What is Kyoto Protocol ?

The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions .These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012. The major distinction between the Protocol and the Convention is that while the Convention encouraged industrialized countries to stabilize GHG emissions, the Protocol commits them to do so.

 

Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on developed nations under the principle of “common but differentiated responsibilities.”

The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. 180 nations have ratified the treaty to date. The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh in 2001, and are called the “Marrakesh Accords.”

 

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Monitoring emission targets

 

Under the Protocol, countries actual emissions have to be monitored and precise records have to be kept of the trades carried out. Registry systems track and record transactions by Parties under the mechanisms. The UN Climate Change Secretariat, based in Bonn, Germany, keeps an international transaction log to verify that transactions are consistent with the rules of the Protocol. Reporting is done by Parties by way of submitting annual emission inventories and national reports under the Protocol at regular intervals. A compliance system ensures that Parties are meeting their commitments and helps them to meet their commitments if they have problems doing so.

 

Adaptation
The Kyoto Protocol, like the Convention, is also designed to assist countries in adapting to the adverse effects of climate change. It facilitates the development and deployment of techniques that can help increase resilience to the impacts of climate change. The Adaptation Fund was established to finance adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol. The Fund is financed mainly with a share of proceeds from CDM project activities.

 

The road ahead

 

The Kyoto Protocol is generally seen as an important first step towards a truly global emission reduction regime that will stabilize GHG emissions, and provides the essential architecture for any future international agreement on climate change. By the end of the first commitment period of the Kyoto Protocol in 2012, a new international framework needs to have been negotiated and ratified that can deliver the stringent emission reductions the Intergovernmental Panel on Climate Change (IPCC) has clearly indicated are needed.

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Status of Ratification  

 

The text of the Protocol to the UNFCCC was adopted at the third session of the Conference of the Parties (COP 3) in Kyoto, Japan, on 11 December 1997; it was open for signature from 16 March 1998 to 15 March 1999 at United Nations Headquarters, New York. By that date the Protocol had received 84 signatures. Those Parties that have not yet signed the Kyoto Protocol may accede to it at any time.

The Protocol is subject to ratification, acceptance, approval or accession by Parties to the Convention. It entered into force on 16 February 2005 - the ninetieth day after at least 55 Parties to the Convention, incorporating Annex I Parties which accounted in total for at least 55 % of the total carbon dioxide emissions for 1990 from that group - deposited their instruments of ratification, acceptance, approval or accession.

 

The list to the right contains the latest information concerning dates of signature and ratification received from the Secretary-General of the United Nations, as Depositary of the Kyoto Protocol. The dates in the column entitled "ratification" are those of the receipt of the instrument of ratification (R), acceptance (At), approval (Ap) or accession (Ac). (For an explanation of these legal terms, visit the UN's Treaty Reference Guide).

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Amendment to Annex B of the Kyoto Protocol  

 

At the second session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 2), held in Nairobi, Kenya, in November 2006, Parties to the Kyoto Protocol adopted an Amendment to Annex B to the Kyoto Protocol by decision 10/CMP.2. The decision was adopted in accordance with Article 20 and 21 of the Kyoto Protocol, based on a proposal from Belarus to amend Annex B to the Kyoto Protocol, which was submitted in March 2006.

 

The Notification of the Amendment was communicated on 17 April 2006, to all Parties to the Kyoto Protocol by the Secretary-General of the United Nations, acting in his capacity as Depositary. The amendment is subject to acceptance by Parties to the Kyoto Protocol. It will enter into force for those Parties having accepted it on the ninetieth day after the date of receipt by the Depositary of an instrument of acceptance by at least three fourths of the Parties to the Kyoto Protocol. The list to the right contains the latest information concerning acceptances received from the Secretary-General of the United Nations, as Depositary of the Amendment to Annex B of the Kyoto Protocol. The dates in the column entitled "acceptance" are those of the receipt of the instrument of acceptance (At).  (For an explanation of these legal terms, visit the UN's Treaty Reference Guide).

 

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Kyoto Protocol Bodies  

 

CMP
The Conference of the Parties (COP) serves as the meeting of the Parties to the Kyoto Protocol. This is referred to as the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP). The CMP meets annually during the same period as the COP. Parties to the Convention that are not Parties to the Protocol are able to participate in the CMP as observers, but without the right to take decisions.  The functions of the CMP relating to the Protocol are similar to those carried out by the COP for the Convention.  The first meeting of the Parties to the Kyoto Protocol was held in Montreal, Canada in December 2005, in conjunction with the eleventh session of the Conference of the Parties (COP 11). Decisions were adopted that outline the path to future international action on climate change.  The Parties to the Kyoto Protocol also formally adopted the “rulebook” of the 1997 Kyoto Protocol, the so-called ‘Marrakesh accords’, which sets the framework for implementation of the Protocol.  

