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What happened to Kyoto at Doha

The latest international climate change negotiations that took place over the last fortnight in Doha, Qatar, marked the end of the Bali Roadmap. This 18th Conference of the Parties (COP18) to the United Nations Framework Convention on Climate Change finally signed off on the climate change action plan that had been in place since negotiations in 2007. Coming into Doha there were two main negotiating streams: one that discussed the Kyoto Protocol and how to extend it beyond its expiry on 31 December 2012, and another that looked beyond the Kyoto Protocol to a broader, more inclusive agreement. This FlagPost will outline developments on the first stream. A second FlagPost addresses the other stream.

The Kyoto Protocol extends to 2020
For those who wished to see the Kyoto Protocol continue beyond 2012, there were a number of issues to resolve, the most pressing of which were to define an end-date, determine new emission reduction targets for participating countries and decide how to deal with the transition into a new commitment period. Both 2017 and 2020 had been floated as possible new end dates. At COP18, a 2020 end date was ultimately chosen. It was decided that major greenhouse gas accounting rules would be maintained, thus signalling a seamless transition from the first to the second commitment periods.

Who’s in and who’s out?
Australia is one of only 36 countries that have signed up to the second commitment period. Together, these countries account for only 15 per cent of global emissions. Twenty seven of the 36 countries are European. Canada withdrew from the Kyoto Protocol at the 2011 climate change negotiations in Durban, where Japan and Russia also indicated their intention not to join any second commitment period. Japan has been struggling to reduce greenhouse gas emissions after the Fukushima disaster redirected the country’s energy policy away from nuclear energy towards more emissions-intensive solutions. The other notable non-participant is New Zealand, which may have isolated its national emissions trading scheme (ETS) from global carbon markets by failing to join this commitment period (more details on that later).

New (more ambitious?) emissions reduction targets
For the EU, the 2013-2020 Kyoto Protocol period is ideal as it aligns with Phase 3 of the EU ETS established in 2005. The EU has also aligned its 2020 Kyoto emissions reduction target with its own climate change policy and target of reducing emissions by 20 per cent on 1990 levels. Australia’s 2020 target is a reduction of 5 per cent over 2000 levels. All participants in the second commitment period are to re-examine their 2020 targets and propose more ambitious ones by 30 April 2014.

Dealing with credits from the first commitment period
Surplus emissions trading credits from the first commitment period will be allowed into the second. However, only two per cent of any country’s target may be met by the purchase of such credits. Most developed countries (Australia included) have declared that they will not trade in these surplus credits. It is over this issue that Russia has continually refused to join a second Kyoto commitment period. Russia (and other economies in transition) was allowed an excess of credits when the first Kyoto Protocol was being negotiated as an incentive to join the Treaty. The original Treaty required at least 55 participants representing 55 per cent of global emissions for it to come into force—without the US, Russia’s membership was crucial. The effect of these surplus credits (known as ‘hot air’) has been to depress the price of the credits and weaken the effectiveness of the Treaty. Although the first commitment period of the Kyoto Protocol required 55 per cent of global emissions to take legal effect, the current agreement apparently no longer has that requirement.

What about credits from projects in developing countries?
A key instrument of the Kyoto Protocol is the Clean Development Mechanism (CDM). The CDM allows developed countries to undertake emissions reduction projects in developing countries and count the resulting carbon credits (known as Certified Emissions Reductions or CERs) towards their own targets. Rallying against Australia and some other industrialised countries at the conference in Doha, developing countries have been resolute that a country must be party to the second Kyoto commitment period to have access to CERs. Under its own carbon price scheme, Australia has legislated that after 2015, liable companies can use CERs to account for up to 17.5 per cent of an emissions reduction obligation. Australia’s participation in the second Kyoto agreement and therefore the CDM has thus been necessary. New Zealand, on the other hand, may no longer have ongoing access to these cheap carbon credits and may need to change the terms of its own ETS to adapt.

Where to from here?
This series of decisions on an extended Kyoto Protocol effectively marks the end of dialogues under the Bali Roadmap. Any unresolved issues are put on the agenda for future UN discussions under the newly-named Doha Climate Gateway. For example, the oversupply of CERs has yet to be addressed. Ideas such as reducing the crediting period of some CDM projects from 21 to 10 years or allowing new types of buyers for CERs have been put forward but not widely accepted. These and other issues will be dealt with in negotiations to come.

For more detail on the Doha Climate Gateway see this FlagPost.