WBGUWISSENSCHAFTLICHER BEIRAT DER BUNDESREGIERUNGGLOBALE UMWELTVERÄNDERUNGEN

materialien
Dr. Axel Michaelowa, Sonja Butzengeiger,
Martina Jung und Michael Dutschke:
Beyond 2012 – Evolution of the
Kyoto Protocol

Externe Expertise für das WBGU-Sondergutachten"Welt im Wandel: Über Kioto hinausdenken.
Klimaschutzstrategien für das 21. Jahrhundert"
Berlin 2003

Externe Expertise für das WBGU-Sondergutachten"Welt im Wandel: Über Kioto hinausdenken. Klimaschutzstrategien für das 21. Jahrhundert"
Berlin: WBGUISBN 3-936191-03-4
Verfügbar als Volltext im Internet unter http://www.wbgu.de/wbgu_sn2003.html
Autor: Dr. Axel Michaelowa, Sonja Butzengeiger, Martina Jung, Michael Dutschke
Titel: Beyond 2012 – Evolution of the Kyoto Protocol Regime
Hamburg 2003
Veröffentlicht als Volltext im Internet unter http://www.wbgu.de/wbgu_sn2003_ex02.pdf

Wissenschaftlicher Beirat der Bundesregierung Globale Umweltveränderungen
Geschäftsstelle
Reichpietschufer 60–62, 8. OG.
10785 Berlin
Telefon (030) 263948 0
Fax (030) 263948 50
E-Mail wbgu@wbgu.de
Internet http://www.wbgu.de
Alle WBGU-Gutachten können von der Internetwebsite http://www.wbgu.de in deutscher und englischer Sprache herunter geladen werden.

© 2003, WBGU

Evolution of the Kyoto Regime

Hamburgisches
Welt-Wirtschafts-Archiv

Hamburg Institute ofInternational Economics

Beyond 2012 – evolution of the Kyoto Protocol regime

An environmental and development economics analysis

Axel Michaelowa, Sonja Butzengeiger, Martina Jung, Michael Dutschke

April 2003

Hamburgisches Welt-Wirtschafts-Archiv
Neuer Jungfernstieg 2120347 Hamburg
Germany

Phone: 0049 – 40 42834 370
Fax:0049 – 4042834 451

Email: climate@hwwa.de
www.hwwa.de/climate.htm

1Evolution of the Kyoto Regime

TABLE OF CONTENTS
1.

INTRODUCTION............................................................................................................... 5

2.

ELEMENTS OF A FUTURE CLIMATE REGIME ............................................................. 7
2.1

ADAPTATION .............................................................................................................................. 7

2.2

REDUCTION OF GLOBAL GREENHOUSE GAS EMISSIONS ............................................................... 9

2.2.1

Absolute vs. relative emissions targets........................................................................... 10

2.2.2

Voluntary vs. mandatory targets .................................................................................... 11

2.3

3.

4.

SEQUESTRATION OF GREENHOUSE GASES FROM THE ATMOSPHERE .......................................... 12

2.3.1

Carbon sequestration by natural sinks........................................................................... 12

2.3.2

Geological storage......................................................................................................... 14

DEFINITION OF GLOBAL EMISSION TARGETS......................................................... 15
3.1

MINIMISING COSTS OF CLIMATE CHANGE AND POLICIES ........................................................... 15

3.2

WILLINGNESS TO PAY ............................................................................................................... 16

3.3

CONCENTRATION TARGETS ...................................................................................................... 17

EXPANDING THE CIRCLE OF COUNTRIES WITH OBLIGATIONS UNDER THE

UNFCCC .................................................................................................................................. 20

5.

4.1

GDP PER CAPITA ...................................................................................................................... 22

4.2

CO2-EMISSIONS PER CAPITA ..................................................................................................... 24

4.3

COMBINED FINANCIAL AND EMISSION THRESHOLDS: GRADUATION INDEX ............................... 26

4.4

MULTI-YEAR GRADUATION INDEX............................................................................................ 27

4.5

ABSOLUTE EMISSION THRESHOLDS........................................................................................... 28

4.6

INSTITUTIONAL THRESHOLDS ................................................................................................... 30

4.7

COMPARISON OF APPROACHES ................................................................................................. 30

QUANTIFICATION OF NATIONAL EMISSION TARGETS........................................... 34
5.1

GRANDFATHERING ................................................................................................................... 35

5.2

PER CAPITA ALLOCATION ......................................................................................................... 35

5.3

CONTRACTION AND CONVERGENCE.......................................................................................... 36

5.4

CUMULATIVE EMISSIONS .......................................................................................................... 39

5.5

PREFERENCE SCORES ................................................................................................................ 39

5.6

TRIPTYCH ................................................................................................................................. 40

2

Evolution of the Kyoto Regime

6.

5.7

MULTI-SECTOR CONVERGENCE ................................................................................................ 42

5.8

DIFFERENTIATED METHODOLOGY ACCORDING TO DEGREE OF DEVELOPMENT ......................... 43

5.9

OTHER APPROACHES ................................................................................................................ 44

5.10

ACCEPTABILITY OF APPROACHES ........................................................................................ 46

HURDLES AND INCENTIVES TO JOIN ANNEX B....................................................... 50
6.1

6.1.1

Capacity for target implementation ............................................................................... 50

6.1.2

Capacity for implementation of CDM............................................................................ 51

6.2

7.

8.

INSTITUTIONAL REQUIREMENTS ............................................................................................... 50

FUTURE ROLE OF THE FLEXIBLE MECHANISMS ......................................................................... 52

6.2.1

Reduction of global GHG emissions and the CDM ....................................................... 52

6.2.2

Attractiveness of IET compared to CDM ....................................................................... 53

6.2.3

The CDM market – real participation of developing countries? ................................... 54

6.2.4

Model estimates for market shares and revenues .......................................................... 55

TECHNICAL ISSUES OF EVOLUTION OF THE CLIMATE REGIME .......................... 57
7.1

CONSISTENT REPORTING AND VERIFICATION REGIME ............................................................... 57

7.2

DEVELOPMENT OF THE COMPLIANCE REGIME ........................................................................... 58

7.2.1

Economic sanctions........................................................................................................ 59

7.2.2

Trading-related sanctions .............................................................................................. 60

7.2.3

Reduction of emission budget in future periods ............................................................. 61

7.2.4

Compliance fund ............................................................................................................ 61

7.2.5

Transfers ........................................................................................................................ 62

7.3

COVERAGE OF GASES AND OTHER SUBSTANCES ....................................................................... 63

7.4

USAGE OF GWPS FOR CONVERSION INTO CO2 EQUIVALENTS................................................... 64

7.5

LENGTH OF COMMITMENT PERIODS .......................................................................................... 64

7.6

COVERAGE OF INTERNATIONAL TRANSPORT ............................................................................ 65

THE ROLE OF POLICIES AND MEASURES IN THE INTERNATIONAL CLIMATEREGIME ................................................................................................................................... 66
8.1

GLOBAL GREENHOUSE GAS TAX WITH LOCAL RECYCLING........................................................ 66

8.2

CO-ORDINATED EFFICIENCY STANDARDS ................................................................................. 66

8.3

TECHNOLOGY MARSHALL PLAN TO DEVELOP BACKSTOP TECHNOLOGIES ................................ 66

8.4

CO-ORDINATED REGULATION ................................................................................................... 67

8.5

VOLUNTARY COMMITMENT TO NO-REGRET POLICIES ............................................................... 67

3

Evolution of the Kyoto Regime
8.6

SUBSIDISATION OF MITIGATION AND ADAPTATION ACTION IN DEVELOPING COUNTRIES .......... 67

8.7

REGIONAL/SECTORAL CDM..................................................................................................... 68

8.8

BIOFUEL OBLIGATION ............................................................................................................... 68

8.9

TARGETS FOR TRANS-NATIONAL COMPANIES ........................................................................... 68

9.

SUMMARY AND CONCLUSIONS ................................................................................. 71

10.

POLICY RECOMMENDATIONS .................................................................................... 74

11.

REFERENCES................................................................................................................ 75

4

Evolution of the Kyoto Regime

1. Introduction
Anthropogenic emissions of greenhouse gases have been increasing sinceindustrialisation started about 150 years ago. Due to the long residence time of many
greenhouse gases and the ubiquity of emissions sources in an industrialised economy,
international climate policy is a task for many generations. Thus the international
negotiation process has started with a general framework that is specified in moredetail as time passes. Each step achieved serves as stepping stone for the subsequent
step. Given that climate policy started only about 15 years ago, the progress made so
far is relatively good compared to other international regimes. Three major steps canbe distinguished:
As its name specifies, the U.N. Framework Convention on Climate Change(UNFCCC) agreed at the U.N. Conference for Environment and Development in 1992
defines the overall framework for a global climate policy regime. Its major pillars arethe Objective of “stabilisation of greenhouse gas concentrations in the atmosphereat a level that would prevent dangerous anthropogenic interference with theclimate system [...] within a time-frame sufficient to allow ecosystems to adapt
naturally to climate change, to ensure that food production is not threatened
and to enable economic development to proceed in a sustainable manner”
 Principle of “common but differentiated responsibilities”, i.e. industrialised
countries shall take the lead in mitigation and adaptation
 Reporting of greenhouse gas emissions on a national level Setup of an institutional structure encompassing a Conference of the Parties
meeting annually, two subsidiary bodies and a permanent secretariat

The Kyoto Protocol agreed in 1997 has the following main elements
 Legally binding emission targets for a basket of six gases for the majority ofOECD members and the majority of countries in transition of Eastern Europe(so-called Annex B countries). These targets apply for the commitment period
2008 – 2012 and relate to the base year 19901.
 Four market mechanisms for the international transfer of emission rights:
Bubbles, International Emissions Trading (IET), Joint Implementation (JI) andthe Clean Development Mechanism (CDM).

1

There are some exceptions concerning the base year for countries in transition and for specific gases.

5Evolution of the Kyoto Regime

The Marrakech Accords of 2001 define the Use of terrestrial sinks
 Reporting requirements
 Determination of non-compliance

While many observers criticise the regime for its short-term orientation, it has always
been open for further development. The institutional setting is geared towards a
regular updating. Currently, the target date of 2005 is set to negotiate the rules for the
regime after 2012.
As the regime becomes more mature, there is certainly a degree of path dependency.
For example, a change from a target-based to a policy-based regime would become
difficult. It is also unlikely that the base year for industrialised country targets will beshifted from 1990. However, there is still a high level of freedom for future
development.
This paper will discuss the different options on the table and identifies issues
concerning the economic efficiency, environmental effectiveness and politicalfeasibility of those options. In chapter 2, the general options of the international
community to react to climate change are presented. We also analyse different typesof reduction targets. In chapter 3, approaches how to define emission targets on theinternational level are described. Based on the understanding that the expansion of thecircle of countries with absolute emission targets is crucial from the ecologicalperspective, chapter 4 identifies and evaluates several threshold options that could beapplied on current Non-Annex-B countries to enter Annex-B. In a next step, weelaborate on options to quantify emissions targets on the national level, also taking
into account issues of equity, historical responsibility for climate change and the needfor sustainable development. The latter issues lead to the discussion what incentives
and barriers for current Non-Annex-B countries exist to take absolute emission
targets. The discussion focuses on institutional requirements and the attractiveness ofinternational emissions trading in comparison to the CDM. In chapter 7, options of“technical” development of the current climate regime are elaborated on. Chapter 8
gives an overview of alternative climate policies and measures, i.e. those measuresthat might be applied on the national level. Finally, policy recommendation are given,taking into account political feasibility.

6Evolution of the Kyoto Regime

2. Elements of a future climate regime
There are three major options of how the international community might react to thethreat of global warming. The future climate regime that can be envisaged today will
combine all three of the following elements:
 a strategy for adaptation to negative economical, social and ecological impacts
 the reduction of global greenhouse gas (GHG) emissions
 the sequestration of carbon dioxide by natural sinks and/or technical storage

2.1

Adaptation

As is understood today, climate change might have significant impact on economies,
society and human infrastructure, although those impacts are expected to be more
severe in some regions of the world than in others. Examples of areas that are
expected to be effected seriously are arid regions whose inhabitants and ecologicalsystems are threatened by the enlargement of deserts as well as regions slightly above
sea-level which are threatened by potentially more intense storms and sea level
increases. Thus, there undoubtedly is the need to adapt to the potential impacts ofglobal warming – be it with technical, behavioural or social measures. However, one
can imagine that funds needed to both prepare for potential impacts of climate change
and to compensate for negative effects in a satisfactory way would need to be
incredibly huge.
Next to the physical need to prepare for and adapt to climate change, negotiations ofrecent years have shown that financial and technical aspects of adaptation
increasingly gain political importance. This trend results from two considerations: theideal of global justice and the political strategy to get developing countries more
actively involved in the UNFCCC process in the long term. Especially many lessdeveloped countries are those that might be most affected by the impacts of climatechange. Those countries can be expected to claim financial support and compensation
for natural disasters mainly caused by the emissions from industrialised countries2.
Article 4.4 of the UNFCCC obliges Annex II Parties to "assist the developing country
parties that are particularly vulnerable to the adverse effects [..] in meeting costs ofadaptation"; article 11 defines a financial mechanism "for the provision of financial
resources on a grant or concessional basis, including for the transfer of technology".
This financial mechanism is under guidance of the Conference of the Parties (COP),
which decides on its policies, eligibility criteria and priorities. Currently the Global
Environmental Facility (GEF) serves as its operational entity.

2

Next to the fact that it can be assumed to be more than diffcult to ensure a sufficient level of funding,the problem arises that it is virtually impossible to decide which weather-related disasters are caused byhuman induced climate change and which ones are due to natural variability.