 

The Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI)
These two permanent subsidiary bodies established under the Convention also serve the CMP.

 

The Bureau
The Bureau of the COP also serves the CMP. However, any member of the COP Bureau representing a non-Party to the Kyoto Protocol has to be replaced by a member representing a Kyoto Protocol Party.

 

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Constituted Bodies under the Kyoto Protocol  

 

Clean Development Mechanism (CDM) Executive Board
The CDM Executive Board supervises the CDM under the Kyoto Protocol and prepares decisions for the CMP. It undertakes a variety of tasks relating to the day-to-day operation of the CDM, including the accreditation of operational entities.

Joint Implementation Supervisory Committee
The Joint Implementation Supervisory Committee (JISC), under the authority and guidance of the CMP, inter alia, supervises the verification of emission reduction units (ERUs) generated by JI projects following the verification procedure under the JISC.

 

Compliance Committee
The compliance regime consists of a Compliance Committee made up of two branches: a Facilitative Branch and an Enforcement Branch.

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The Mechanisms under the Kyoto Protocol:

Emissions Trading, the Clean Development Mechanism and Joint Implementation  

 

Background  

Countries with commitments under the Kyoto Protocol to limit or reduce greenhouse gas emissions must meet their targets primarily through national measures. As an additional means of meeting these targets, the Kyoto Protocol introduced three market-based mechanisms, thereby creating what is now known as the “carbon market.”  
 

The Kyoto mechanisms are:

• Emissions Trading

• The Clean Development Mechanism (CDM)

• Joint Implementation (JI)

The Kyoto mechanisms:

• Stimulate sustainable development through technology transfer and investment

•  Help countries with Kyoto commitments to meet their targets by reducing emissions or removing carbon from the atmosphere in other countries in a cost-effective way

• Encourage the private sector and developing countries to contribute to emission reduction efforts

JI and CDM are the two project-based mechanisms which feed the carbon market. JI enables industrialized countries to carry out joint implementation projects with other developed countries, while the CDM involves investment in sustainable development projects that reduce emissions in developing countries.

 

The carbon market is a key tool for reducing emissions worldwide. It was worth 30 billion USD in 2006 and is growing.

Annex I Parties must provide information in their national communications under the Protocol to demonstrate that their use of the mechanisms is “supplemental to domestic action” to achieve their targets. This information is assessed by the facilitative branch of the Compliance Committee.

 

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Eligibility requirements  

 

To participate in the mechanisms, Annex I Parties must meet, among others, the following eligibility requirements:

• They must have ratified the Kyoto Protocol.

• They must have calculated their assigned amount in terms of tonnes of CO2-equivalent emissions.

• They must have in place a national system for estimating emissions and removals of greenhouse gases within their territory.

• They must have in place a national registry to record and track the creation and movement of ERUs, CERs, AAUs and RMUs and must annually report such information to the secretariat.

• They must annually report information on emissions and removals to the secretariat.

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Detailed eligibility requirements  

 

Detailed eligibility requirements can be found under the respective decisions agreed by the CMP, as follows:

• ET eligibility requirements are reflected in in the Modalities, rules and guidelines for emissions trading under Article 17 of the Kyoto Protocol ( decision 11/CMP.1);

• CDM eligibility requirements are reflected in section F in the modalities and procedures ( decision 3/CMP.1);

• JI eligibility requirements are reflected in section D in the Guidelines for implementation of Article 6 of the Kyoto Protocol ( decision 9/CMP.1);

Businesses, non-governmental organizations and other legal entities may participate in the three mechanisms under the authority and responsibility of governments.

 

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Registry systems under the Kyoto Protocol  

 

Emission targets for industrialized country Parties to the Kyoto Protocol are expressed as levels of allowed emissions, or “assigned amounts”, over the 2008-2012 commitment period. Such assigned amounts are denominated in tonnes (of CO2 equivalent emissions) known informally as “Kyoto units”.

 

The ability of Parties to add to their holdings of Kyoto units (e.g. through credits for CDM or LULUCF activities) or move units from one country to another (e.g. through emissions trading or JI projects) requires registry systems that can track the location of Kyoto units at all times.

 

Two types of registry are being implemented:

• Governments of the 38 Annex B Parties are implementing national registries, containing accounts within which units are held in the name of the government or in the name of legal entities authorized by the government to hold and trade units.
   

• The UNFCCC secretariat, under the authority of the CDM Executive Board, has implemented the CDM registry for issuing CDM credits and distributing them to national registries. Accounts in the CDM registry are held only by CDM project participants, as the registry does not accept emissions trading between accounts.

