In 1997, the 188 signatory countries met at Kyoto in order to agree on a number of restricting commitments.
Amongst the signatory countries, the 38 'Annex 1' industrialised countries committed to reducing their CO2 emissions by 5.2% from 1990 levels between 2008 and 2012.
The Kyoto Protocol only came into effect in 2005, after its ratification by Russia. To date, 172 countries have ratified the Protocol, excluding the USA which refused to sign.
The European Union as a whole made a commitment to reduce its emissions by 8%. The efforts to be made by each country varied, with France simply having to stabilise its emissions.
To reach these objectives, each country may not only use a complete range of internal measures (energy taxation, energy saving incentives, etc.) but also resort to three 'flexibility' mechanisms:
- The Joint Implementation (JI) mechanism establishes the possibility for an Annex 1 country to obtain CO2 emission credits by investing in a greenhouse gas (GHG) emission reduction project from another Kyoto Protocol signatory country.
- The Clean Development Mechanism (CDM) is based on the same principle as that of the JI mechanism, but in this case, the investments are made in countries such as China, India and Brazil which are nonAnnex 1 countries.
- The CO2 Emissions Trading Scheme (ETS) allows for the possibility of exchanging the CO2 quotas assigned to companies. At the end of each period, a company whose actual CO2 emissions are greater than its allowances can purchase the missing allowances from the market. This is only possible if, similarly, other companies emit less than their allocation of allowances and are in a position to sell their surplus allowances.
Of the major industrialised countries, only the USA has not signed the Kyoto Protocol, since Australia has just signed. A certain number of American states, including California, have nevertheless adopted a very similar system.
At the same time, it is quite obvious that some parties will not respect their Kyoto commitments.
On 1 January 2005, the European Union set up the European Emissions Trading Scheme, provided for under the terms of the Kyoto Protocol.
Companies which make investments to reduce their CO2 emissions may, if their performance is better than the objective set by the government, sell emission allowances and thereby pay back their investments. Stock exchange mechanisms apply in this case: the value of a tonne of CO2 varies according to supply and demand and according to the volumes traded. This system will be restricted to Europe (some 12 000 industrial sites are concerned) for 3 years before being extended internationally in 2008, thereby concerning exchanges not only between companies but also between countries. The aim of this system, by combining government intervention (to set reduction objectives and check compliance with commitments) and market mechanisms, is to promote collective and global control of emissions. The idea is to optimise investment levels, which will primarily concern the most effective actions in terms of reducing CO2 emissions, through market regulation either in Europe or in the developing countries by implementing clean development mechanisms.
After a sharp increase, the value of a tonne of CO2 dropped to a very low level due to a surplus of allowances for the first application period. A readjustment was made in the second application period of the system (2008-2012), with rates in the region of D 20 per tonne of CO2.
The Kyoto Protocol objectives seem relatively modest compared with the requirements. The Kyoto Protocol nevertheless offers the major advantage of having initiated a process and having set up mechanisms aimed at reducing CO2 emissions.
The question of the post-Kyoto period now arises: what actions must be taken after 2012? A new step must be defined to move towards the targeted objective.
The European Union has demonstrated its determination to make further progress, by setting itself the objective of a 20% cut in greenhouse gas emissions by 2020. The actual means required to reach this objective still remain to be defined.
The economic mechanisms to limit greenhouse gas emissions will only be truly effective if they are generalised. The introduction of emission allowances or a carbon tax has major impacts on the economy [32, 33]. It is important to avoid the negative impact of distortion of the competition between countries which would not apply the same rules. This could result in delocalisation of the most CO2-polluting industries to countries whose environmental regulations are most lax.
Consequently, there is an urgent need to reach an international agreement covering the post-Kyoto period, with precise figures on the reduction of CO2 emissions which would be accepted and applied by as many countries as possible and especially by the most polluting countries.
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