7

Evolution of the Kyoto Regime

The GEF has been established in 1991 and focuses on six environmental core issues:
 biodiversity loss, climate change,
 ozone depletion,
 degradation of international waters, and organic pollutants
Financial support is given on the basis of concrete projects. Several funding options
exist (full-size projects, medium-sized projects, support for the preparation of national
inventories, project preparation and development facility, small grants program theand small and medium enterprise program). So far, over 1000 projects have been
supported (GEF contribution in grants: $4 billion) in 160 developing countries andtransitional economies of which about 1.2 billion were pledged for the climate changearea. For the period 2002-2006, $3 billion have been pledged by donor countries.
However, in the climate change area only 50% of the funds pledged are really
disbursed and the lion’s share of funding goes to large countries that also receive a lotof foreign direct investment (Ravindranath and Sathaye 2002). The project cycle iscumbersome and takes many years; until 1999, only 11% of approved projects inenergy efficiency and renewable energy were fully operational. A GEF project inIndia to promote biomass energy in rural areas took almost a decade.
Based on the Buenos Aires Plan of Action of 1998, three new funds under theConvention and the Kyoto Protocol were established with the Bonn Agreements in2001: the special climate change fund the least developed countries fund, and the adaptation fund
The adaptation fund is based on the income generated by the "share of proceeds" ofthe Clean Development Mechanism (CDM) - which is a 2% tax on generated certified
emission reductions (CERs). Thus, the volume of the adaptation fund is strongly
dependent on the market share of the CDM as well as market prices for emission
certificates. Given the low demand for CERs that currently is predicted for the firstcommitment period (see e.g. Jotzo and Michaelowa, 2002), one can expect theadaptation fund to suffer a serious lack of capital. This situation would change withmore stringent reduction targets in future commitment periods. Nevertheless, it isstrange why developing countries have to finance adaptation themselves, as in acompetitive market the adaptation tax cannot be charged on the buyers of CERs andreduces the revenue of CER sellers.
The least developed countries fund is supposed to assist least developed countries(LDCs) to conduct work programmes, as for example National Adaptation

8

Evolution of the Kyoto Regime

Programmes of Action. One still has to agree on how funds will be shared between
LDCs.
The special climate change fund shall finance activities, programmes and measuresrelated to adaptation, technology transfer, energy, transport, industry, agriculture,
forestry and waste management as well as to assist developing countries which
economies are highly dependent on exports of fossil fuels in diversifying theireconomies. Those activities should be complementary to those originally financed by
the GEF.
As part of the political agreement reached in Bonn, Annex II Parties have pledged tomake available US $ 410 million annually for the latter two funds by 2005. On a
global scale, however, this amount is negligible - it will by far not be enough toperceivably improve the situation of developing countries, especially given the wide
range of tasks of the funds.
Due to the funding problem, a relatively old idea to raise funds currently re-enters thedebate: insuring against negative impacts of climate change. The idea is to establish aclimate-change-insurance on a multi-national or national level to help compensating
the poorest people after e.g. floods, storms or draughts. Such insurance systems
obviously would need to be established as private-public partnerships – withensurance companies, financial institutions, governments and potentially emitters
involved. One might even apply the polluters pays principle in obliging emitters of
GHGs – be it nations or companies – to contribute to finance insurance fees according
to their contribution to global warming. Some of Europe´s large reinsurancecompanies as Munich and SwissRe recently have started a first dialogue on this issue.

The major political element of providing adaptation funds is that many developing
countries see the willingness of industrialised nations both to effectively reduce
emissions at home and to compensate for the impacts of their present and pastemissions by providing sufficient funds as a prerequisite for any own futurecommitments. This did not only become obvious during the negotiations in Bonn,
Marrakech and Delhi, but will be a central element of future negotiations.

2.2

Reduction of global greenhouse gas emissions

Whereas adaptation measures only touch the symptoms/physical consequences ofclimate change, a substantial reduction of global GHG emissions is crucial toeffectively combat global warming. As we discuss in chapter 4, a significant inclusionof developing countries – in terms of taking absolute emissions targets - will be themost crucial factor of any future climate regime. But let us first elaborate on different
types of emission targets.

9Evolution of the Kyoto Regime

2.2.1

Absolute vs. relative emissions targets

GHG emissions targets can be of absolute nature [e.g. Mio t CO2-eq per year] or
relative to another variable such as GDP or population. Many observers have argued
that GDP-related targets (commonly called intensity targets) would be appropriate forcountries with strong economic growth (Hargrave 1998, Baumert et al. 1999, Philibert
2000). In general terms, countries with significant economic growth favour relative
targets whereas shrinking economies favour absolute targets which then create the socalled "hot air".
Although politically attractive, pure intensity targets have significant drawbacks
compared to absolute targets from the ecological perspective. If the corresponding
variable (as economic output) increases, the emissions budget is enlarged
respectively. What finally counts to avoid/reduce climate change is the absolute
reduction of GHG emissions. Additionally, dealing with relative targets significantly
complicates the handling of emission trading schemes. The emissions budget of aparty can only be determined ex-post, i.e. after the value of the corresponding variable
has been determined for a certain year or period.
Another basic problem is that relative targets might give credits for "virtual
reductions". This is the case if the emission intensity decreases (slightly) while theoutput/value of the corresponding variable increases. figure 1: problem of relative
targets shows that in this scenario a party can claim emission reductions while actual
emissions have increased (situation 2). Only in case the value of the corresponding
variable remains constant, changes in emission intensity match with real emission
changes (situation 1).

es0

total emissions (E)Et4

Accountableemission„reductions“ (2)

es1

Et3

Et0

Accountableemission
reductions (1)

Et1

q0

q1

corresponding variable(e.g. production/GDP)

figure 1: problem of relative targets

10Evolution of the Kyoto Regime

Consequently, purely relative targets do not prove to be environmentally effective if
the value of the correlating variable increases over time.
Frankel (1999) proposes an absolute target adjusted for GDP development at end of acommitment period. Müller et al. (2001) evaluate intensity targets in the Kyoto
context. They argue that intensity targets are pro-cyclical as intensity tends todecrease in a phase of strong growth (e.g. in China during the full period of economic
reform and in India in the second half of the 1990s) whereas it increases in phases of
economic distress (e.g. in Russia and other countries in transition during the economic
slump of the 1990s). However, if flexible instruments as emissions trading are to be
applied, an ex-post determination of emission budgets can be expected to restrict the
global GHG-market.
Argentina proposed an elaborate intensity target in 1998 when it prepared COP 4. Fora discussion of its genesis see Bouille and Girardin (2002) who criticise the lack of
stakeholder consultation about the definition of the target and its inappropriateness inthe face of an economic crisis. However, their criticism seems too strict as theresearch input to derive the Argentinean target compares favourably with many adhoc target setting processes in Annex B countries.
After denouncing the Kyoto Protocol, the U.S. defined a voluntary target to reducegreenhouse gas intensity by 18% from 2002 to 2012. Van Vuren et al. (2002) consider
this target as “modest at best”: since 1990, a decrease of 17% in GHG intensity could
be observed in the US. At the same time, absolute emissions increased by 12%. Thisshows the risks of intensity targets for environmental effectiveness.

2.2.2

Voluntary vs. mandatory targets

The strongest type of targets are mandatory targets with onerous financial sanctions incase of non-compliance. On the level on installations, such targets are envisaged in
the EU emissions trading system and have led to almost 100% compliance in U.S.
SO2 trading. This has not been achieved by the Marrakech Accords which just define
an in-kind penalty of 30% payable in the subsequent commitment period. Several
more lenient target variants have been proposed.
The weakest form of targets are purely voluntary ones as specified for the Annex I
countries in the UNFCCC. They were not successful and thus substituted by the
Kyoto targets.

11

Evolution of the Kyoto Regime

2.3 Sequestration of greenhouse gases from the atmosphere
Sequestration of greenhouse gases might be classified as a sub-category of reduction
options. However, since the discussion on natural sinks has played a special role inpast negotiations and since it is not clear yet what relevance sinks will have in a longterm climate regime, we discuss them separately.

2.3.1

Carbon sequestration by natural sinks

The inclusion of natural sinks in the Kyoto regime was one of the most contentious
issues in the recent negotiation process. Environmental NGOs have strongly beenfighting against their inclusion due to the issue of permanence and the fact that natural
GHG sequestration decreases the pressure on emitters to reduce their GHG emissions.
One might also pose the question if the inclusion of natural sinks does overload the
UNFCCC process - both in ecological and political terms. Concerning the future
development of the UNFCCC-regime, one can expect increasing efforts to include
sinks by many parties the more stringent emission targets become. Therefore, it is
crucial that scientifically sound and ecologically integer rules are defined and applied.
While “natural carbon sinks”, as e.g. forested areas, were not included in thevoluntary UNFCCC targets, the Kyoto Protocol allowed Annex B countries to useterrestrial sinks for political reasons. Many stakeholders see natural sinks as a cheap
option to comply with emission targets while supposingly contributing to `save theworld’s large forests´. At the same time, the inclusion of terrestrial sinks is seen as achance for many developing countries to participate at the global market for emission
certificates by means of the Clean Development Mechanism (CDM).
In the long-term, the way in which natural sinks are included might change withincreasing “active” participation of developing countries. One will need to ensure thatno double-counting of CDM-projects and national inventories occurs. This also
reinforces the need for functioning national registries and monitoring systems as theprerequisite for taking Annex-B-status (see also chapter 6.1).
Natural sinks can be classified in terrestrial sinks and marine sinks.

Terrestrial sinks
The decision which sink types are eligible almost scuppered the subsequent
negotiations and still leaves many questions open. The main “technical” problems ofsinks are the issue of permanence and monitoring. The very point about permanenceis the following: while any non-emissions of greenhouse gases for energy use areassumed to be of permanent benefit, carbon uptake in soils and vegetation will bereverted at some time in the future. This can happen incidentally, as e.g. due to nonsustainable forest management, cessation of replanting after harvesting, or natural

12

Evolution of the Kyoto Regime

fires and pests. In any case, stored carbon will be released after the natural death of agiven tree by biological degradation processes.
The resulting question then is: what is the benefit of temporal carbon storage for the
global climate system? Several accounting proposals have been developed to deal
with non-permanence. The so-called ton-year-approach handles the issue in
discounting the amount of credits that can be earned depending on project duration.
However, it still has some shortcomings and not much political backing especially by
project developers (reduced financial attractiveness). Inspired by the so-called
Columbian Proposal, there currently is increasing support for temporary CERs (TCERs) as proposed by the EU group. These credits are only created for a certain
period of time – e.g. 5 years - after which they expire and need to be replaced by otheremission rights. If the project still subsists after this period, the same amount of new
credits can be re-expended (Dutschke 2003).

Terrestrial sinks can be divided in vegetation and soils. The debate so far has focusedon the former, but the latter category increasingly takes prominence.
For Annex B countries, the Marrakech Accord has decided a jumbled forest sinks
accounting, including several caps, and still leaves many questions open. Overall, theregime is relatively unbalanced. Afforestation and reforestation can be accounted forin full whereas forest management is capped at ad hoc levels. It is also not clear how anatural increase in forest carbon stocks is to be separated from planned/humaninduced increase. This task becomes even more complicated if indirect effects ofhuman action – e.g. atmospheric carbon fertilisation or increased temperatures due toglobal warming – are to be taken into account.
Due to the negotiators´ focus on forest sinks, soil sinks in Annex B were not cappedin the Marrakech Accords. Potentially, soil sinks can become highly important but
monitoring and introduction of policies addressing many dispersed actors remains
problematic.
Sinks in the CDM have been capped and limited to afforestation and reforestation.
Decisions of COP 9 on sink rules are expected for the end of 2003.

Marine sinks
While some experience has been gathered with carbon uptake in forestry, the sciencearound marine sinks is only just in its infancy. A series of experiments has been madewhere iron is used to fertilise nutrient-poor surface areas of the oceans. The resulting
plankton bloom would capture CO2 and some companies have already started tomarket this as sink. However, the permanence of this sink and ecological side effects
are uncertain and monitoring challenges are huge (Chisholm et al. 2001).

13

Evolution of the Kyoto Regime

Another type of marine sink is the disposal of liquid CO2 in the deep sea. Due tonatural processes, submarine CO2 bubbles can exist under high pressure and stabletemperatures. Similar caveats apply as to the surface sink. With a rise in sea
temperatures, these large deposits may bubble up. As temperature variation of deepsea water is a very slow process, the duration of the marine sinks may thus be longer.
However, their ecological effects have not been explored at all.

2.3.2

Geological storage

Aquifers, coal seams and empty oil and gas reservoirs constitute large potentials fortechnical storage of greenhouse gases. For example, carbon dioxide could be
separated from the effluent gas of fossil fuel fired plants, collected and stored in thosereservoirs. This would allow a “CO2-free” power production with fossil fuels.
Research policy in several Annex B countries tries to assess the overall scale of thesesinks and costs for sequestration. Currently, only in specific circumstances such as
offshore oil and gas exploration or generation of coal bed methane geologicalsequestration is viable. This situation might change in the long-term, if stricter
reduction targets are negotiated and cheaper mitigation options are exhausted.
Geological storage might therefore become an attractive option for sectors/economies
based on fossil fuel burning. Similar to natural sinks, permanence might become aproblem if places for CO2-storage are not selected and monitored carefully.

14

Evolution of the Kyoto Regime

3. Definition of global emission targets
After the international community (more or less) agreed that global warming is aserious threat that should be responded to appropriately, the major question is whichemission reductions are necessary. Several scientific studies and recommendations on
appropriate target level exist (e.g. WBGU, IPCC). This chapter analyses
methodological approaches how to determine reduction targets from the economical
point of view while considering scientific and political issues.

3.1 Minimising costs of climate change and policies$

An economist would frame the task of international climate policy as follows:
minimise net costs of climate policy. Costs would be generated by the mitigation ofgreenhouse gases and adaptation to climate change while benefits would accrue fromreducing impacts of climate change. Minimisation of costs would mean that marginal
costs of mitigation and adaptation would have to be equal to marginal benefits fromavoided climate change (figure 2).

Benefits of reduced
climate change

Costs of emission
reductions

Mitigation of global
warming

figure 2: definition of global GHG-reduction targets (minimum-cost-approach)This seemingly easy task becomes complex due to several factors:
 Discounting of future costs and benefits leads to interminable debates among
economists about the appropriate level of the discount rate (for a good
overview see Bayer 2000). Given the multi-century nature of climate change,even a tiny difference in the discount rate leads to hugely differing outcomes.

15Evolution of the Kyoto Regime

 Uncertainty about costs and benefits-

Uncertainty of current mitigation costs on an aggregated level. Detailed
information on costs and potential only is available to emitters themselves,
not to national/international bodies.

-

Development of mitigation costs over time is uncertain due to theunpredictable course of technological progress. If for example atechnological breakthrough occurs that allows greenhouse gas emissionfree electricity generation at costs below those of fossil fuel plants,
mitigation costs fall dramatically.

-

Adaptation costs depend on the overall level and pace of development of asociety that is uncertain over the long run.

