreeing to a seven percent reduction level and Japan agreeing to a six percent reduction level. Thus, the commitments are politically differentiated but were not determined by any formulaic means.Critical components of the agreement on targets and timetables were agreements on coverage of gases–the so-called “basket” approach–and “sinks,” or forestry-based offsets. Coverage of all six gases was crucial to the U.S. The option of being able to elect a different baseline for the second set of gases was important to Japan and other countries. No clear consensus could be reached on sinks, so the Parties agreed to limit removals by sinks to afforestation, reforestation and deforestation since 1990, subject to later decisions by the conference, taking into account work by the Intergovernmental Panel on Climate Change. See Articles 3.3, 3.4 and 3.7.“Banking” of excess reductions from the first commitment period to meet obligations in a subsequent commitment period was allowed, but “borrowing” of reductions from a subsequent commitment period to meet obligations in the first commitment period was not. See Article 3.13.Policies and measures, and the EU bubble. Under Article 4, the EU received its bubble, under which it collectively will be responsible for an eight percent reduction but will also have the flexibility to assign different targets to individual Parties. Thus, some EU countries will be able to increase their emissions, while others (such as the United Kingdom and Germany) will bear a larger share of reductions. Failure by the EU to meet the collective eight percent target will mean that each Party shall be responsible for meeting its own level of emissions set out in the EU agreement. See Article 4.5. However, the EU was only able to obtain a weakened version of policies and measures (PAMs) in Article 2. While there is still mandatory language in Article 2, implementation or “elaboration” of such PAMs appears to be discretionary in accordance with individual Parties’ national circumstances.Emissions trading and commitments for developing countries. These two issues threatened to crater the negotiations in the early hours of December 11. Ultimately, the U.S. and other Annex I Parties insisted on emissions trading,and the non-Annex I Parties (developing countries) acceded in order to avoid total collapse of the negotiations. Later, however, although many Annex I Parties and some non-Annex I Parties sought to include a U.S.-sponsored provision so that advanced developing countries could “opt in” to Annex I commitments, the U.S. acceded to developing countries’ insistence that the protocol exclude binding obligations for developing countries, the opt-in provision, and even establishment of a process for developing such commitments for developing nations.Emissions trading, joint implementation and the Clean Development Mechanism. Because no clear consensus could be forged on many critical issues, numerous framework, shell or placeholder provisions are scattered throughout the Kyoto Protocol. Notable among these are the following provisions: emissions trading (Articles 3.10, 3.11 and 16 bis); joint implementation among Annex I Parties (Articles 3.10, 3.11 and 6); the so-called Clean Development Mechanism (Articles 3.12 and 12), which became a substitute for joint implementation between Annex I and non-Annex I Parties and for the Brazil-sponsored Clean Development Fund; credit for early action from the year 2000 (Article 12.10); and enforcement and noncompliance (Article 17).NOTES AND COMMENTS1. An extensive analysis of the Kyoto Protocol is found in Michael Grubb et al., The Kyoto Protocol: A Guide and Assessment (Royal Institute of International Affairs, 1999). Perhaps the key question in the international politics of climate change is whether the developing countries will remain unified in their present posture. At one point during the Kyoto negotiations, some 35 developing countries supported a proposal to provide an explicit path by which developing countries might voluntarily adopt quantified commitments, but Brazil, India, China and the OPEC countries lined up solidly against it and it was withdrawn. Grubb, supra at 110. For a relatively optimistic look at the possibilities for reductions by developing countries, see Jonathan Baert Wiener, On the Political Economy of Global Environmental Regulation, 87 Geo. L. J. 749 (1999). For a critique of Kyoto from a deep ecology perspective, see Prue Taylor, An Ecological Approach to International Law: Responding to Challenges of Climate Change (Routledge, 1998).2. The United States, the world's biggest GHG emitter, explicitly rejected the Kyoto Protocol in 2001. President Bush said Kyoto was too costly, based onunreliable science and unfairly excluded big developing nations like India, China and Brazil which account for a third of the world's population. In 2005, on the occasion of President Bush’s visit to Europe, British Prime Minister Blair promised to try to persuade the U.S. to rethink. “The truth of the matter is without America there is no deal. We have got to do our best and use our relationship with America to try and make sure they come into agreement with us. Whether I will be able to achieve it or not, I don't know,” he told Channel Five TV. Doyle, supra. Australia, the only big developed nation on the sidelines with the United States, said it had no plans to sign up. “Until such time as the major polluters of the world, including the United States and China, are made part of the Kyoto regime it is next to useless and indeed harmful for a country such as Australia to sign up to the Kyoto Protocol,”Prime Minister John Howard told the Australian Parliament. Id.3. In July 1997, the only vote in the U.S. Senate on the Kyoto Protocol took place. By a unanimous vote of 95-0, the U.S. Senate adopted S. Res. 98, the so-called Byrd-Hagel Resolution. S. Res. 98, 105th Cong., 143 Cong. Rec. S8138-39 (daily ed. July 25, 1997). S. Res. 98 stated that the United States should not be a signatory to any protocol to, or other agreement regarding, the Climate Convention that would (A) mandate new commitments to limit or reduce greenhouse gas emissions for the Annex I [developed country] Parties, unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or (B) would result in serious harm to the economy of the United States.One argument cited