Kyoto Protocol

1. Protocol Summary

The international agreement known as the Kyoto Protocol was adopted by the majority of countries in the world to regulate and minimise the world’s emissions to combat global warming.

The Protocol’s aim is to reduce greenhouse gas (GHG) emissions, namely carbon dioxide, and nitrous oxide and other gases which are emitted from combustion engines from industrial plants.

Whilst those participating countries have voluntarily signed this Protocol they are legally required to meet certain emissions target by 2012.
Eventually participating countries that do not meet the targets will be penalised.

2. Three Key Mechanisms Under the Protocol

The Protocol provides three mechanisms that enable the acquisition of Carbon Credits:

Joint Implementation (JI) – under this mechanism an industrialised country, which has relatively higher costs, can establish a greenhouse reduction project in another industrialised country, which has a relatively low cost.

Clean Development Mechanism (CDM) - An industrialised country can adopt a greenhouse gas reduction project activity in a developing country where the cost of such project is substantially lower. Under this arrangement a developing country would receive the necessary capital for the project and “Green” technology to start up the project. In return, the industrialised country would be granted the credits for achieving its emission reduction targets in this project.

International Emission Trading (IET) – Under this mechanism, nations can buy and sell carbon credits in the International Carbon Credit Scheme. In other words, nations with excess carbon credits can sell the same to nations with quantified emission limitation and reduction commitments under the Protocol.