-

Impacts of climate change depend on non-linearities that are currently not
well understood.

Many analysts have thus proposed a hedging approach that allows policy adjustments
over time. This would be consistent with the current policy regime. However, in the
short run, marginal costs of mitigation will be high due to premature retirement ofgreenhouse gas-intensive capital stock whereas marginal costs of adaptation andbenefits from reduced impacts would be relatively low. Thus a hedging approach
would lead to an under-provision of mitigation compared to a long-term approach.

3.2 Willingness to pay
An alternative methodology is the willingness to pay approach. Here, countries
negotiate up to which level of marginal costs of mitigation and adaptation they areprepared to pay. Once this level is fixed, policy instruments are introduced thatprovide a corresponding incentive. This approach is well-suited to a hedging strategy
but incurs the risk of wild swings in incentives if political pressure depends on thelevel of past perceived damages from climate change. Damages would be the morediscounted, the earlier they occurred. A catastrophe could lead to a sudden increase inwillingness to pay while a long period with low impacts would erode it. Further
problems are that the willingness to pay strongly depends on the specific situation of agiven country - both its economic situation and its exposure to the effects of climatechange. Consequently, this approach is extremely unstable and does not seemapplicable for a long-term solution of the underlying problem.

16

Evolution of the Kyoto Regime

3.3 Concentration targets
If economists cannot use a cost-benefit approach, they use the standard-priceapproach as a second best (Baumol and Oates 1971). The standard has to be set by thepolitical process (which obviously generates an opportunity for lobbies to influence
the standard level) and then instruments are introduced to equalise marginal costs ofreaching the standard.
The Kyoto Protocol has many features of a standard-price approach. The emissions
targets define the standard and the Kyoto mechanisms allow marginal costequalisation. However, the targets only cover a part of global emissions and are
uncertain beyond 2012 which makes long-term marginal cost equalisation impossible.
A pure standard-price approach for international climate policy would consist of thefollowing elements:
 Political definition of a maximum tolerated level of climate change at a
specific time. Usually, global temperature change is used as a parameter.
 Political definition of a maximum tolerated rate of climate change until the
maximum level is reached. This is necessary because damages from climatechange increase with its rate.
 Derivation of a maximum concentration and a concentration path
 Definition of a global emissions path that generates the concentration path
The German Advisory Council on Global Change (WBGU) has used this approach todefine a “tolerable window” of a temperature increase beyond 16.6°C global averagetemperature and a maximum rate of 0.2°C per decade. This would approximately
mean a stabilisation at 450 ppm (WBGU 1995, p. 111 ff). Bruckner et al. (2001)
further elaborate this approach. They not only define a temperature “guard-rail” which
is set at a temperature increase of 2°C and the decadal rate specified by WGBU
(1995) but also an economic one expressed as a maximum global emission reduction
rate of 4% per year. Continuation of a global business-as-usual scenario until 2010
leads to Annex B countries having to implement the maximum reduction rate for three
decades.
A famous controversy about the shape of the emissions paths leading to a stabilisationof concentrations arose between Wigley et al. (1996) and Ha Duong et al. (1997). The
former argue for delayed mitigation action due to the high economic costs ofpremature retirement of emissions-intensive capital stock while the latter contend thatearly action is warranted as current capital stock can only be replaced after a time lagof several decades. Thus the Ha Duong et al. emissions path is flatter that the Wigley
et al. one.

17

Evolution of the Kyoto Regime

figure 3 visualises the steps necessary following the concentration path – approach.

Definition of a maximum
tolerable temperature
increase and pace

Derivation of an
appropriate emissions path(long-term)

Calculation of maximum
global emissions allowed
to reach emissions path

Participants ofAnnex-B(share of global emissions)

Derivation of nationalemissions targets

figure 3: steps to define national emission targets (based on concentration-path
approach)

In the political debate, concentration targets so far have taken a back seat, the only
exception is the 1997 EU proposal of a stabilisation at 550 ppm. This might be due toa fear of stringent future emission targets: once a concentration target and the target
path has been defined, the maximum level of global GHG emissions in a given period
is quantified. This sets the base for negotiations about the allocation of emission
targets to all countries. One might imagine the political explosiveness of resulting
negotiations as in a given group of countries with emission targets the only option to
reduce the stringency of one nation’s reduction target would then be to shift burdens
to other nations. In this context, one should also be aware that the share of emissionsof countries with an absolute emissions target - - the Annex-B-countries of the Kyoto
Protocol - in relation to total global emissions also might influence the target
stringency for Annex-B countries as a whole. If only a few countries take reduction
commitments, there is a great extent of uncertainty about global emissions caused by
Non-Annex-B countries. Regardless the fact that one might question the effectivenessof such a system, one might agree on more stringent targets for those few Annex-B
countries to create a safety margin. Of course, it is very doubtful if such a regime ispolitically feasible in the long term and if it makes sense from the ecologicalperspective. Set into the context of the Kyoto regime, the above said visualises theneed to expand the circle of Annex-B-countries.

18

Evolution of the Kyoto Regime

To conclude, the concentration-path approach theoretically is a very suitable one inecological terms if effective targets are agreed on and if it can be ensured that theresulting emission path is complied with. To reach this, the following strategy seems
necessary: Maximise the share of global GHG emissions (i.e. countries) covered byabsolute targets and Define realistic, economically and politically feasible emission targets on thenational level.

19

Evolution of the Kyoto Regime

4. Expanding the circle of countries with obligations under the
UNFCCCIn the past, developing and newly industrialised countries refused to accept any
emission targets under the UNFCCC; they only consented to establish national
inventories - which in practice often proves difficult due to limitations in financial andpersonnel resources. Despite funding by the Global Environment Facility (GEF), mostdeveloping countries submitted their first National Communication with considerable
delay.
The main arguments of those nations not to take absolute emission targets were thatthey could simply not afford to pose any potential burdens on the development of
their economies and that they historically are not responsible for the greenhouse gas
effect. Consequently, they want industrialised nations to take responsibility for their
historical emissions and to take the leadership in reducing GHG emissions. Somecountries even feared that the availability of emissions data would be the first step
towards an emission target. Although this argumentation is traceable, it poses two
problems:
First, although past emissions of the developing world have been relatively low,emissions have been rising and are expected to increase significantly in the next
decades. As can be seen in figure 4, emissions from developing countries are
predicted to surpass those of industrialised countries in about 2025. Consequently, aquantitative inclusion of developing countries is essential for a long-term, effective
climate regime.
Energy related CO2-Emissions by Region
40000

World

Mio. t CO2

30000

OECD

20000
Transition
economies
Developing
countries

10000

0
1970

1980

1990

2000

2010

2020

2030

Source: World Energy Outlook 2002

figure 4: Projected emission paths of different country groups

20Evolution of the Kyoto Regime

The second problem is of political nature. While developing countries call for
leadership of the industrialised world, the world’s largest emitter – the US - withdrew
from the Kyoto Protocol arguing that a climate regime which excludes developing
countries does not make sense. Perversely, at COP 8 in New Delhi it made a U-turnand declared that it would be unfair if developing countries would have to take up
targets. The major challenge of future negotiations will therefore be to solve this
impasse and to define effective contributions for developing nations while
industrialised countries continue to take the lead.

The principle of common but differentiated responsibilities that has been adopted
in Art. 3 of the UNFCCC calls for taking up emission targets once countries reach e.g.
a level of wealth or of emissions comparable to the current Annex B countries. Such athreshold approach might help to ensure that countries contribute to fight global
warming in a “fair” way. Since the exact definition of “fairness” or “equal
contribution” not only is a very complex task but also a very sensitive one in politicalterms, there so far has not been reached consensus on a concrete definition. It will
become a core element of future negotiations, though. Major indicators might be acountry’s
 historical responsibility, its need for (sustainable) development, its capability in terms of finance (Jansen et al. 2001), and its
 capacity in terms of (cheap) mitigation potential (Cluassen/McNeilly 1998)

Consequently, there are several options how to define thresholds triggering target
negotiations for Parties:
 financial indicators, as e.g. GDP/GNP per capita, emissions per capita
 cumulative past emissions ("historical responsibility for climate change"), and institutional indicators
In the following, we discuss the major proposals that have recently been developed,
further elaborate them and quantify their consequences concerning the expansion of“Annex-B”.

21Evolution of the Kyoto Regime

4.1 GDP per capita
If thresholds are to be based on financial indicators, one can – to a certain extent –take into account the capacity of a country to contribute to global GHG-emission
reduction or limitation. Financial indicators can be expressed in GDP per capita or inpurchasing power parities of a reference period or averages of past periods per capita.
This idea was first developed by Claussen/McNeilly 1998 but only applied in a fairly
rough manner. We elaborate it in detail. The data source used for the following
calculations is IEA (2002) and is limited to fossil fuel CO2. Reliable emissions data
for the Kyoto basket do not exist for many countries. Micro states of less than
100,000 inhabitants such as San Marino and dependent territories (e.g. Bermuda) are
not analysed. The latter should in any case be taken into account as part of theirrespective Annex B country.
Variations of the GDP threshold would be: Absolute threshold, e.g. 10,000 $1995 in 2000. Such a threshold would be easy
to understand but is rather arbitrary. One would also need to define timeintervals in which those "even numbers" are updated and in which countries
are evaluated. Our analysis shows that 16 Non-Annex B countries with 10.7%
of Annex B emissions would lie above the 10,000 $ threshold (see Table 1).
 Absolute threshold based on the income of the poorest current Annex B
country (Ukraine), with 3528 $1995 in 2000. As Table 1 shows, the Ukraine iscurrently surpassed by 46 Non-Annex B countries accounting for 27.5% ofAnnex B emissions.
 Absolute threshold based on the income of the poorest Annex II country(Philibert/Pershing 2002, p. 104f) which is Greece at 15,019 $1995 in 2000.
Still 9 Non-Annex B countries with 3.4% of Annex B emissions lie above.
 Absolute threshold based on the income of the Annex-B-average (population
weighted) which would amount to 20,218 $1995 in 2000. This is only surpassedby two countries. Berk and den Elzen (2001) simulate triggers of 75% of
average 1990 Annex I income. This would be very similar to the poorest
Annex II country.
Table 1 summarises the impact of these thresholds.

Table 1: GDP thresholds for graduation to Annex B (2000 data)
GDP/capita

Qatar
Singapore
Average Annex B
Cyprus

26,051
22,716
20,21819,197

EmissionsShare of(million t CO2) current Annex
B (> 1%)
35.1
42.0
77.1
0.6
6.3

22

Emissionschange 19902000 (%)+150.4
+46.0
+80.2
+63.1

Evolution of the Kyoto Regime

GDP/capita

TaiwanIsraelUnited Arab Emirates
Oman
BruneiMalta
Lowest Annex II
Bahamas1
KuwaitBarbados1
Bahrain
Korea
Argentina
Saudi Arabia
Even number
Mauritius3
Chile
South Africa
Uruguay
Trinidad and Tobago
MexicoMalaysia
Costa Rica
Botswana3
BrazilTurkeyThailandTunisia
Gabon
Colombia
Namibia
Dominican Republic
Equatorial Guinea3
PanamaIranVenezuela
Bosnia and Herzegovina
Kazakhstan
Peru
Macedonia
El Salvador
Paraguay
Philippines
Guatemala
Turkmenistan

18,54718,45418,182
17,667
16,264
15,33315,01915,00014,833
14,50014,203
13,79011,506
10,452
10,000
9940
8898
8754
8452
8446
8358
8195
7630
7170
6949
6299
6020
5986
5878
5843
5744
5728
5600
5580
5567
5518
5452
5194
4518
4729
4177
4115
3845
3577
3548

EmissionsShare of(million t CO2) current Annex
B (> 1%)
215.3
1.6
62.4
68.7
23.5
5.1
2.3
460.7
3.4
1.9
62.6
2.2
14.1
433.6
3.2
130.2
260.6
1.9
1461.8
10.7
1.8
48.1
295.8
2.2
5.3
15.1
359.6
2.6
106.1
4.6
3.1
303.3
2.2
204.1
1.5
147.2
1.1
17.8
1.4
57.2
1.9
17.8
NA
4.9
292.1
2.1
128.6
15.4
122.8
26.4
8.4
5.2
3.3
68.9
8.8
34.3

23

Emissionschange 19902000 (%)
+88.9
+85.8
+68.0
+120.1
+57.8
-0.9
+83.3
NA
+213.12
NA
+20.7
+91.7
+33.1
+54.1
+88.4
NA
+58.9
+16.2
+25.4
+38.7
+23.1
+123.9
+74.3
NA
+57.0
+58.4
+89.0
+45.4
+32.0
+27.8
+55.84+132.6
NA
+98.8
+83.7
+25.4
-21.65-50.75+37.7-8.1+141.7+70.6+91.4+166.5+17.65

Evolution of the Kyoto Regime

GDP/capita

EmissionsShare of
Emissions(million t CO2) current Annex change 1990B (> 1%)
2000 (%)
Lowest Annex B
3528
3766.227.5+49.6
1
Data from national communication and World Bank
2very low 1990 level due to Iraqi occupation; compared to 1989 level, the increase is only
22.7%
3
Philibert/Pershing (2002) and respective national communications
4compared to 1991
5compared to 1992
Source: IEA (2002)

4.2 CO2-emissions per capita
The idea of this threshold is that countries take an absolute emissions target once acertain level of per capita emissions is reached. The threshold could be fixed at a
certain (more or less arbitrary) value. If one wants to reach a global emissions path,the level of the threshold and the stringency of targets for countries that have passed
the threshold are two distinct variables that can be set.
We discuss the following variations of the current per capita emissions target (seeTable 2):
 Lowest current Annex B country (Latvia, at 2.8 t CO2). 39 non-Annex B
countries lie above accounting for 26.9% of Annex B emissions.
 Lowest Annex II country (Switzerland at 5.8 t CO2). Here, still 21 countries lie
above and emit 13.9% of Annex B values.
 Absolute threshold (e.g. 10 t CO2) with 9 countries above accounting for 4.1%of Annex B emissions
 Annex B average (11.2 t CO2) with 7 countries beyond that emit 3.4% ofAnnex B figures.