by a number of Senators was the same one later made by President Bush: that the Kyoto Protocol would put an unfair burden on developed countries, particularly the United States. In order for the Senate to ratify Kyoto and agree on legislation to implement it, developing countries would need to share in reductions, which they were not required to do.b. RATIFICATION OF THE KYOTO PROTOCOLIn 2004, Russia ratified the Kyoto Protocol, and it went into effect. See Doyle, supra. A key consideration in Russia’s decision to ratify the Protocol was its position as a likely net exporter of CO2 allowances, after the collapse of Soviet-era industries reduced GHG emissions in the nation. In Moscow, Russian electricity giant Unified Energy, which accounts for 2 percent of world GHG emissions, said it was close to signing 30 deals to cut emissions.Id.Scientists have stated that the Protocol’s goal of reducing GHG emissions by 5.2 percent from 1990 levels is just a first step, and a cut of at least 60 percent is needed to prevent catastrophic impacts of climate change this century. See Clouds Gather Over Future of Kyoto Climate Pact, Reuters, Feb. 11, 2005. Even if fully implemented, Kyoto would slow rising temperatures by just 0.18 F (0.1 C) by 2100, according to figures from the IPCC, and this would be a small dent in rising temperatures compared to the IPCC’s forecasts of an overall rise of 1.4-5.8 degrees Celsius this century. See IPCC 2001 Report, supra.NOTES AND COMMENTS1. Canada announced in early 2005 that it would spend between $8-10 billion (Canadian) by 2012 on its efforts to meet targets under the Kyoto Protocol. The majority of the money would be split into two projects: a $1 billion Climate Change Fund to create an emissions credit-trading program for private industry and a partnership fund for provincial clean-air efforts. Canadians also would be encouraged to reduce their energy consumption, and oil, gas and other large industries would cut GHG emissions with new clean-air equipment. CBC News Online, Apr. 8, 2005. Emissions trading is discussed further in the next section.2. The Kyoto Protocol gave support to “joint implementation,” a system where industrialized countries receive benefits from helping developing countries with their emissions reduction commitments. Kyoto Protocol Annex I countries can undertake emissions reduction projects in other Annex I countries and receive a negotiated share of the emissions reductions generated by the projects. Some commentators suggest that this may present a “free-rider” problem. See Hanafi, supra at 460, 467-69. For additional commentary on joint implementation, see Note: Joint Implementation: Legal and Institutional Issues for an Effective International Program to Combat Climate Change, 22 Harv. Envtl. L. Rev. 441 (1998).3. The Kyoto Protocol created the Clean Development Mechanism (CDM) to foster collaborative projects to reduce emissions or sequester carbon in developing countries. It allows an industrialized country that must reduce its emissions under the Protocol (an Annex I country) to invest in a project in a developing country without a target (non-Annex I), and claim credit for the emissions that the project achieves (known in CDM parlance as “Certified Emission Reductions”). In theory, this is done if it is easier and cheaper forthe Annex I nation to meet its GHG reduction target in this fashion; at the same time, a developing country host can benefit from new investment that increases economic productivity and may reduce local environmental problems. See Sophie Smyth, The Prototype Carbon Fund: A New Departure in International Trusts and Securities Law, Sustainable Dev’t L. & Pol’y, Spring 2005, at 28.Article 12 of the Kyoto Protocol established three bodies to oversee the CDM: the representatives of the COP, an executive board established by the COP, and independent auditors to verify project activities. However, the Protocol provided almost no guidance on what exactly the CDM would do or how it would operate. Instead, the structure and authority of supervisory bodies and the CDM were left for future negotiation. The final rules for the CDM were agreed to at the 7th COP in Marrakech in 2001, with the exception of rules on carbon sinks, which were completed at the 9th COP in 2003, and some details about CDM project approval, which were delegated to the newly formed CDM Executive Board. See CDM Watch, The Clean Development Mechanism (CDM) Toolkit, /files/CDMToolkitVO19-02-04.pdf, for a complete description of the project application process; Annual report (2003–2004) of the Executive Board of the clean development mechanism to the Conference of the Parties, http://unfccc.int/resource/docs/cop10/02a01.pdf. The World Bank has three carbon funds for the financing of CDM projects. See . The operational details of the “Prototype Carbon Fund” are described in Smyth, supra.A “CDM Scorecard” is maintained by the group CDM Watch. See/. One observer notes that the CDM “remains under-resourced and its lethargic approval process has only sanctioned several projects to date,” and recommends more involvement from private sector firms with experience in emissions trading finance. Stephen Tully, Commercial Contributions to the Climate Change Regime: Who’s Regulating Whom?, Sustainable Dev’t L. & Pol’y, Spring 2005, at 14, 22.The CDM overlaps with the European Union’s emissions trading scheme (discussed below); CO2 emissions reduction projects undertaken outside the EU pursuant to JI and CDM may qualify for allowances that can be bought and sold within the ETS. However, one report notes that over 800 CDM projects – significantly more than the number currently approved –would be necessary to meet European reductions targets. Pew Center onGlobal Climate Change, The European Union Emission Trading Scheme: Insights and Opportunities (2005), (“Pew EU-ETS Report”).For a discussion of the possible conflict between the CDM and world trade rules, see Andrew Green, Climate Change, Regulatory Policy and the WTO, 8 J. Int’l Econ. L. 143 (2005).4. The tenth session of the COP was held in Argentina in 2004, and produced a number of decisions aimed at strengthening the climate change framework. See http://unfccc.int/. However, negotiations on commitments to GHG reductions after the Kyoto period were rejected by the U.S. as premature. Tully, supra, at 23.。
