The Climate Treaties: UNFCCC and Kyoto Protocol

UNFCCC

Most important aspects – Objective = overall goal for the treaty – Divides parties into different categories – Establishes moderate commitments – Applies to 6 greenhouse gases – Requires parties to meet every year to assess whether the existing commitments will meet the objective

Art. 2 - Objectives Stabilization of GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner

Art. 4 - Commitments All Parties, Annex I Parties, Annex II Parties – All = developed, developing, economies in transition – Annex I = developed – Annex II = developed - economies in transition

All Parties = Developed + Developing Annex I = Developed Annex II = Developed/Not EITs All Parties: Inventory Develop programmes Cooperate in tech transfer Manage sinks and reservoirs Subject to “common but Differentiated responsibilities” Annex II: Fund emissions inventory Transfer technology Fund adaptation Annex II: Fund emissions inventory Transfer technology Fund adaptation Annex I: “take the lead” Develop national programs And take actions to mitigate

UNFCCC Structural importance – Developed countries must take the lead to reduce emissions – Developing countries do not have strong obligations to reduce emissions – but should inventory and report – Parties will meet to determine if they need to do more

Kyoto Protocol

The Politics = Same as Before Developed countries – EU – U.S. – Canada, Australia, Japan, New Zealand, etc. – Former Soviet Union Developing countries – Association of Small Island States (AOSIS) – OPEC – Brazil, Indonesia, other major forested areas – China – India – Least Developed Countries

The Politics = Same as Before Increased differences: – Developing countries argue: developed countries promised to “take the lead” – until they do this, no new commitments for developing countries Berlin Mandate: affirms no new commitments for developing countries – U.S. argues: if developing countries (i.e., China) do not have commitments, then United States should not sign or ratify any treaty

Kyoto Protocol Key Elements QELROs = targets and timetables – collectively, 5.2 percent reduction below 1990 levels during 5 year reporting period, – Individually – calculated in AAUs flexibility mechanisms – emissions trading - AAUs – Joint implementation - ERUs – EU bubble - AAUs – CDM - CERs

Kyoto Protocol: Targets and Timetables Art 3(1) - Annex I Parties individually or jointly CO2Eq emissions of GHGs in Annex A – “basket of gases” do not exceed assigned amounts – QELROs in Annex B overall goal = at least 5 percent below 1990 levels in commitment period

Kyoto Protocol: Targets and Timetables Art 3(1) - Annex I Parties – CO2Eq emissions of GHGs in Annex A “basket of gases” = CO 2, CH 4, N 2 O, HFCs, PFCs, SF6

Kyoto Protocol: Targets and Timetables Art 3(1) - Annex I Parties – do not exceed assigned amounts = QELROs in Annex B

Kyoto Protocol: Targets and Timetables Art 3(1) - Annex I Parties – do not exceed assigned amounts = QELROs in Annex B – Australia 108Austria 92Belgium 92Bulgaria* 92 – Canada 94Croatia* 95Czech Republic* 92Denmark 92 – Estonia* 92European Community 92 Finland 92 France 92 – Germany 92Greece 92Hungary* 94Iceland 110 – Ireland 92Italy 92Japan 94Latvia* 92 – Liechtenstein 92Lithuania* 92Luxembourg92Monaco 92 – Netherlands 92New Zealand 100Norway101Poland* 94 – Portugal 92Romania*92Russian Federation*100Slovakia* 92 – Slovenia* 92Spain92Sweden92Switzerland 92 – Ukraine* 100United Kingdom 92United States of America 93 – * Countries that are undergoing the process of transition to a market economy.

Kyoto Protocol: Targets and Timetables Art. 3(7) - Annex I Parties – 1st commitment period – assigned amount percentage reduction times baseline times 5 – = Annex B percentage of 1990 baseline emissions of GHGs – alternate baseline for human-made GHGs (see Art. 3(8)) – alternative baseline for Economies in Transition (EITs) – example Japan baseline emissions in 1990 = 100 What is its assigned amount?