Table 2: Per capita emissions thresholds
t CO2/
capitaQatar
KuwaitUnited Arab Emirates
BahrainBrunei
Saudi Arabia
Trinidad and Tobago

60.0
31.5
23.7
20.4
15.0
12.6
11.6

EmissionsShare of(million t CO2) current Annex
B (> 1%)
35.1
62.6
68.7
14.1
5.1
260.6
1.9
15.1

24

Emissionschange 19902000 (%)+150.4+213.11
+68.0
+20.7
+57.8
+54.1
+38.7

Evolution of the Kyoto Regime

t CO2/
capitaEmissionsShare of
Emissions(million t CO2) current Annex change 1990B (> 1%)
2000 (%)
Average Annex B
11.2
461.3
3.4
+71.0
Singapore
10.5
42.0
+46.0
Israel
10.0
62.4
+85.8
Even number
10.0
565.7
4.1
+70.3
Taiwan
9.7
215.3
1.6
+88.9
North Korea
9.5
167.3
1.2
-15.7
Korea
9.2
433.6
3.2
+91.7
Cyprus
8.4
6.3
+63.1
Barbados2
8.2
2.2
NA
Oman
9.8
23.5
+120.1
Kazakhstan
8.3
122.8
-50.72
Bahamas3
7.5
1.9
NA
Libya
7.3
38.9
+46.5
South Africa
6.9
295.8
2.2
+16.2
Turkmenistan
6.6
34.3+17.62
Malta
5.8
2.3
-0.9
Lowest Annex II
5.8
1909.913.9+31.6
Venezuela
5.3
128.6
+25.4
Malaysia
4.6
106.1+123.9
Iran
4.6
292.1
2.1
+83.7
Uzbekistan
4.6
114.9
+2.34
Macedonia
4.1
8.4
-8.1
Yugoslavia
4.1
43.2-22.85
Bosnia and Herzegovina
3.9
15.4-21.64
Jamaica
3.7
9.8
+35.9
Mexico
3.7
359.6
2.6
+23.1
Azerbaijan
3.5
28.2-37.44
Argentina
3.5
130.2
+33.1
Iraq
3.3
77.2
+35.4
Lebanon
3.3
14.2+121.8
Syria
3.2
52.3
+68.9
Chile
3.2
48.1
+58.9
Turkey
3.1
204.1
1.5
+58.4
Jordan
2.9
14.3
+55.4
Cuba
2.8
31.4
-1.1
2.8
Lowest Annex B
3673.926.9+36.6
1very low 1990 level due to Iraqi occupation; compared to 1989 level, the increase is only
22.7%
2
1997 data
3
1994 data
4
compared to 1992
5compared to 1991

25

Evolution of the Kyoto Regime

4.3 Combined financial and emission thresholds: graduation index
A combination of GDP and per capita emissions thresholds would be promising as it
captures both ability to pay and the polluter pays principle. If a “graduation index(GI)” is calculated where both figures are weighted with 50%, we get the results
shown in Table 3. Each 10,000 $ GDP per capita and each 10 t CO2 per capita give thegraduation index value 1.

For example, Qatar has a GDP of 26,051 $ per capita (Graduation index = 2,6) andannual per capita emissions of 60 t CO2 (Graduation index = 6). The graduation index of
Qatar sums up to

GIQatar =2,6 + 62

= 4,3

Table 3: Combined GDP and emissions per capita thresholds (2000 data)

Qatar
KuwaitUnited Arab Emirates
Bahrain
Singapore
BruneiAverage Annex B
IsraelTaiwanCyprusOman
BahamasSaudi Arabia
Korea
Lowest Annex II
Barbados
Trinidad and Tobago
Malta
Even number
South Africa
Argentina
Kazakhstan
Libya
Malaysia
MexicoGraduationindex1

Emissions(million t CO2)

4.3
2.3
2.1
1.7
1.7
1.6
1.6
1.4
1.4
1.4
1.4
1.3
1.2
1.2
1.23
1.1
1.0
1.0
1.0
0.8
0.7
0.7
0.6
0.6
0.6

35.1
62.6
68.7
14.1
42.0
5.1
227.6
62.4
215.3
6.3
23.5
1.9
260.6
433.6
1231.22.2
15.1
2.3
1250.8
295.8
130.2
122.8
38.9
106.1
359.6

26

Share of current
Annex B (%)

1.7
1.6

1.9
3.2
9.0

9.1
2.2

2.6

Emissionschange 19902000 (%)+150.4+213.12
+68.0
+20.7
+46.0
+57.8
+92.0
+85.8
+88.9
+63.1
+120.1
NA
+54.1
+91.7
+81.9
NA
+38.7
-0.9
+80.9
+16.2
+33.1
-50.74+46.5+123.9+23.1

Evolution of the Kyoto Regime

Graduationindex1

Emissions(million t CO2)

Share of current
Annex B (%)

Emissionschange 19902000 (%)
NA+17.64
+25.4
+83.7
+25.4
+58.4
NA
-16.7
+37.7

Mauritius
0.6
1.8
Turkmenistan
0.5
34.3
Venezuela
0.5
128.6
Iran
0.5
292.1
2.1
Uruguay
0.5
5.3
Turkey
0.5
204.1
1.5
Botswana
0.5
3.0
North Korea
>0.4
167.3
1.2
Lowest Annex B
0.5
3139.722.9
110,000 $ and 10 t CO2 give the graduation index value 1.
2very low 1990 level due to Iraqi occupation; compared to 1989 level, the increase is only
22.7%
3
Switzerland
4
compared to 1992

The graduation index approach leads to a de facto convergence of the lowest Annex II
and even number threshold. The countries above the threshold account for 9% of
current Annex B emissions and should be fully integrated into Annex B, especially as
their emissions growth has been rapid. For the category between the even number
threshold and lowest Annex B threshold a less stringent target regime should beenvisaged given the diverse development status of the members of this group and therelatively low emissions increase in the last decade (also see proposal of Baumert et alas described in chapter 5.9).

4.4 Multi-year graduation index
Instead of using a single base year, the triggers could be based on averages over a
distinct period, e.g. from 1991-2000 (see Table 5). This would better describe overall
responsibility of a country and lead to a higher ranking of countries with a longer
history of industrialisation and relatively slow growth.

Table 4: Triggers based on decadal averages 1991-2000

Qatar
United Arab Emirates
KuwaitBahrainBruneiSingaporet CO2/
capitaGDP/capita

54.1
23.2
30.2
21.1
14.5
10.4

22,981
19,307
15,618
13,68916,66018,83027

Decadalgraduation
index
3.9
2.6
2.3
1.7
1.6
1.5

Graduationindex 2000
4.3
2.1
2.3
1.7
1.6
1.5

Evolution of the Kyoto Regime

Average Annex B
IsraelOman
CyprusSaudi Arabia
Taiwan
Malta
Even number
Korea
Trinidad and Tobago
Lowest Annex II
Kazakhstan
South Africa
Argentina
Libya
Venezuela
MexicoMalaysia
Chile
Uruguay
Turkmenistan
Iran
Macedonia
North Korea
BrazilYugoslavia
ThailandTurkeyLowest Annex B
1
Switzerland
2
Greece3
Latvia4
Ukrainet CO2/
capitaGDP/capita

11.07
8.4
7.9
7.3
11.7
7.7
6.3
10
7.8
9.8
5.91
10.3
7.0
3.3
6.9
5.3
3.7
3.8
2.8
1.6
6.7
3.9
4.6
8.5
1.5
4.4
2.2
2.6
3.83

18,25916,936
17,092
16,721
10,98015,107
13,023
10,00011,3387263
13,3292
4945
8575
11,101
5465
5876
7408
7178
7637
8078
3809
5134
4503
NA
6610
3829
5686
5825
43784

Decadalgraduation
index
1.5
1.3
1.2
1.2
1.1
1.1
1.0
1.0
0.9
0.9
0.9
0.8
0.8
0.7
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5
>0.4
0.4
0.4
0.4
0.4
0.4

Graduationindex 2000
1.6
1.4
1.4
1.4
1.2
1.4
1.0
1.0
1.2
1.0
0.9
0.7
0.8
0.7
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.4
>0.4
0.4
0.4
0.4
0.5
0.4

Using the CDIAC dataset (CDIAC 2002) for the period since 1950, the results could
be even smoothened further and more strongly reflect historical responsibility.
Obviously, questions of data quality would arise.

4.5 Absolute emission thresholds
A further option would be to define absolute GHG-emissions of a nation as thethreshold (not related to population or GDP). This would of course "disadvantage"large countries while sparing small countries regardless their economical situation or28

Evolution of the Kyoto Regime

per capita emission and thus cannot be expected to be politically feasible. However, acountry ranking based on absolute emissions provides a good overview on whichcountries should be included in the short term because of the magnitude of theirimpact on global climate. Table 6 provides data of all non-Annex B countries emitting
more than 50 million t CO2 in 2000.

table 5: Emitters above 50 million t CO2

China
India
Korea
MexicoBrazilSouth Africa
IranIndonesia
Saudi Arabia
TaiwanTurkeyNorth Korea
Argentina
Venezuela
Kazakhstan
Uzbekistan
Egypt
Malaysia
Pakistan
Iraq
Philippines
United Arab Emirates
Algeria
KuwaitIsraelColombia
Syria

EmissionsShare of
Emissions(million t CO2) current Annex change 1990B (> 1%)
2000 (%)
3035.5
22.1
+32.6
937.3
6.8
+60.7
433.6
3.2
+91.7
359.6
2.6
+23.1
303.3
2.2
+57.0
295.8
2.2
+16.2
292.1
2.1
+83.7
269.3
2.0
+100.1
260.6
1.9
+54.1
215.3
1.6
+88.9
204.1
1.5
+58.4
167.3
1.2
-15.7
130.2
+33.1
128.6
+25.4
122.8
-50.72
114.9
+2.34
108.5
+48.0
106.1
+123.9
98.0
+66.1
77.2
+35.4
68.9
+91.4
68.7
+68.0
66.6
+21.8
62.6
+213.11
62.4
+85.8
57.2
+27.8
52.3
+68.9

t CO2/ capita

2.4
0.9
9.2
3.7
1.8
6.9
4.6
1.3
12.6
9.7
3.1
9.5
3.5
5.3
8.3
4.6
1.7
4.6
0.7
3.3
0.9
23.7
2.2
31.5
10.0
1.4
3.2

One can see that only six countries are found on this list that do not figure on any ofthe previous graduation thresholds. Those are China, India, Indonesia, Egypt, Pakistan
and Algeria.
However, these countries account for a combined 33 % of Annex B emissions and in
the sum had an emission increase of 41.4% during the last decade. They thus combine
more emissions than the entire set of graduating countries and thus should be subject

29

Evolution of the Kyoto Regimeof a special agreement which entitles them to a considerably less stringent target, if atall, or defines a special instrument such as a country-wide CDM (also see discussionin chapters 6 and 9).

4.6 Institutional thresholds
Other than being derived from quantitative thresholds, graduation could also be linked
to institutional parameters. An simple institutional graduation scheme could look likeas depicted in table 6:

table 6: Institutional graduation
Institutional characteristics
EU, OECD, IEA membership
OPEC membership
LDC, IDA and food aid recipients

Graduation
Automatic inclusion in Annex B
Graduation depending on index as defined
above
Exempt

4.7 Comparison of approaches
Above, we have discussed several threshold triggers.
table 7 compares the results of the options, ranking countries by their current absoluteemissions. An "x" indicates that the country passes the respective threshold and thus
would be included in a future Annex B. The last row of the table summaries how
often a given country surpasses the thresholds analysed. For example, China accounting for 13% of global emissions in 1999 - only passes the threshold "morethan 50 million tons CO2 emissions". Consequently, the value of the last row is 1.

30

Evolution of the Kyoto Regime

table 7: Comparison of threshold triggers

China
India
Korea
MexicoBrazilSouth Africa
IranIndonesia
Saudi Arabia
TaiwanTurkeyNorth Korea
Thailand
Argentina
Venezuela
Kazakhstan
Uzbekistan
Egypt
Malaysia
Pakistan
Iraq
Philippines
United ArabEmirates
Algeria
KuwaitIsraelColombia
Syria
Chile
Yugoslavia

Emissions Share oft CO2/
2000
globalGDP/capita
GDP/capita t CO2/ capita > t CO2/capita GI_2000 > GI_2000 >GI_decadal GI_decadal[million emissions > lowest> lowest capita > lowest> lowest
lowestlowest GI_2000 > lowest> lowest
GDP/capita
GI_decadalt CO2](1999)
Annex II
> 10.000 $Annex B
10
Annex II
Annex B
Annex B Annex II>1Annex B
Annex II
>1
3035,5
13,0%
937,3
3,8%
433,6
1,8%
x
x
x
x
x
x
x
x
359,6
1,5%
x
x
x
x
303,3
1,3%
x
x
295,8
1,3%
x
x
x
x
x
292,1
1,2%
x
x
x
x
269,3
1,1%
260,6
1,1%
x
x
x
x
x
x
x
x
x
x
215,3
0,9%
x
x
x
x
x
x
x
x
x
x
x
204,1
0,8%
x
x
x
x
167,3
0,9%
x
x
x
x
147,2
0,6%
x
x
130,2
0,6%
x
x
x
x
x
128,6
0,5%
x
x
x
x
122,8
0,5%
x
x
x
x
x
114,9
0,5%
x
108,5
0,4%
106,1
0,4%
x
x
x
x
98,0
0,4%
77,2
0,3%
x
68,9
0,3%
x
68,7
66,6
62,6
62,4
57,2
52,3
48,1
43,2

0,3%
0,3%
0,3%
0,2%
0,2%
0,2%
0,2%
0,2%

x

x

x

x

x

x

x

x

x

x

x

x

x

x
x

x
x
x

x
x

x
x

x
x

x
x

x
x

x
x

x
x

x
x

x
x

x
x
x

x

x

31

x
x

total
emissions> 50 mio t
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x

total ofpositivedecisions
1
1
9
5
3
6
5
1
11
12
5
5
3
6
5
6
2
1
5
1
2
2
13
1
12
13
2
2
4
2

Evolution of the Kyoto Regime

Singapore
Libya
Qatar
Turkmenistan
Cuba
Azerbaijan
Peru
Oman
Dominican
Republic
Tunisia
Bosnia andHerzegovina
Trinidad andTobagoJordanLebanonBahrainJamaica
Guatemala
Macedonia
Uruguay
El Salvador
BruneiPanamaCosta Rica
CyprusParaguay
Botswana3
Barbados1
Bahamas1
Namibia
Mauritius3
Gabon
Malta
Equatorial Guinea

Emissions Share oft CO2/
2000
globalGI_decadal GI_decadal
GDP/capita t CO2/ capita > t CO2/capita GI_2000 > GI_2000 >GDP/capita> lowest
lowest GI_2000 > lowest> lowest capita > lowest
lowest> lowest[million emissions > lowest
GI_decadal
GDP/capita
Annex II
>1
Annex B
10>1
Annex B
Annex B Annex II
Annex II
> 10.000 $Annex Bt CO2](1999)
Annex II
42,0
0,2%
x
x
x
x
x
x
x
x
x
x
x
x
38,9
0,2%
x
x
x
35,1
0,2%
x
x
x
x
x
x
x
x
x
x
x
x
34,3
0,1%
x
x
x
x
x
31,4
0,1%
28,2
0,1%
x
x
x
x
x
x
26,4
0,1%
x
23,5
0,1%
x
x
x
x
x
x
x
x
x
x
x
0,1%
0,1%

x
x

15,4

0,02%

x

15,1
14,3
14,2
14,1
9,8
8,8
8,4
5,3
5,2
5,1
4,9
4,6
3,6
3,3
3,1
2,2
1,9
1,9
1,8
1,4
1,3

0,1%
0,1%
0,1%
0,1%
0,04%
0,04%
0,04%
0,03%
0,02%
0,02%
0,02%
0,02%
0,03%
0,02%
0,01%
0,01%
0,01%
0,01%
0,01%
0,01%
0,01%
0,00%

x

x

x

x

x

x

x

x

x

x

x
x

x

x

x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x

x

total ofpositivedecisions
12
3
12
6
0
6
1
11
1
1

17,8
17,8

x

total
emissions> 50 mio t

x

x

x
x
x
x
x

x

x

3

x

x

x

x

x

x

x

x

x

x
x

x
x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x
x

x
x

x
x
x

x

x

x

x
x

x
x

x

x

x

8
1
1
11
1
1
3
3
1
12
1
1
11
1
2
6
6
1
2
1
10
1

GI_2000 = graduation index based on 2000 data
GI_decadal = graduation index based on data from 1990-2000

32

Evolution of the Kyoto Regime

figure 5 compares the amount of global emissions covered by the individual
approaches.