In addition to recording the holdings of Kyoto units, these registries “settle” emissions trades by delivering units from the accounts of sellers to those of buyers, thus forming the backbone infrastructure for the carbon market. Each registry will operate through a link established with the International transaction log put in place and administered by the UNFCCC secretariat. The ITL verifies registry transactions, in real time, to ensure they are consistent with rules agreed under the Kyoto Protocol. The ITL requires registries to terminate transactions they propose that are found to infringe upon the Kyoto rules.

 

 

In verifying registry transactions, the ITL provides an independent check that unit holdings are being recorded accurately in registries. After the Kyoto commitment period is finished, the end status of the unit holdings for each Annex B Party will be compared with the Party’s emissions over the commitment period in order to assess whether it has complied with its emission target under the Kyoto Protocol.

 

EU emissions trading  

 

Domestic or regional emissions trading schemes that use Kyoto units also undertake their settlement through these registry systems. For example, under the second phase of the European Union emissions trading scheme, EU allowances are specific Kyoto units which have been designated as being valid for trading under the scheme. Transactions in EU allowances are therefore recorded automatically as transactions under the Kyoto Protocol.

 

As EU trading legislation sets in place rules over and above those agreed for the Kyoto Protocol, a supplemental transaction log has been implemented by the European Commission. The Community Independent Transaction Log has been in place since the start of the scheme in 2005 and EU registries are now operating with it.

 

For the start of the Kyoto commitment period in 2008, EU registries are to switch their connections from the CITL to the ITL. The ITL will conduct “Kyoto checks” on transactions proposed by both EU and non-EU registries. In the case of transactions involving EU registries, the ITL will forward information to the CITL so that it can conduct “supplementary checks” defined under the EU scheme.

 

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International Transaction Log  

 

The ITL verifies transactions proposed by registries to ensure they are consistent with rules agreed under the Kyoto Protocol. Each registry sends transaction proposals to the ITL, which checks each proposal and returns to the registry its approval or rejection. Once approved, registries complete the transaction. In the event that a transaction is rejected, the ITL sends a code indicating which ITL check has been failed and the registry terminates the transaction.

 

Data Exchange Standards (1393 kB) coordinate the functions of systems when processing transactions. They define technical requirements for the communication between the ITL and registries. They also define the checks performed by the ITL, embodying the policy rules agreed by Parties for the accounting of their assigned amounts and their use of the Kyoto mechanisms.

Each registry is to be connected to the ITL through secure communication channels established across the Internet. These connections will allow a registry to receive an immediate response from the ITL, typically within a matter seconds after sending the transaction information.

 

The administrator of the ITL is the UNFCCC secretariat, which has awarded a contract for the development and operation of the ITL to leading companies in the field of IT services. The ITL is hosted at two commercially-operated data centres, one for primary operations and the other as a backup site, both located in the United Kingdom. A service desk, also based in the United Kingdom, has been put in place to support the administrators of the ITL, registries and the CITL.

 

Current status (14 November 2007)  

 

The ITL became operational with the CDM registry and Japanese registry today. All previous issuances of CERs in the CDM registry have been confirmed by the ITL as having been in accordance with Kyoto rules and the first CERs have been forwarded to the Japanese registry.

See press release.

 

It is expected that further non-European registries will be going live with the ITL in the next weeks. The go-live of European registries with the ITL, originally planned for mid-November 2007, has been postponed. The secretariat is informed that these registries are to join the ITL simultaneously, together with the EU’s transaction log (CITL) under its trading scheme. At present, delays in connecting the CITL to the ITL mean that it has not been possible to fully test the two systems together. The timing of when European registries and the CITL will be able to commence operations with the ITL depends on the readiness of the CITL.

 

Almost all Parties have now completed the initialization of their registry connections with the ITL. This process verifies that they meet all technical requirements prior to commencing live operations with the ITL. At present, only 1 European registry (Bulgaria) and 1 non-European registry (Canada) are yet to complete their technical testing (several more are in the process of completing their procedural documentation).

 

RSA Forum  

 

The ITL administrator has convened the Registry System Administrator Forum in order to ensure that technical and management issues across registry systems are affectively coordinated. The Forum met for the first time in April 2006 and typically meets as a full group three times a year. In addition, groups are established under the Forum to conduct more detailed work in preparing and implementing procedures of joint concern to administrators of all registry systems.

 

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Registry Functions  

 

Registries record the holdings of Kyoto units, and any transactions involving them, through a structure of accounts.  This is similar to the way that banks record balances and movements in money using accounts allocated to individuals or other entities. 

 

Data Exchange Standards (1393 kB) have been developed to coordinate the electronic messaging that occurs between registry systems when processing transactions.  The types of Kyoto units and transactions enabled by these standards are summarized in the tables below.  The ITL, CITL and registries also process unit types and transactions defined under other emissions trading schemes, such as EU allowances for the first phase of the EU trading scheme and other transaction sub-types defined under this scheme. 

