COMPLIANCE WITH THE KYOTO PROTOCOL

KYOTO PROTOCOL COMPLIANCE MECHANISM

The Kyoto Protocol compliance mechanism is designed to strengthen the Protocol’s environmental integrity, support the carbon market’s credibility and ensure transparency of accounting by Parties.  Its objective is to facilitate, promote and enforce compliance with the commitments under the Protocol.  It is among the most comprehensive and rigorous systems of compliance for a multilateral environmental agreement.  A strong and effective compliance mechanism is key to the success of the implementation of the Protocol.

The Compliance Committee is made up of two branches: a facilitative branch and an enforcement branch.  As their names suggest, the facilitative branch aims to provide advice and assistance to Parties in order to promote compliance, whereas the enforcement branch has the responsibility to determine consequences for Parties not meeting their commitments.  Both branches are composed of 10 members, including one representative from each of the five official UN regions (Africa, Asia, Latin America and the Caribbean, Central and Eastern Europe, and Western Europe and Others), one from the small island developing States, and two each from Annex I and non-Annex I Parties.  The Committee also meets in a plenary composed of members of both branches, and a bureau, made up of the chairperson and vice-chairperson of each branch, supports its work.  Decisions of the plenary and the facilitative branch may be taken by a three-quarters majority, while decisions of the enforcement branch require, in addition, a double majority of both Annex I and non-Annex I Parties.

The enforcement branch is responsible for determining whether a Party included in Annex I (Annex I Party) is not in compliance with its emissions targets, the methodological and reporting requirements for greenhouse gas inventories, and the eligibility requirements under the mechanisms.  In case of disagreements between a Party and an expert review team, the enforcement branch shall determine whether to apply adjustments to greenhouse gas inventories or to correct the compilation and accounting database for the accounting of assigned amounts.

The mandate of the facilitative branch is to provide advice and facilitation to Parties in implementing the Protocol, and to promote compliance by Parties with their Kyoto commitments.  It is responsible for addressing questions of implementation by Annex I Parties of response measures aimed at mitigating climate change in a way that minimizes their adverse impacts on developing countries and the use by Annex I Parties of the mechanisms as “supplemental” to domestic action.  Furthermore, the facilitative branch may provide “early warning” of potential non-compliance with emissions targets, methodological and reporting commitments relating to greenhouse gas inventories, and commitments on reporting supplementary information in a Party’s annual inventory.

In the case of the enforcement branch, each type of non-compliance requires a specific course of action.  For instance, where the enforcement branch has determined that the

emissions of a Party have exceeded its assigned amount, it must declare that that Party is in non-compliance and require the Party to make up the difference between its emissions and its assigned amount during the second commitment period, plus an additional deduction of 30%.  In addition, it shall require the Party to submit a compliance action plan and suspend the eligibility of the Party to make transfers under emissions trading until the Party is reinstated.

“FLEXIBILITY” MECHANISMS

Under the Protocol, countries must meet their targets primarily through national measures. However, it also provides a range of “flexibility” mechanisms that Annex I Parties can employ to meet their commitment targets. Among these are Clean Development Mechanism (CDM), Joint Implementation (JI), and International Emissions Trading (IET). The economic basis for providing these is that the marginal cost of reducing or abating emissions differs among countries. At the time of the original Kyoto targets, studies suggested that the flexibility mechanisms could reduce the overall cost of meeting the targets.

1. Clean Development Mechanism

The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. It is the first global, environmental investment and credit scheme of its kind, providing a standardized emissions offset instrument, CERs.

A CDM project activity might involve, for example, a rural electrification project using solar panels or the installation of more energy-efficient boilers. The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction or limitation targets.

Under the Protocol, only the Annex I Parties have committed themselves to national or joint reduction targets (formally called "quantified emission limitation and reduction objectives" (QELRO).  Parties to the Kyoto Protocol not listed in Annex I of the Convention (the non-Annex I Parties) are mostly low-income developing countries, and may participate in the Kyoto Protocol through the Clean Development Mechanism.

2. Joint Implementation

The mechanism known as “joint implementation,” defined in Article 6 of the Kyoto Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex B Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project in another Annex B Party, each equivalent to one tonne of CO2, which can be counted towards meeting its Kyoto target.

Joint implementation offers Parties a flexible and cost-efficient means of fulfilling a part of their Kyoto commitments, while the host Party benefits from foreign investment and technology transfer.