Share of global CO2 emissions covered by threshold options
40%
35%
30%
25%
20%
15%
10%
5%

G
D

>
P/
ca
pi
ta
G
D

G
D

lo

we
st
P/
An
ca
ne
P/
p
x
i
ca
ta
II
pi
>
ta
10
>
.0
lo
00
we
$
st
An
tC
t
n
O
C
ex
2/
O
B
ca
2/
ca
pi
tC
ta
pi
t
>
a
O
lo
>
2/
w
10
ca
es
pi
tA
ta
nn
>
lo
G
ex
w
I_
es
II
20
t
00
An
>
ne
G
lo
x
I_
we
B
20
s
t
00
An
>
ne
lo
x
we
B
st
An
G
I_
ne
de
x
ca
G
II
I_
da
2
l
0
G
>
0
I_
0
lo
de
>
we
1
ca
s
tA
da
l>
nn
ex
lo
we
B
st
An
ne
G
to
x
I_
ta
II
de
le
ca
m
is
d
al
sio
>
ns
1
>
50
m
io
t

0%

figure 5: share of global CO2-emissions covered by the individual threshold options

Important questions that are relevant for all threshold approaches include: How often is the ranking conducted?
 Are threshold values (especially financial ones) updated and, if so, how often?
 Will countries that have passed the threshold once have to be reclassified to"nations without targets" as soon as they fall below the threshold, e.g. for acertain period?

33

Evolution of the Kyoto Regime

5. Quantification of national emission targets
Once the methods to determine which countries take up a target and the global
emission target in a given period (e.g. by means of a GHG-concentration path) havebeen defined, the target level has to be specified for every country. Several principles
have been developed over the last decade to avoid an ad-hoc “oriental bazaar”
bargaining.
Once again, the notion of equity is important. While some analysts argue that“existing theories provide little or no guidance to the equity of any particularinternational allocation of carbon emission permits” (Beckerman and Pasek 1995),
others (Grubb 1995, New Economics Foundation 2002) see some clear
recommendations emanating from the equity principles discussed.
Table 8 shows main equity principles suggested in the last years that allocate targets
dependent on different criteria.

Table 8: Equity principles
Principle
Need for economic development1
Responsibility for the problem1
Capacity, i.e. ability to pay1
Opportunity212

Criterion
Equal per capita emissions budget
Stringency of reduction proportional tocumulated emissions
Stringency of reductions proportional to GDP
per capita
Stringency of reductions proportional toavailability of cheap reduction potential

Jansen et al (2001)
Claussen and Mc Neilly (1998)

Closely connected to the above named principle of "capacity" is the question if andwhat kind of targets (in terms of stringency) are economically viable especially fordeveloping countries. One must be aware, however, that there is no universal answer
to this question. A country-specific approach seems necessary since national
circumstances and economic needs differ strongly regardless their classification as
industrialised or developing country.
A seemingly easy option would be to correlate target stringency to economic
parameters such as GDP per capita or power purchase parities, with the latteraccounting for national differences. Another option would be to use “standard ofliving” as the correlating parameter – but to do so, indicators would need to be
defined on a global scale and applied first.

34

Evolution of the Kyoto Regime

Factors that could also be taken into consideration are:
 standards of public infrastructure (social, health, infant mortality),
 availability of natural resources,
 recent pace of development, international debts,
 international development aid received, etc.
Overall, a fair allocation of target stringency seems a very complex task. Further
research seems necessary to provide a solid foundation for discussion andinternational negotiations .
In the sum, the task to define national emissions targets based on the degree ofdevelopment is a very complex one and a highly political issue. Objective criteria /formulas should be worked out to serve as the starting point for international
negotiations. In the following, we present the methodological approaches that havebeen proposed in recent years.

5.1 Grandfathering“Grandfathering” allocates emission budgets cost-free according to emissions in a
specified base year. It was the basis of the UNFCCC targets and is found to a great
extent in the Kyoto targets (base year 1990/1995). Grandfathering under a strongly
declining emissions path due to a tough concentration target will lead to extremely
challenging targets for countries with strongly rising business-as-usual emissions.
Thus Non-Annex B countries will stiffly oppose global grandfathering. At the sametime, grandfathering advantages countries with high emissions in the reference
year/period chosen, which basically are industrialised countries. Grandfathering byitself does not take account of the equity issue.
However, initial grandfathering is a crucial dimension of most compromise proposals.

5.2 Per capita allocation
Equal per capita allocation has been argued for by representatives of developing
countries from the start of the climate negotiation process (Agarwal and Narain 1991).
As immediate per capita allocation would lead to an enormous shortfall in Annex B
emissions budgets and a corresponding surplus in Non-Annex B budgets, it is notsuggested by any serious proposal. However, many proposals contain elements of percapita allocation at a future date. The question is how the transition process ismanaged. A promising approach is the Contraction and Convergence model described
below.

35

Evolution of the Kyoto Regime

5.3 Contraction and convergence
The ethically appealing and easy-to-understand approach “contraction andconvergence” has been developed and marketed by the Global Commons Institute andincreasingly attracted supporters (see the interesting description of its history in
Meyer 2000). On the basis of a concentration target, a global emissions budget path isdeveloped. A date is negotiated by which budgets are derived on an equal per capita
basis. Until then, budgets decrease proportionally from current emission levels (seefigure 6).

figure 6: Contraction & Convergence model of Aubrey Meyer. Emissions in Gt C foreach country/region between 1800-2200, for convergence of per capita emissions in
2030 and concentration goal 450 ppm.

Resulting emissions reductions for Annex B countries are the sharper, the earlier
convergence takes place and the lower the target concentration level. The Global
Commons Institute provides the model free of charge. Emissions targets for majorcountries / country groups for different years as well as some sensitivity analysis(variation of stringency levels expressed in concentration targets) is shown in table 9.

36

Evolution of the Kyoto Regime

table 9: Contraction and convergence targets for 2020 under different
concentration targets and convergence dates (%, base year 1990)

Contraction and Convergence targets for 2020 under different concentration targets
and convergence dates (% reduction of 1990 emissions)Concentration
450 ppmv
target 2100
Convergence
2030
2050
2070
2090
Year
Russia
-55.9
-36.4
-30.5
-27.8
India
+432.8+283.3+237.5+216.6
China+114.6+100.4+95.9+93.8
Brazil+220.1+147.7+125.4+115.3Qatar+29.7+129.5+160.0+173.9Kuwait
-54.4
-32.4
-25.6
-22.5
UA
-45.2
-12.0
-1.9
+2.8
Bahrain
-24.2
+20.4
+34.0
+40.3
Brunei
-33.3
+9.6
+22.7
+28.7
Saudi Arabia
+13.5
+44.2
+53.8
+58.2
Trinidad and
-39.6
-18.8
-12.5
-9.6
TobagoSingapore+21.4+103.4+128.5+139.9Israel
+7.0
+36.3
+45.3
+49.4
Taiwan
+10.0
+51.6
+64.2
+69.9
North Korea
-29.0
-7.2
-0.6
+2.5
Korea
+18.8
+53.9
+64.6
+69.4
Cyprus
-8.5
+10.6
+16.4
+19.1
Barbados
-7.8
-8.9
-9.3
-9.5
Oman
+65.0
+85.3
+92.1
+95.3
Kazakhstan
-59.9
-44.3
-39.6
-37.5
Bahamas
+29.2
+58.8
+67.8
+71.9
Libya
+71.2
+95.2
+102.9+106.5South Africa
-6.7
+5.2
+8.9
+10.6
Turkmenistan
-46.9
-42.2
-40.7
-40.1
Malta
-3.4
+1.6
+3.0
+3.6
Venezuela
+53.0
+95.8
+108.9+114.9
Malaysia+129.6+162.1+172.1+176.6
Iran+108.1+100.4+98.4+97.6
Uzbekistan
+4.8
+0.1
-0.7
-1.3
Macedonia
-56.0
-50.5
-48.9
-48.2
Yugoslavia
-37.6
-41.9
-43.3
-44.0
Bosnia &+293.8+167.7+128.0+109.8Herzeg.
Jamaica
+36.2
+30.9
+29.3
+28.5
Mexico
+46.1
+43.1
+42.1
+41.7

37

Evolution of the Kyoto Regime

Contraction and Convergence targets for 2020 under different concentration targets
and convergence dates (% reduction of 1990 emissions)Concentration
450 ppmv
target 2100
Convergence
2030
2050
2070
2090
Year
Azerbaijan
-35.4
-28.9
-26.9
-26.0
Argentina
+46.7
+47.8
+48.1
+48.2
Iraq
+296.9+323.6+332.4+336.6
Lebanon
+68.2
+71.1
+72.0
+72.4
Syria
+159.3+125.1+115.3+111.0
Chile
+79.3
+66.5
+62.5
+60.6
Turkey
+77.8
+47.4
+38.1
+33.8
Jordan+200.9+127.8+106.2
+96.6
Cuba
+27.3
+13.8
+9.4
+7.4
Major global emitters / regions
USA
-43.5
-13.5
-4.4
-0.2
Japan
-37.7
-17.7
-11.6
-8.9
Western Europe
-36.3
-17.2
-11.5
-8.9
Rest Annex I
-40.3
-13.8
-5.8
-2.1
FSU
-53.8
-33.6
-27.4
-24.6
EET
-43.1
-29.3
-25.1
-23.2
Rest FSU
-36.0
-28.9
-26.7
-25.8
South East Asia
+308.7+222.0+195.4+183.3
East Asia
+94.7
+89.9
+88.2
+87.5
South Asia
+536.0+341.5+282.4+255.4
Middle East
+75.2
+73.1
+72.7
+72.6
Latin America+148.1+118.7+109.7+105.6Africa+360.6+219.5+177.5+158.6
Population cutoff 2050, exponential convergence mode, speed of convergence parameter 4, planned
110-year emissions (in GtC) = 590 for 450 ppmv

Some argue that there are other factors influencing the amount of per capita
emissions, e.g. a colder climate or lower availability of renewable resources of acountry which could lead to differences of cross-country CO2 emissions and should
therefore be considered to adjust allocation of emissions permits.
Neumeyer et al. (2002) have analysed those factors. However, they come to theconclusion that natural factors can help to explain these differences, but only to alimited extent. A country´s income level remains the main explanatory variable.
Consequently, they have not proposed a target allocation based on these factors.

38

Evolution of the Kyoto Regime

5.4 Cumulative emissions
A more complex proposal calculates the cumulative warming impact of country
emissions and assigns more stringent targets to those countries with the highest
cumulative emissions. For a more detailed discussion see Brazil 1997, La Rovere etal. 2002.

5.5 Preference scores
The preference scores approach asks countries to specify their preference for either
grandfathering or per capita allocation. The preferences are globally weighted withcountry population (Bartsch/Müller 2000, p. 259ff). The overall budget is derived
from the emissions path that reaches the desired concentration target. On the basis ofa 550 ppm concentration target a global target of 31.5 billion t CO2-eq is derived for
2020, leading to a global reduction of 14.4% from business-as-usual. The calculationof the preference scores gives a weighting of 75% of per capita and 25% ofgrandfathering (see Table 10).

Table 10: Preference score calculation
Per capita
score100000Grandfathering
score1
292
127
390
391
335

2020 target (% change,
base year 1995)2
-46.1
-21.7
-18.3
-26.5
+18.8

0
0
0
0
0
1591
25%

+92.7
+84.3
+80.2
+370.0+320.0
+33.3
NA

US
Japan
EuropeOther EITs
Middle East and North
AfricaLatin America
471
China
1304
Asian NICs
473
India
1082
Rest of developing countries
1569
World
4900
Weights
75%
1
Population projections for 2005
2
Energy-related greenhouse gas emissions only
Source: Bartsch/Müller (2000, p. 262f).

