International Framework and Kyoto Protocol

1
International Framework and Kyoto Protocol
2
UNFCCC

• Conference of the parties (annual meeting)
• Review implementation
• Consider new needs
• Subgroups
• Creates Kyoto Protocol in 1997 COP 3
• COP 6 no credit for forestland in closed cap
  and trade

3
Kyoto Protocol Highlights

• Binding Emissions Limitations for Certain
  Developed Countries Annex I
• Prize for list of Annex B countries (diff?)
• Based on historic (1990) emissions
• 2008 first commitment period
• Basket of Greenhouse Gases (US) open?
• Land Use Disfavored
• Commitment Period average
• Particularly Advantageous for Russia, former
  Eastern European Countries

4
Kyoto Flexibility Mechanisms

• International Emission Trading (IET)
• Clean Development Mechanism (CDM)
• Joint Implementation (JI)

5
International Emissions Trading

• Can Trade if Annex B meet rules
• Important for US? Post-Kyoto?
• Kyoto Units AAUs, ERUs, CERs, RMUs
• Cant trade more than 10 of budget
• Only supplementary reductions
• Practice on this evolving
• Trade vs. Transfer
• Temporal Bank only 2.5

6
CDM and JI

• CDM projects in non-Annex I Kyoto Protocol
  parties
• Must Have National Authority to Provide Oversight
  - ???
• Limitations on nuclear and certain sinks
• Registered and Certified by CDM Executive Board
• Process page 643
• Generally Open to players (project participants)
  US market
• Timing CDM (2000) JI (2008)

7
Additionality and Leakage

• Alternatives Scenarios
• Investment Analysis
• Barrier Analysis

8
EU Emissions Trading System

• Derived from Kyoto
• Permission from Kyoto to vary individual
  countries as basket
• Countries have own internal rules
• Registry is nation based
• Trading between EU entities
• Starts with CO2 only (in trade part)
• Allows CDM offsets additional certification(?)

9
Phase I

• 2005-2008 (BEFORE Kyoto Commitment)
• Voluntary Reporting of Baseline
• European Commission Reviewed NAPs
• General giveaway - (at least 95) almost NO
  auction
• Only partially covered
• Power Sector bears shortage
• No Banking Why?
• Price Collapse

10
Phase II

• 2008-2012
• Formula for Allocation NAPs not negotiated
• Banking between Phase II and Phase III
• Target of 20 reduction by 2020 influence
• Some Auction

11
Lessons and Phase III Transition

• Initial Allocation and Measurerment Important
• Massive Fuel Switching coal to CH4 affect on
  price moving back imperfect information with
  volatility
• No significant outflow of business yet