Kyoto Protocol: Targets and Timetables – example Japan baseline emissions in 1990 = 100 MtCO 2 eq What is its assigned amount? 100Mt *.94 (percentage reduction) * 5 (commitment period) = 470 MtCO 2 eq

Kyoto Protocol: Targets and Timetables – example Japan’s assigned amount = 470 MtCO 2 eq What does this mean? Japan may emit, on average, 92 Mt/year, but can have varying emissions levels during that 5-year period It just needs to achieve the overall goal

Kyoto Protocol: Targets and Timetables Baselines – 1990 baseline in most cases – alternate baseline for human-made GHGs – alternative baseline for Economies in Transition (EITs)

Kyoto Protocol: Targets and Timetables Why have different baselines? – 1990 baseline – alternate baseline for human-made GHGs Montreal Protocol phase out – wanted to give time for companies to use alternative products and create new ones – alternative baseline for Economies in Transition (EITs) “hot air”

Kyoto Protocol: Targets and Timetables What is “hot air”? – Economies in transition = large emissions in early/mid 1980s – Soviet Union collapsed, so did their economies, so did their emissions – But countries want to allow EITs to pretend their emissions were higher – why?

Economies in Transition – Hot Air

Hot Air and Assigned Amounts If use 1989 as baseline: – Emissions = 100 MtCO 2 eq – QELRO = 100% – Assigned Amount = 100 MtCO 2 eq * 100% * 5 = 500 MtCO 2 eq If use 1990 as a baseline: – Emissions = 70 MtCO 2 eq – QELRO = 100% – Assigned Amount = 70 MtCO 2 eq * 100% * 5 = 350 MtCO 2 eq

Kyoto Protocol: Flexibility Mechanisms Emissions Trading Joint Fulfillment Joint Implementation Clean Development Mechanism

Kyoto Protocol: Flexibility Mechanisms Joint Fulfillment - Art. 4 – “EU Bubble” – Annex I parties may jointly fulfill commitments enter into agreement total combined aggregate GHGs cannot exceed total assigned amounts revised emissions allocations must be set out in the agreement – if revise regional economic integration organization, does not change commitments if Parties fail to meet combined level of emissions reductions, each Party is responsible for its emissions in the agreement

Joint Fulfillment - Art. 4 “EU Bubble” – Annex I parties may jointly fulfill commitments enter into agreement total combined aggregate GHGs cannot exceed total assigned amounts revised emissions allocations must be set out in the agreement – if revise regional economic integration organization, does not change commitments if Parties fail to meet combined level of emissions reductions, each Party is responsible for its emissions in the agreement See page 66

Joint Fulfillment - Art. 4 “EU Bubble” – every EU country agreed under Annex B to reduce emissions by 8% (or to emit.92 of baseline) Country% reduction New QELRO Country% reduction New QELRO Austria-13%.87Italy-6,5%.935 Belgium-7,5%.925Luxembourg-28%.72 Denmark-21%.79Netherlands-6%.94 Finland0%1.00Portugal27%1.27 France0%1.00Spain15%1.15 Germany-21%.79Sweden4%1.04 Greece25%1.25UK-12.5%.875 Ireland13%1.13

Emissions Trading Simplest form – Regulators set an overall cap on allowable emissions from covered sources – Regulators allocate emissions credits/allowances to covered sources – each credit = amount of pollution (e.g., 1 credit = 1 ton CO 2 eq) – Sources may: Emit same amount of pollution as they have credits Emit more pollution, so buy credits Emit less pollution, and sell credits

Emissions Trading

Emissions cap: year 1-5 = 12, year 6-10 = 9, year = 6, year = 3

Emission Trading Emissions cap: year 1-5 = 12; emissions trading allows facilities to buy/sell credits, but cap stays the same

Emissions Trading Arguments in Favor?

Emissions Trading Arguments in Favor? – Cost-effective – Flexible – Administratively easier (money v. expertise to set emissions limits) – Spurs Innovation – Absolute cap on emissions

Emissions Trading Arguments in Favor? Some responses. – Cost-effective For some facilities, but not all. – Flexible Subject to gaming – Administratively easier Not always – Spurs Innovation Not always

Emissions Trading Arguments in Favor? Some responses (cont.) – Absolute cap on emissions Overallocation problem What if the cap doesn’t achieve environmental goals? Caps may not be more effective than command-and- control But they are more directive than taxes