39

Evolution of the Kyoto Regime

5.6 Triptych
The Triptych approach defines three sectors – electricity generation, heavy industry
and households (Groenenberg et al. 2000). For each sector, a variable is deemed tolinearly converge to a uniform global value at a future date – greenhouse gas intensityof electricity production, energy efficiency of industry and per capita emissions. So
the Triptych is essentially a sectoral and linear contraction and convergence approach.
It has been successfully used within the EU to reallocate targets within the bubble.
Groenenberg (2002) defines a global Triptych for 2020. A decisive input necessary toapply a Triptych are estimates for the growth rates of electricity generation,
production of heavy industry and population; Groenenberg uses World Energy
Council and U.N. projections. One needs to be aware that uncertainties are the higher,
the farther the target year is in the future. Key elements of the approach are shown intable 11.

table 11: Determinants of global Triptych

Variable addressed
Convergence year
Convergence level
US 1995
Japan 1995
Western Europe 1995
Former Soviet Union
1995
Middle East 1995
Latin America 1995
East Asia 1995
South East Asia 1995
South Asia 1995
Africa 1995

Electricity
generation
Emissions intensity1
2050
2004
580
400
390
700

Heavy industry

Households

Energy efficiency2
2050
0.675
1.8
1.3
1.2
2.0

Per capita emissions3
2050
26
10.3
4.6
4.6
4.1

640
230
790
610
860
590

1.6
1.5
1.9
1.6
1.7
1.6

2.6
1.7
1.0
0.8
0.5
0.6

1

g CO2/kWh2

Best practice in 1995 = 1

3

t CO2.

4

Derived from the estimate that 50% of the gap between the current best practice and thethermodynamic minimum can be closed.
5

Derived from an assessment of basic energy needs on European consumption level of the 1970s that

leads to an average of 1.5 kW per capita
6

Derived from the assumption of 60% renewables and 13.3% each of oil, gas and coal.

Evaluation of the proposal: an optimistic assumption is that non-CO2 emissions inboth heavy industry and the household sector will be reduced by 100% and methane40

Evolution of the Kyoto Regime

from fossil fuel production by 90% until the convergence year. Agricultural emissionsof methane and nitrous oxide are estimated to stabilise while per capita emissions
from deforestation are assumed to linearly decrease to zero until 2050.
Table 12 shows the resulting emissions targets for 2020 and some sensitivity analyses.

Table 12: Emission targets under global Triptych compared to 1995 (%)
Base case1

US
Japan
Western Europe
Former Soviet Union
Middle East
Latin America
East Asia
South East Asia
South Asia
AfricaWorld
1-27, -27-21, -21-19, -19-23, -21+33,+34+10,+29+36,+47+59,+77+187,+213+95,+140+19,+24

Energyefficiency
strengthened2
-28
-23
-21
-21
+33
+28
+45
+76
+210
+139
+23

Electricity
intensity
relaxed3
-25
-18
-16
-19
+36
+31
+49
+79
+218
+144
+27

Per capita
emissionsrelaxed4
-23
-14
-12
-14
+54
+46
+68
+115
+296
+208
+44

First value: with deforestation, second value without. Sensitivity analyses are done without

deforestation and should be compared with the second value.
2

Convergence level 0.5

3Convergence level 300g CO2/kWh

4

3 t CO2/capita

One clearly sees the importance of the household sector as the impact of changes inhousehold per capita emissions is much higher than the one in the other sectors. Thebase case achieves an emissions path leading to a concentration of about 600 ppm.
Nevertheless, the targets for Annex B countries in the second commitment period arequite tough compared to the first commitment period. Obviously, several developing
country regions would still hold substantial surplus that could be sold.
The Triptych has already shown its usefulness in the EU. It avoids the extremes ofgrandfathering and per capita allocations and thus is a suitable compromise candidate,especially if the growth assumptions are regularly checked and recalculations done
accordingly. Some assumptions may be too optimistic but convergence dates andlevels can be adjusted.

41

Evolution of the Kyoto Regime

5.7 Multi-sector convergence
The multi-sector approach (Jansen et al. 2001) has some similarities with the
Triptych. It starts with the definition of seven sectors – power generation, households,
transport, industry, services, agriculture and waste. For these sectors global “emission
standards” are set on a per capita basis derived from a set concentration target; they
converge at a set future year. The sectoral standards are then converted into indicative
national targets; all countries that have a per capita emission above the world average
have to make that target binding. Specific national circumstances can be addressed
through ad hoc adjustments, which of course reopens the whole regime and is notadvisable. Countries that have to take up targets can apply an adjustment period of
one commitment period before the targets become binding.

table 13: 2020 targets for multi-sector convergence at 3.6 t CO2/capita in 2100
US
Japan
EU
RussiaChina
India
BrazilTanzania

2020 target (% change, base year 1990)
-17.3
-19.3
-20.0
-25.0
+146.6+176.5+212.6+309.5

A practical problem concerning both the Triptych and the multi-sector approach willprobably be data availability on a global scale. Whereas one can expect needed data to
be available in Annex-B and most Annex-II countries, data availability might beinsufficient in many developing countries – with the situation getting worse the lower
the degree of development of a given country is. For example, in some Africancountries researchers have encountered severe problems to gather sufficient data for a
project baseline in the electricity sector (PROBASE 2003). As data demand for suchbaselines is similar to the one for the Triptych and/or Multi-Stage approach, one
might doubt the applicability of such complex formulas on a global scale in the shortterm. Although one might expect many developing countries favour such a “fair”
approach, those countries that oppose it may easily boycott its application by notproviding needed data.

42

Evolution of the Kyoto Regime

5.8 Differentiated methodology according to degree of development
Taking into account the industrialised countries political power and their interest not
to impose extraordinary burdens on their economy as well as the developing
countries´ call for equity and historical responsibility, an attractive alternative might
be a two-fold-approach. After the global emissions budget has been determined for acertain year or period, emission targets for the group of industrialised countries andfor the group of developing countries would be defined (categorisation of countries
according to internationally accepted definitions, i.e. UN definitions / country
ranking). Allocation within the group of industrialised countries could e.g. be basedon the grandfathering principle or on the emissions targets of the first Kyoto period(which would avoid the perverse incentive for countries not to reach their targets
which exists if a future base year was chosen). Allocation within the group of
developing countries could then be based on a different criterion as e.g. per capita
emissions.
The first major issue would then be the allocation of emission budgets to the groups
industrialised / developing countries.
Calculation of maximum
global emissions allowed
to reach emissions path

Quantification of anemission target for thegroup of industrialised
countries

Quantification of anemission target for thegroup of developing
countries

Allocation to countries
based on criterion A

Allocation to countries
based on criterion B

figure 7: differentiated target definition developing – industrialised countries

43Evolution of the Kyoto Regime

5.9 Other approaches
Baumert (2002) proposes a dual target consisting of a stringent target from whichemissions trading can be done, and a considerably weaker target that triggers noncompliance procedures. Targets could be linked to an international price cap per tonneof CO2 equivalent. This presumes an international emissions trading system. Whenthe market price rises above the threshold value, governments can issue an unlimited
quantity of additional allowances (Kopp et al. 1999, Victor 2001, Philibert/Pershing2002).
A mix of absolute and relative targets could also be envisaged. As an example, Parties
with a two-tired target would be in compliance as long as either their relative or theirabsolute emissions are below the negotiated intensity/absolute level. Participation in
trading would be allowed if intensity targets are met as long as the absolute threshold
is not passed (, situation A). If the intensity target is not met, emissions trading would
not be allowed (situation B). Non-compliance sanctions would only become effective
if both intensity targets and absolute thresholds are passed3.
Such a two-tiered approach might be a politically promising approach to encourage
developing countries to take obligations under the UNFCCC. The decisive question
again is what reference figure/corresponding value is chosen to define intensity
targets.
If a system combines absolute and relative targets, one would need to establish special
structures to "translate" relative targets and emission rights into absolute ones. A good
example is the "Gateway" that was established in the UK emissions trading scheme.

3

Note that this is only one possible design option.

44

Evolution of the Kyoto Regime

figure 8: Combination of absolute and relative targets
Situation A: intensity target is met

t CO2-eq

Intensity
targetTrading
not allowed

Absolute target
actual intensity

Trading
allowed

Situation B: intensity target is NOT met

t CO2-eq
actual intensity

Trading
not allowed

Intensity
targetTrading
not allowed

Absolute target„Output“, e.g.
[GDP; capita]

45

Evolution of the Kyoto Regime

5.10 Acceptability of approaches
If developing countries were to take on emission targets, one would argue that thetargets should not lead to an undue economic burden. As described, numerous
approaches and variants of formulas to calculate national emissions targets for future
Annex-B parties exist, many further can be thought of. However, the evaluation ofwhich formula is a fair one and/or acceptable will strongly depend on national
circumstances and priorities. One must be aware that each country’s understanding ofwhat kind of target is economically viable is highly subjective. As the president of the
U.S. has stated clearly, he does not believe the world’s leading nation can afford toaccept an absolute emissions targets. Also, the awareness that there is a need to reduce
global GHG reductions can be expected to correlate to the country’s exposure tonegative impacts of climate change.
Nevertheless, one could imagine the definition of indicators and setting of thresholds
that would define a maximum burden. Possible indicators are:
 Costs relative to GDP Costs relative to GDP growth during a specified period, i.e. the last decade Costs relative to export earnings
Similar indicators have been used in the context of determining debt alleviation.
A general problem with these indicators is that the calculation of costs is notstraightforward and depends on a number of assumptions. Moreover, it would be
unlikely that developing countries are willing to accept higher burdens thanindustrialised countries did during the first commitment period. Assuming a fully
functioning international greenhouse gas market with a price of 5 $/t CO2, and the
maximum cost accruing if one buys the total reductions needed on the international
market, the following burden would accrue (see table 14).
table 14: Annual climate policy burden in 2010 for industrialised countries
RegionEmission
reductionneed (Mt
CO2)

Gross
costs
(billion $)United States

2,141

Western Europe

GDP
20001
(billion $)Costs/
GDP(%)

Costs/GD
P growth
in 1990s(%)

Costs/expo
rt earnings
2001 (%)

10.7

8987

0.12

0.43

1.46

693

3.5

8594

0.04

0.22

0.14

Japan

330

1.7

3144

0.05

0.41

0.42

Other
OECD
Annex B

337

1.7

2014

0.08

0.36

0.38

Russia, Ukraine,
non-OECD
Eastern Europe-1,162

Negative

1517

Negative

NA

Negative46

Evolution of the Kyoto Regime
1

Obviously, one should use a date as close to the target date as possible. Using a past dateoverestimates costs if the economy is growing
Source: emission reduction data from Jotzo/Michaelowa, (2002), GDP purchasing power data fromIEA (2002), export earnings from WTO (2003)

Given that developing countries would not accept higher relative burdens thanindustrialised countries, the threshold of the cost indicator should be defined by thelowest value for a region in the industrialised world excluding the regions endowedwith hot air4. If one then calculates backwards from developing country data by using
the same market price as used above, one arrives at the reduction target frombusiness-as-usual. table 15 provides numerical values derived from the thresholds oftable 14 for the countries with an emission of more than 50 million t CO2.

table 15: Developing country reduction targets from business-as-usual under
different thresholds (million t CO2 and % of 2000 emissions)
Country/Region

GDP
20001
(billion $)Threshold level

Reduction undercosts/GDP
threshold

Reduction undercosts/GDP
growth threshold

Reduction undercosts/export
earnings threshold

0.04%

0.22%

0.14%

China

4721

378 (12.6%)

1286 (42.9%)

74 (2.5%)

India

2247

180 (19.2%)

497 (53.0)

12 (1.3%)

Korea

652

52 (12.0%)

128 (29.6%)

42 (9.7%)

Mexico813

65 (18.1%)

104 (28.9%)45 (12.5%)

Brazil1184

95 (31.4%)

92 (30.4)

16 (5.3%)

South Africa

375

30 (10.1%)

25 (8.4%)

8.2 (2.8%)

Iran

355

28 (9.6%)

52 (17.8%)

7.0 (2.4%)

Indonesia576

46 (17.1%)

86 (32.0%)

16 (5.9%)

Saudi Arabia217

17 (6.5%)

19 (7.3%)

19 (7.3%)

Taiwan412

33 (15.3%)

81 (37.7%)

34 (15.8%)

Turkey421

34 (16.7%)

55 (27.0%)

8.7 (4.3%)

North Korea

NA

NA

NA

NA

Argentina

426

34 (26.2%)

68 (52.3%)

7.5 (5.8%)

Venezuela133

11 (8.5%)

11 (8.5%)

7.7 (6.0%)

Kazakhstan

77

6.2 (5.0%)

Negative

2.4 (2.0%)

4

If one would include this region, the threshold would be zero and developing countries would not
accept any burden; they could even ask for likewise benefits.

47

Evolution of the Kyoto Regime

Country/Region

GDP
20001
(billion $)Reduction undercosts/GDP
threshold

Reduction undercosts/GDP
growth threshold

Reduction undercosts/export
earnings threshold

Uzbekistan

55

4.4 (3.8%)

Negative

NA

Egypt

220

18 (16.7%)

34 (31.4%)

1.1 (1.0%)

Malaysia191

15 (14.2%)

41 (38.7%)

25 (23.6%)

Pakistan249

20 (20.4%)

35 (35.7%)

2.6 (2.7%)

Iraq

32

2.6 (3.3%)

Negative

4.4 (5.7%)

Philippines291

23 (33.3%)

32 (46.4%)

9.0 (13.0%)

United ArabEmirates

53

4.0 (5.8%)

4.9 (7.1%)

12 (17.4%)

Algeria152

12 (17.9%)

11 (16.4%)

5.6 (8.1%)

Kuwait29

2.3 (3.7%)

5.3 (8.4%)

4.5 (7.1%)

Israel115

9.2 (14.8%)

20 (32.3%)

8.1 (13.1%)

Colombia247

20 (35.1%)

26 (45.6%)

5.4 (9.5%)

Syria

50

4.0 (7.7%)

9.5 (18.3%)

1.3 (2.5%)

Sum

14293

1144

2755

379

4.9%

11.8%

1.6%

% of world
emissions
Data sources: see table 14

One can easily see that the GDP-related approaches lead to high reduction rates,
especially for quickly growing countries while the trade-related approach generates
low rates except for a few countries with a high export value. As the market priceenters the calculation on the side of the threshold calculation as well as the conversionof the threshold into the emissions target, it does not play a role.

48

Evolution of the Kyoto Regime

A generic formulation of this approach would be:
C IC = p ∗ Rbau − ICwith CIC = costs for industrialised country, p = international price for emission
permits, Rbau-IC = average emission reduction during the commitment period compared
to business-as-usual

C IC −GDP =

C IC
GDP

with GDP = most current value of purchasing-power GDP

C DC −GDP = min(C IC −GDP )with CDC-GDP = cost threshold for developing country. CIC-GDP is preferably defined on
the basis of multi-country regions to avoid undue influence by outliers.