 

The data held by registries is reconciled on a daily basis with data in the ITL and CITL. Procedures are in place for identifying and resolving any inconsistencies discovered.

 

Kyoto units
Unit	Unit name	Issuer	Description	Kyoto Protocol
AAU	Assigned Amount Units	National registry	Units representing the initial assigned amount of each Annex B Party	Article 3.7
RMU	Removal Units	National registry	Units given for net removals from land use, land-use change and forestry activities	Article 3.3, 3.4
ERU	Emission Reduction Units	National registry	Units converted from AAUs or RMUs on the basis of JI projects	Article 6
CER	Certified Emissions Reductions	CDM registry	Credits given for emission reductions certified for a CDM project	Article 12
tCER	Temporary CERs	CDM registry	Credits given for emission removals certified for an afforestation or reforestation CDM project (to be replaced upon expiry at end of the second commitment period)	Article 12
lCER	Long-term CERs	CDM registry	Credits given for emission removals certified for an A&R CDM project (to be replaced upon expiry at end of the project’s crediting period or in event of storage reversal or non-submission of a certification report)	Article 12

 

Kyoto transaction types
Issuance	Initial creation of an AAU, RMU, CER, tCER or lCER
Conversion	Transformation of an AAU or RMU into an ERU based on a JI project
External transfer	External transfer of a unit from one registry to another registry
Cancellation	Internal transfer of a unit to a cancellation account, in order that it may not be used for compliance with an emission target
Replacement	Internal transfer of a unit to a replacement account, in order to replace tCERs or lCERs when required
Retirement	Internal transfer of a unit to a retirement account, in order that it can be used by the Annex B Party for compliance with its emission target
Carry-Over	Change of validity an AAU, ERU (only those converted from AAUs) or CER from one commitment period to the next
Expiry date change	Change in the expiry date of a tCER or lCER
Internal transfer between holding accounts	Internal transfer of a unit between holding accounts within the same registry (the ITL does not verify such transactions but forwards them to the CITL to allow their verification under the EU  trading scheme)

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Registry Initialization  

 

Prior to commencing live operations with the ITL, all registries need to demonstrate that they have properly implemented the Data Exchange Standards. Each registry therefore undertakes the initialization process with the ITL in order to demonstrate that it fulfils all required registry functions to the appropriate standard.

The initialization of registry connections with the ITL proceeds in three phases:

• Documentation review: the operation of the registry is assessed by reviewing its technical and operational documentation

• Connectivity testing: the ability of the registry to connect to the ITL is assessed by verifying that it can undertake basic communication steps with the ITL

• Functional testing: the ability of the registry to carry out its required functions is assessed by verifying that it can undertake transaction, reconciliation and administrative processes, including for notifications, as specified in the data exchange standards

The assessment of the registry activities under this process is carried out by the ITL administrator.  The results of this assessment are contained in Independent Assessment Reports for each registry.

Once approved by the ITL administrator, the registry can in principle go live with the ITL, though the decision as to when the registry wishes to have this live link activated will often take account of other factors. Generally speaking, non-European registries can go live individually with the ITL while European registries may wish to go live together and simultaneously with the EU transaction log (the CITL).

For an up-to-date status of registry initialization and whether registries are live with the ITL, see the registry websites page.

 

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Registry Websites  

 

The table below indicates which registries have completed the initialization process (and are therefore approved to go live with the ITL) and which registries have gone live with the ITL.

Click on the Party name to be routed to the registry websites.

 

Party	Initialization passed?	Live with ITL?
CDM Registry	Yes	Yes
Australia
Austria	Yes
Belgium	Yes
Bulgaria
Canada
Croatia
Czech Republic	Yes
Denmark	Yes
Estonia	Yes
European Community
Finland	Yes
France	Yes
Germany	Yes
Greece	Yes
Hungary	Yes
Iceland	Yes
Ireland	Yes
Italy	Yes
Japan	Yes	Yes
Latvia	Yes
Liechtenstein	Yes
Lithuania	Yes
Luxembourg	Yes
Monaco
Netherlands	Yes
New Zealand	Yes	Yes
Norway	Yes
Poland	Yes
Portugal	Yes
Romania
Russian Federation	Yes	Yes
Slovakia	Yes
Slovenia	Yes
Spain	Yes
Sweden	Yes
Switzerland	Yes	Yes
Ukraine	Yes
The United Kingdom of Great Britain and Northern Ireland	Yes

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Compliance under the Kyoto Protocol

 

What’s new:

 

Fifth Meeting of the Enforcement Branch

 

The fifth meeting of the enforcement branch of the Compliance Committee of the Kyoto Protocol will be held in Bonn, Germany from 14 to 16 June 2008.

more>> (67 kB)

 

 

Informal information notes by the secretariat on recent and current compliance cases

 

Greece>> (93 kB)

Canada>> (116 kB)

 

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