A JI project must provide a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to what would otherwise have occurred.  Projects must have approval of the host Party and participants have to be authorized to participate by a Party involved in the project.

The CDM and JI are called "project-based mechanisms," in that they generate emission reductions from projects. The difference between IET and the project-based mechanisms is that IET is based on the setting of a quantitative restriction of emissions, while the CDM and JI are based on the idea of "production" of emission reductions. The CDM is designed to encourage production of emission reductions in non-Annex I Parties, while JI encourages production of emission reductions in Annex I Parties.

The production of emission reductions generated by the CDM and JI can be used by Annex I Parties in meeting their emission limitation commitments. The emission reductions produced by the CDM and JI are both measured against a hypothetical baseline of emissions that would have occurred in the absence of a particular emission reduction project. The emission reductions produced by the CDM are called Certified Emission Reductions (CERs); reductions produced by JI are called Emission Reduction Units(ERUs). The reductions are called "credits" because they are emission reductions credited against a hypothetical baseline of emissions.

Each Annex I country is required to submit an annual report of inventories of all anthropogenic greenhouse gas emissions from sources and removals from sinks under UNFCCC and the Kyoto Protocol. These countries nominate a person (called a "designated national authority") to create and manage its greenhouse gas inventory. Virtually all of the non-Annex I countries have also established a designated national authority to manage their Kyoto obligations, specifically the "CDM process". This determines which GHG projects they wish to propose for accreditation by the CDM Executive Board.

3. International Emissions Trading

Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not "used" - to sell this excess capacity to countries that are over their targets.Thus, a new commodity was created in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the "carbon market."

The Green Investment Scheme (GIS), a mechanism in the framework of International Emissions Trading (IET), is designed to achieve greater flexibility in reaching the targets of the Kyoto Protocol while preserving environmental integrity of IET. However, using the GIS is not required under the Kyoto Protocol, and there is no official definition of the term.

Under the GIS a Party to the Protocol expecting that the development of its economy will not exhaust its Kyoto quota, can sell the excess of its Kyoto quota units (AAUs) to another Party. The proceeds from the AAU sales should be "greened", i.e. channeled to the development and implementation of the projects either acquiring the greenhouse gases emission reductions (hard greening) or building up the necessary framework for this process (soft greening).

Latvia was one of the front-runners of GISs. World Bank (2011) reported that Latvia has stopped offering AAU sales because of low AAU prices. In 2010, Estonia was the preferred source for AAU buyers, followed by the Czech Republic and Poland. Japan's national policy to meet their Kyoto target includes the purchase of AAUs sold under GISs. In 2010, Japan and Japanese firms were the main buyers of AAUs. In terms of the international carbon market, trade in AAUs are a small proportion of overall market value.

LULUCF

Kyoto Parties can use land use, land use change, and forestry (LULUCF) in meeting their targets. LULUCF activities are also called "sink" activities. Changes in sinks and land use can have an effect on the climate, and indeed the Intergovernmental Panel on Climate Change's Special Report on Land Use, Land-Use Change and Forestry estimates that since 1750 a third of global warming has been caused by land use change. Particular criteria apply to the definition of forestry under the Kyoto Protocol.

Forest management, cropland management, grazing land management, and revegetation are all eligible LULUCF activities under the Protocol.Annex I Parties use of forest management in meeting their targets is capped.

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 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 technologies 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. In the first commitment period, the Fund was financed mainly with a share of proceeds from CDM project activities.

KYOTO PROTOCOL IN THE PHILIPPINES

On November 20, 2003, the Kyoto Protocol was ratified by the Philippines. In pursuance thereof, The Medium Term Philippine Development Plan of 2004-2010 (MTDP) at the national level was set which underscored the need to manage the environment more effectively. Included in the Plan are targets for the development of renewable energy, expanding the use of natural gas and accelerate the development of alternative fuels such as coconut biodiesel and exhaust.

To comply with the agreements provided by the Kyoto Protocol, the Philippines passed national legislations such as the Clean Air Act of 1999 and Solid Waste Management Act of 2000 which were enacted to improve the effectiveness of the air quality management program. These ensures the Philippines’ faithful compliance to the mandates and principles contained in the UNFCCC and the Kyoto Protocol and sees to it that adequate public awareness campaign and initiatives are held to bring the issue to all the sectors of the country.