Rbau − DC =C DC − GDPpwith Rbau-DC = emission reduction target compared to business-as-usual.

Critical parameters are the region definition for threshold determination and thedefinition of business-as-usual emission paths.

At the same time it must be recognised that many countries currently having a NonAnnex-B status will ask for incentives to commit themselves to an emissions target.
Such incentives can be of direct or indirect financial or of political nature. Next tothose extra incentives, Non-Annex-B countries might find some intrinsic advantages
to “voluntarily” join Annex-B. Chapter 6 elaborates on hurdles and incentives to doso.

49

Evolution of the Kyoto Regime

6. Hurdles and incentives to join Annex B
In preparation for upcoming international negotiations, many developing countries
will need to evaluate for themselves if they prefer to enter Annex B or to remain in
the Non-Annex-B group.
It can be expected that developing countries will demand “incentives” from theinternational community to take emission targets. The extend of incentives needed
will obviously depend on target type and stringency. The developing countries
evaluation should contain an assessment of the benefits and drawbacks but also of thebarriers and existing incentives to join Annex B. In the following, we discuss major
elements that should be taken into account.

6.1 Institutional requirements
The capacity of many Non-Annex B countries to implement even the basic
requirements of the UNFCCC is limited (UNITAR/North-South Dialogue on Climate
Change 2001). Thus the question arises whether they will be able to implement targets
or the much easier step to participate in the CDM.

6.1.1 Capacity for target implementation
Countries interested in reaping the benefits of joining Annex B should be very
realistic in assessment of their possibilities to sell assigned amounts. If a country has
not assessed its situation properly and adopted a challenging target it will pay a
penalty due to non-compliance with its commitments at the end of the budget period.
Therefore, it has: to assess the growth and emission reduction potential of the different sectorsof its economy and to define priorities;
 to develop a national strategy on GHG-emission reduction;
 to assess the investments and time needed for realisation of the measures on
GHG-emission reduction;
 to assess whether the funds received from selling of assigned amounts will beable to cover the expenses for GHG-emission reduction.
Countries with a differentiated industrial sector should be able to reduce overall
energy intensity provided the sectoral structure does not change. China is a good
example. A successful reduction of energy intensity needs a prior abolition or strong
reduction of subsidies. In democratic countries with strong interest groups this is noteasy as examples from both the industrialised (coal subsidies in Germany) and thedeveloping countries (electricity subsidies for Indian farmers) show. Countries wherea large part of the population has not yet moved up the energy ladder are likely to50Evolution of the Kyoto Regime

exhibit a growing domestic energy intensity. (This would call for a Triptych approach
where the household sector still has room to grow but the industrial sector intensity ho
be reduced.)

6.1.2 Capacity for implementation of CDM
Even if the CDM in principle provides an opportunity for developing countries, will
they be able to use it? Several institutional requirements and needs exist here as well.
The experience of the AIJ pilot phase has shown that only few developing countries
were able to immediately profit from this opportunity. Only after several years, theparticipation of developing countries grew considerably (see table 16).

table 16: The AIJ pilot phase over time
Number of projects

1995

1996

1997

1998

1999

2000

2001

Accepted projects
Projects actually being implemented*
Investing countries
Host countries
Developing countries
Share of developing countries intransition in all projects (%)
Planned emission reduction(mill.t.CO2)**
Share in developing countries (%)

10
0
3
7
2
40

16
3
3
7
2
50

61
13
5
12
5
26

95
60
8
24
14
28

122
86
11
34
23
35

143
n.a.
12
38
27
42

152
n.a.
12
41
30
44

23

111

140

162

217

366

442

43.5

60.5

67.4

68.7

75.7

84.4

87.4

* These are estimates as no reliable information exists. The implemented projects tend to be small
projects in countries in transition.
** The emission reduction actually implemented is much lower (see previous note).
Sources: UNFCCC reports on AIJ, national AIJ programmes

Both the sluggish processes of finalising national communications and implementing
GEF projects show that institutional structures and human capacities are lacking inmany developing countries. However, some success stories show that these obstacles
can be overcome. Latin America participated intensively in the AIJ pilot phase.
Several countries set up JI offices. The Costa Rican office “OCIC” set standards ofefficient marketing and project approval. Costa Rica was also exemplary in setting a
supportive legal framework. The excellent framework was crucial in attracting nine
AIJ projects. However, a period of low demand between 1996 and 2000 lead todifficulties to finance OCIC and it degenerated into a consultancy.
Latin America also intensively used the National Strategy Study programme of theWorld Bank to enhance its capacity. Given these circumstances, it was no accident
that Latin America now leads in the establishment of Designated National Authorities
for the CDM as well as projects approved by the Prototype Carbon Fund. What is still51

Evolution of the Kyoto Regime

lacking everywhere is a domestic capacity to set up Operational Entities. Here, CDM
investor countries should provide capacity building funding. This will pay off very
quickly as developing country Operational Entities will be much cheaper than those of
the North.
Overall, capacity for CDM implementation seems to be well correlated with overall
capacity to attract FDI. This in turn means that small LDCs without any striking CDM
potential should not try to put any of their scarce resources in CDM development.
They are better off in looking for adaptation funding. Large countries have to avoid
internal squabbling for competences in CDM approval. This so far has inhibited large
Asian countries to close the gap that separates them from Latin America.

6.2 Future role of the flexible mechanisms
6.2.1 Reduction of global GHG emissions and the CDM
The Clean Development Mechanism enables developing countries to participate in"emissions trading" in a project-based approach. Emission reductions resulting from a
project activity, as e.g. increasing the energy efficiency of a given plant or a fuelswitch, can be quantified and certified. Generated reduction certificates ("certified
emission reductions, CERs") can be used by Annex-B countries to comply with theirown targets.
If the CDM is conducted properly, it can help Annex-B Parties to reach their emission
targets cost-effectively while supporting developing countries in a sustainable
development. From the environmental point of view, a major benefit is that the longterm emission path of developing countries can be influenced in a positive way by anincreased transfer of efficient technology.
In practice, however, the CDM bears some significant problems concerning its
environmental integrity. The major concern is that "business-as-usual-projects" might
be declared as CDM projects, generate reduction credits and consequently reduce theneed to mitigate emissions in Annex-B countries. The problem is that there currently
are no strict UNFCCC - eligibility rules for projects concerning their "investment
additionality". Even conservative countries as Germany do not seem to impose strict
rules on investment additionality and/or eligibility requirements. Sceptics often statethat it is impossible to determine whether a project is investment additional or not
because project developers would be able to “produce any figures” they need to pass
the test. Nevertheless, several proposals for investment additionality checks have beendeveloped. For a more detailed discussion see for example Langrock et. al (2001) orBode, Michaelowa (2002). In order to establish an environmentally integer system inthe long term, one of the major tasks will be to ensure that no business-as-usual
projects are accredited.

52

Evolution of the Kyoto Regime

Another point is that climate benefits of a given project might be overestimated. This
danger can be reduced by means of high-quality, conservative baseline determinationand certification.

6.2.2 Attractiveness of IET compared to CDM
Developing countries so far have opposed absolute emission targets due to theiroverall economic situation and the understanding that emission targets bear costs thatare non-viable. However, just entering Annex B does not necessarily cause costs5.
Costs to comply with commitments depend on the emission targets themselves andthe emissions path of the joining countries, i.e. the stringency of emission targets. As
one has seen from the Russian example, emission targets can even become a source ofincome. The allocation of surplus emission budgets does, of course, not serve theenvironmental objective of the UNFCCC regime.
From developing countries point of view, the second major question is whether there
are benefits from joining Annex B compared to their current status.
One major benefit of joining Annex B is the chance to directly participate ininternational emissions trading. This avoids the higher transaction costs of the projectbased mechanisms, due to: Project identification and baseline selection;
 Project approval;
 Monitoring and verification of project performances; Certification of GHG emission credits obtained as a result of CDM activities Negotiating sharing of achieved credits.

A country taking Annex-B status needs to establish additional institutions, as
discussed above. If a Party joins Annex B after having served as a host country for a
CDM project, it also has to define a procedure how to treat ongoing CDM projects on
its territories (as the country loses its CDM status). There are the following
possibilities No compensation for CER loss is given
 Projects are converted into JI and generate the same amount of ERUs
 The investors receive AAUs equal to the CERs
 The investors are bought out

5

Costs resulting from institutional requirements are neglected here53

Evolution of the Kyoto Regime

On the other hand, it is quite obvious that for many developing countries andcountries in transition climate change does not belong to the priority tasks and they do
not intend to implement measures exclusively aimed at GHG emission reduction. For
such countries, CDM might be the instrument of choice as it helps to introduce newenvironmentally sound technologies in key economic sectors. That will promote both
GHG emission reduction and sustainable development. In addition to these benefits,
the participation in the CDM will further help to create national institutions, andpromote markets.
In the past, many developing countries have been afraid that with the CDM many“cheap” mitigation options are exploited – giving credits to foreign investors whileleaving the host country with more expensive mitigation options for futurecommitments. Such an argumentation of course neglects other benefits for the hostcountry caused by a foreign investment. Moreover, CDM project possibilities cannot
be “banked” indefinitely due to technological progress and the need to replaceobsolete plants.
Zalayova, Michaelowa (2000) further discuss the advantages and disadvantages for
Non-Annex-B countries to take emissions targets.

6.2.3

The CDM market – real participation of developing countries?

Even if there is no expansion of Annex B, the CDM already now could lead to aconsiderable involvement of developing countries in mitigation activities. However,the Kyoto Mechanisms are competing against each other due to the decision taken at
Marrakech that all types of emission rights are fully fungible. While CERs and ERUs
formally can only be banked up to a limit of 2.5% of a country´s emissions budget
and RMUs are not bankable, countries will just use up RMUs, CERs and ERUs firstand bank AAUs. Moreover, there is no formal supplementarity threshold; in principle
countries can buy as many emission rights abroad as they like.
The shares and revenues of the different mechanisms strongly depend on demand andsupply. If one takes the targets for the first commitment period only and assumes the
US and Australia stay at the sidelines, the market is very lopsided. The withdrawal of
the US has reduced demand by over two thirds. Russian hot air covers the residual
demand alone; Ukrainian and Eastern European hot air add about the same amount.
Thus the CDM and JI market depends on voluntary export restrictions of the hot air
countries. Under a rational behaviour, only one third of hot air would be exported andthe price reaches about 4 Euro/t CO2. If the CDM involves a strict additionality test
and high transaction costs, its share would be minor while if profitable projects areregistered by the Executive Board low-priced CERs could compete with hot air (alsosee Jotzo, Michaelowa (2002)). JI supply depends on the willingness of hot air
countries to embark on positive cost measures. JI demand depends on the willingness
to buy hot air. For example, the EU could prohibit the import of hot air but would be
unlikely to block JI.

54

Evolution of the Kyoto Regime

The situation changes substantially if the targets of the second commitment period are
known well in advance of the first period, involve more countries and are relatively
tough. Then banking of hot air as well as CDM (and to a smaller extent JI demand)
will increase.
The introduction of price caps can destroy the market completely as the price cap isalways binding and acting as a tax or not impact at all as the cap is not reached. It isrelatively unlikely that an intermediate scenario applies where the cap only binds fromtime to time.

6.2.4 Model estimates for market shares and revenues
The 1999 model comparison of the Energy Journal is no longer relevant for policy
analyses as both the U.S. withdrawal and the loosening of targets due to the
Marrakech Accords were not known at the time.
After the U.S. decision not to ratify the Kyoto Protocol and the Marrakech Accords,
astonishingly few model runs on the global greenhouse gas market have been done
and even fewer address the CDM6. Their results are summarised in table 17; theystrongly depend on the assumptions about CDM transaction costs and hot air sales
from the countries in transition.-table 17: Estimates of total CDM revenue until the end of the first commitment
periodCDM revenue

Jotzo/Michaelo
wa 20021

DenElzen/Bot
h 20022Eyckmans
et al. 20013

7.0

1.5

10.7

($US billion)
Adaptation tax

1.8
141

30

214

($US million)
Market price ($/t CO2)

Blanchard
et al. 20024

36
3.8

2.5

1

CDM transaction costs 0.75 $/t CO2, 35% of hot air sold2

CDM transaction costs 20%, 10% availability, 100% of hot air sold3

CDM transaction costs 10%, 60% availability

4

CDM transaction costs 20%, 10% availability, 10% of hot air sold

6

4.9

4.6

Several papers (Manne/Richels 2001, Löschel/Zhang 2002) model intricacies of Annex B permit
supplies but completely leave aside the CDM. Sijm et al. (2001) do not consider the US absence.

55

Evolution of the Kyoto Regime

Obviously, net revenue to CDM host countries is substantially smaller depending on
the actual abatement costs. The results are relatively robust inasmuch CDM revenue isseen to be one order of magnitude smaller than official development assistance flows.
Distribution of CDM flows is likely to be much more correlated with private foreign
direct investment than ODA.

56

Evolution of the Kyoto Regime

7. Technical issues of evolution of the climate regime
7.1

Consistent reporting and verification regime

Any regime based on emission targets needs to ensure a consistent reporting andverification. Otherwise, free riding can occur. The past experience with in-depth
reviews of national communications of Annex B countries shows that there was astrongly varying quality of reporting. The quality of Non-Annex B country reports iseven more variable but no independent review has been done. This led to agreement
on relatively strict reporting and verification rules in the Marrakech Accords (seefigure 9).

