Kyoto Countries May Exploit Slack Targets
Date: 17-Feb-05
Country: UK
Author: Gerard Wynn
Kyoto aims to tackle global warming by cutting emissions of heat-trapping greenhouse gases such as carbon dioxide, produced by cars, power plants and industry from burning fossil fuels.
But for the 39 countries that face restrictions on emissions, those over the limit can buy so-called Assigned Amount Units, or AAUs, of greenhouse gases from those below their targets, such as Russia and Ukraine.
Such trading could threaten the environmental credentials of the treaty because Kyoto is meant to promote a shift to renewable energies like solar or wind power.
It will do nothing to clean up the planet if countries simply buy rights to pollute, scientists and environmentalists say.
"On one hand, most OECD countries won't meet their targets, but on the other, Russia will have a large surplus," said Michael Grubb, a director at Britain's Carbon Trust and professor of climate change at Imperial College.
Russia and Ukraine's surplus exceeds the amount by which all other countries have to reduce their emissions, Grubb said.
"The question of whether there's an oversupply of AAUs is very real," said Graham Meeks, director of policy research at Climate Change Capital, a bank which focuses on clean energy projects.
The Kyoto Protocol becomes legally binding on Feb. 16. Scientists and politicians have hailed it as an important first step in global action to save the planet from overheating.
The treaty had a difficult start, having to overcome rejection by the United States in 2001. President George W. Bush said it was too costly and wrongly left out developing countries during its first round of commitments, which runs to 2012.
Flexibility was built into the treaty to encourage countries to sign. The protocol was able to come into force only after Russia signed up last November.
HOT AIR
Of the 141 ratifying nations, the Protocol requires 39 developed countries to cut greenhouse gas emissions between 2008 and 2012 to an average 5 percent below 1990 levels.
Despite the AAU trading option, there will be cuts in domestic emissions because many countries are committed to some clean-up.
The European Union has committed to achieving more than half of its reductions domestically, and last month handed 40 percent of its cap to its Emission Trading Scheme, where companies buy and sell emissions among themselves.
But most countries are still behind. Canada has said it will not meet its target, and AAU trading looms large. Italy said last week that it was unlikely to reach its targets through domestic cuts alone and would have to use the trading option.
"There are certainly negotiations going on between West and East European countries and further afield," said Steven Drummond, managing director of CO2e.com, brokers in greenhouse gas emissions.
In 2000 the most polluting ratifying countries -- the EU, Japan and Canada -- were some 130 million tonnes of carbon over their Kyoto limit, according to Grubb, the Imperial College professor. Carbon is currently traded in the Emission Trading Scheme at 7.2 euros per tonne, implying a 1 billion euro ($1.28 billion) cost to buying their entire shortfall.
In 2000 Russia and Ukraine were below their limit by a combined 290 million tonnes of carbon, said Grubb.
Because trading AAUs does not itself lead to a cut in greenhouse gases, environmental groups are lobbying for countries to either add some environmental benefit or use other mechanisms.
Other nondomestic Kyoto mechanisms should result in a cut in emissions: Countries and companies can invest in other countries' clean energy projects -- known as joint implementation, or JI, and clean development mechanisms -- and pocket any resulting emission cut for themselves.
"WWF is pushing for JI and keeping silent about trading," said Alexey Kokorin, climate change spokesman for the World Wildlife Fund in Russia. "If Japan wants to buy AAU quotas, why not invest in JI