National
Communication

Reportondemonstrable
progress

2005

2006

National
Communication
Annualreport ontransactionsfor 2008

Reporton establishment of
AA

2007

2008

2009

National
Communication

2009

2010

2011

2012

Inventory
for 2008

O

O

O

O

2010

2011

2012

2013

2014

Commitment period

Report on
accounting
Minimum during thecommittime for
ment
review
period2015

2016

True-Upfigure 9: Reporting of Annex B countries before, during and after the commitment
periodFor Annex-B countries, the report on the establishment of the national Assigned
Amount (AA) is due Jan. 1, 2007 and describes the national system to derive
emissions inventories. A national entity co-ordinates Responsibilities for methods used to set up the inventory and collect data
 A quality assurance plan
 A procedure for official approval of the inventory The national system should “preferably” undergo third party review.
The national system will be reviewed by an expert review team (ERT) once. The
report on establishment of AA will be reviewed within one year. The ERT makes an

57

Evolution of the Kyoto Regime

in-country visit, identifies flaws and suggests adjustments to the reported figures.
Adjustments accepted by the country or mandated by the enforcement branch of thecompliance committee will be used to calculate the final volume of AA that remains
unchanged for the commitment period. The annual inventories will also be reviewed.
If changes in national systems or national registries have been made, an in-depth
review including an in-country visit will be done. Here, adjustments can be revised if
the ERT that did the adjustment or the compliance committee accepts.
Reporting requirements are deemed not to be fulfilled if the inventory is more than 6 weeks late.
 a source category is missing which encompassed more then 7% of the total
emissions in the last submitted inventory
 adjustments lead to an increase of more than 7% in total reported emissions
 the sum of adjustments since the start of the commitment period is bigger than
20 percentage points
 for three years in a row adjustments are calculated for a key source categorythat is responsible for over 2% of total emissions. This trigger does not apply
if the country has asked the facilitative branch for help to resolve this problem,is thus weaker than it appears.
As Annex B countries will find it difficult to fulfil these rules, it would be much moredifficult for developing countries (also see discussion in chapter 6.1). Only countries
with a reliable civil service and developed data collection can develop inventories of aminimum standard. This is not the case for most of sub-Saharan Africa and LDCs ingeneral. Countries that fulfil the graduation thresholds discussed below should nothave more problems than countries in transition.

7.2

Development of the compliance regime

Prior to COP 7., compliance rules were an intensely debated issue (see e.g. Goldberg
et al. 1998a,b, Wiser/Goldberg 1999, Hargrave et al. 1999). Wiser (2002) summarises
the compliance-related decisions in the Marrakech Accords. He finds that there is no
realistic way to force parties who exceed their Kyoto emissions targets to remedy the
problem. Trade sanctions used under the Montreal Protocol are not part of the
Marrakech Accords. The "legally binding" nature of consequences for noncompliance remains to be resolved; an amendment or other formally ratified legal
instrument would provide the highest possible expression of the intent of parties torespect the results of an enforcement branch proceeding.
Nevertheless, procedures and institutions for the compliance system as well as
sanctions for non-compliance were agreed. According to Wiser (2002), “that is a58

Evolution of the Kyoto Regime

politically potent accomplishment that makes the protocol's compliance system themost robust ever adopted for a multilateral environmental agreement”. He sees thedeclaration by the enforcement branch that a country has violated its treaty obligations
by exceeding its emissions target as potentially effective public "shaming".
Further development of compliance-related issues can take two paths:
Internal stabilisation means that co-operative behaviour is achieved without additional
instruments because the members of the climate treaty form a stable coalition in thesense that no country wants to leave it. Co-operating countries can exploit the fact thatclimate policy measures are repeatedly taken by making future abatement efforts
dependant on the - potentially defecting - behaviour of other countries. Reciprocity inthat sense is a possible instrument to stabilise a climate treaty because it imposes
future costs on the breaching country when the remaining countries retaliate.
External stability requires various compliance tools that can be evaluated according to
the criteria ‘environmental effectiveness’ and ‘economic efficiency’. Given the profitmaximising behaviour of all involved actors, the punishment associated withsanctions and transfers should counterbalance the gains from non-compliance.
Regarding the alternative approaches, the performance should be assessed on the basisof their ability to prevent a profit-maximising seller from over-selling its allowances.
Economic efficiency requires that the environmental goal – compliance – is achievedat least compliance costs, i.e. the costs to participants that meet their commitments
should be minimised. This applies to buyers as well as sellers of emission permits. In
the following, the various compliance tools are compared to the least-cost, fullcompliance equilibrium: compliance is achieved voluntarily and the permit market isfully competitive.

7.2.1 Economic sanctions
Economic sanctions decrease the net benefit from non-compliance. To be effective,
the sanction must be credible and it must counterbalance the gain from noncompliance. Hence, the expected impact of the financial sanction – which is smaller
than the actual impact if the probability that the sanction will be executed is smaller
than one – must at least match the benefit from the defecting behaviour (Heister et al.,1997). The gain from non-compliance corresponds to the excess emissions –irrespective of their cause – multiplied by the market price for the emission
allowances. Therefore, a financial sanction is an effective threat if the penalty perexceeding emission unit times the probability is greater than the market price. The
credibility of trade sanctions is relatively small because trade sanctions may not only
hurt the target country but also the sanctioning country. Since increasing the impact oftrade sanctions renders their execution even more improbable (Heister et al., 1997), it
is unlikely that the expected impact of trade sanctions is high enough to deter noncompliance.

59Evolution of the Kyoto Regime

Sanctions are intended to work as a threat. Therefore, effective sanctions will not be
executed. Their execution means that they have missed their primary aim, that is todeter non-compliance. Hence, economic sanctions do not impose any additional costs
on parties that meet their commitments. Furthermore, economic sanctions do not
restrict the efficiency of the market for emission allowances, because neither thenumber of trading parties nor the number of allowances is reduced as compared to thereference case. Consequently, compliance costs correspond to the least-cost solution,i.e. effective sanctions fulfil the efficiency criterion. But, if the sanction is not highenough to prevent excess emissions, it will impose additional costs on non-compliant
parties. These costs including reduced compliance costs must be lower thancompliance costs in the reference case because otherwise the parties would chose tocomply. This is true for financial sanctions that do only affect non-compliant parties.
But it is not true for trade sanctions that will also impose costs on the sanctioning
country. As trade sanctions will probably not fulfil the incentive compatibility
condition due to their lack of credibility, financial penalties are superior to trade
restrictions regarding the efficiency criterion.

7.2.2 Trading-related sanctions
In the following, only the loss of eligibility to trade will be discussed as a tradingrelated sanction. The traffic light approach works as a sanction in such a way that theliability rule is changed as a consequence of non-compliant behaviour. Therefore, itwill be analysed in the context of the other liability rules.
The loss or limitation of the right to engage in emission trading is not a suitable
instrument to prevent net buyers from exceeding their emission limits. This is because
buyer non-compliance is a result of not using the right to buy allowances. But thesuspension of selling rights in future commitment periods could be a possibility toensure seller compliance. The effectiveness of this compliance strategy depends onwhether the gain from over-selling is outweighed by the expected loss of profits in the
future suspension period. Therefore, the duration of the suspension period, past andfuture market prices for allowances as well as the discount factor (assessment of
future rewards compared to present gains) matter. If the above condition is met, seller
compliance would be established. But the environmental effectiveness of the tradingrelated sanction would nevertheless be restricted by under-buying of emission
allowances.
The economic efficiency of the suspension of selling rights is restricted due to the factthat the number of trading parties is reduced. On the one hand, buyers do not have an
incentive to engage in emission trading and on the other hand, sellers might be
excluded. Therefore, the liquidity of the permit market is decreased, which leads to ahigher market price and higher costs for buyers (Haites and Missfeldt, 2001). Apartfrom this, compliance costs are the same as in the least-cost reference case if the
sanction is an effective deterrence. Hence, the net effect on costs will be negative so60

Evolution of the Kyoto Regime

that environmental effectiveness and economic efficiency cannot be obtained
simultaneously.

7.2.3 Reduction of emission budget in future periods
If the reduction corresponds to the excess emissions times (1 + x) where x represents
the discount factor, this is technically equivalent to borrowing (under the assumptionthat the future market price for allowances will be the same). Hence, a reduction tothis extent does not mean a punishment for non-compliant parties. The Marrakech
Accords set x=0.3 We have a financial penalty if the interest rate is below 5.2%. Since
this kind of sanction only imposes costs on non-compliant parties, compliance costs
will be lower than in the least-cost solution if ecological effectiveness is not reached.

7.2.4 Compliance fund
Wiser and Goldberg (1999) propose a compliance fund. The underlying idea is thatparties are required to purchase offsetting or more than offsetting emission allowancesat the end of the commitment period. This approach is limited due to the fact that
there could be a global shortage of emission allowances at the end of the commitment
period – especially if several countries were non-compliant. On this account, acompliance fund should be set up. If a party’s emissions exceed its AA, it has to pay afee proportional to its overage into the fund. Fees collected by the fund are used tofinance GHG mitigation projects that generate the credits needed for compliancepurposes. The compliance fund thus combines the advantages of financial sanctions
with those of the reduction of future period emissions.
The fee can be seen as a financial penalty. If its expected impact is high enough tooutweigh the gain from non-compliance, it will be an effective deterrence. Hence, thecompliance fund will ensure environmental effectiveness as well as cost efficiency.
This is especially true if the party had to pay inflated prices for emission allowances
being in short supply at the end of the commitment period. If for any reason the feedoes not surpass the benefit from non-compliance, the compliance fund will at least
compensate a part of the excess emissions. The fund approach will in principle not beable to ‘make the climate whole’ because a fee that is not high enough to deter noncompliance cannot be sufficient to finance emission reductions in the amount needed
to bring the party into compliance. If this were the case, there was no reason for the
non-compliant party not to undertake the mitigation projects by itself.

The preceding analysis has shown that sanctions can be an effective deterrence of
non-compliant behaviour if they counterbalance the gain from non-compliance. The
only exception is the suspension of selling rights which is not effective in preventing
buyers from exceeding their emission limits. If a sanction is an effective threat, it will
not be executed and will thus not impose any additional costs. Cost efficiency thus

61

Evolution of the Kyoto Regime

applies to all effective sanctions. Sanctions that are not an effective deterrence may
imply lower costs provided that the market for allowances is not restricted and theexecution of the sanction does not imply additional costs to the sanctioning parties.
Since trade restrictions and the suspension of selling rights do not fulfil thisrequirement, they are inferior to the other approaches with respect to cost efficiency.
Regarding environmental effects in the case of non-compliance, protocol-related
sanctions do have the advantage that they at least partly compensate the excess
emissions. Since borrowing implies the possibility to shift the burden to future
generations, the compliance fund seems to be the superior strategy from the point ofview of environmental and economic efficiency.

7.2.5 Transfers
Transfers can prevent parties from exceeding their emissions, if any possible gainfrom non-compliance is outweighed by the loss of the transfer the countries werepreviously entitled to (Heister et al., 1997). If this condition is met, compliance isalways the best option and the environmental goal is fulfilled.
In contrast to sanctions, transfers provoke costs for the donor countries only ifcompliance is achieved, whereas compliance costs for the recipient countries are
reduced. The additional costs for the complying countries (who pay for thecompensations) depend on the number of ‘opportunistic parties’ (that receive thetransfer) and on the way the transfer scheme is financed. If the transfers have to besupported by an international tax and if the number of opportunistic countries is large,such a tax-transfer-scheme could be very costly (Heister et al., 1997). Therefore,
looking at aggregate compliance costs, successful sanctions are a cheaper way to deter
non-compliance than monetary transfers.
The linkage of different and otherwise independent issues is another possible transfer
strategy. Concerning the compliance problem, issue linkage involves the combinationof compliance with the CO2 reduction targets and other policy questions in which theopportunistic parties have a strong interest. The concessions in other policy issues,e.g. development assistance or R & D programmes, increase the benefit fromcompliance and thus imply an implicit transfer between countries. The withdrawal of
the concessions can therefore be used as a sanction, provided that the approval can betaken back afterwards. If this is not the case, issue linkage is inappropriate to prevent
countries from breaching their commitments. Provided that the subsequent withdrawal
is possible and also credible, the linkage of compliance to other policy questions is aneffective deterrence, if the concession and the gain from non-compliance are at leastof equal value for the receiving country. Like monetary transfers, issue linkage
implies costs for the party making the concessions since this country has to agree to apolicy it would reject otherwise. Nevertheless, the linkage of issues is cheaper thanmonetary transfers, because the latter ones often involve additional costs, such as
raising taxes (Heister et al., 1997). Moreover, the concession may be of less value for62

Evolution of the Kyoto Regime

the donor country than for the receiving country, implying less costs compared tomonetary transfers. Since all kinds of transfers must compensate the opportunistic
party for the potential gain from non-compliance, issue linkage and monetarytransfers can be of equal value for the receiving country. Therefore, aggregate
compliance costs (including the costs of the concessions) will be smaller than with
monetary transfers.

7.3

Coverage of gases and other substances

The Kyoto basket of six gases does not cover all known greenhouse gases orsubstances that influence the global climate. The Kyoto gases are estimated to accountfor about 92% of the total radiative forcing by substances with a “high” to “medium”
level of scientific understanding (IPCC 2001, p. 8)7. Tropospheric ozone has a forcingof almost 15%, while stratospheric ozone depletion reduces the forcing by 6%.
Inclusion of tropospheric ozone would be a realistic option and politically interesting
as it acts as a major local pollutant with negative effects on health and agricultural
production. Targets could be expressed in ozone levels but policy measures would
have to be aimed at the precursors.. Stratospheric ozone depletion will be reversed
due to the success of the international ozone regime and thus the reduction of forcing
will diminish over time.
Aerosols such as dust and SO2 lead to regional cooling effects that counteracts thegreenhouse gas warming. The order of magnitude of the direct effect is 30% of the
Kyoto basket but the indirect effect could be almost as large (IPCC 2001, p. 8). It is
likely that the cooling phase from 1940 to 1975 was due to the strong increase inaerosol loads during that period and that measures to reduce SO2 emissions inindustrialised countries have contributed to the strong warming push since the mid1980s as global sulphate forcing stabilised (IPCC 2001, p. 402). As aerosols arelinked to local and regional pollution there is a strong incentive for countries to reducethese emissions; in fact newly industrialised countries are embarking on this path.
Theoretically, countries with a high production of aerosols could receive a “bonus”
for their greenhouse gas target. The quantification of this bonus is difficult due to theregional character of the cooling effect and the transboundary pollutant effects.
Many observers from the US have argued for an inclusion of black carbon, the only
aerosol with a warming contribution whose radiative forcing is about 8% of the
cumulative radiative forcing of the Kyoto basket.

7

The radiative forcing is proportional to the current concentrations of the respective greenhouse gases
and thus not directly linked to current emissions.

63

Evolution of the Kyoto Regime

A problem with the inclusion of additional gases or substances is that a certain degreeof measurement accuracy is necessary to avoid opening of loopholes; the IPCC
classifies the level of scientific understanding for all categories besides the Kyoto
basket and stratospheric as well as tropospheric ozone as “very low” (sulphate scoresa “low”).

7.4

Usage of GWPs for conversion into CO2 equivalents

The Kyoto Protocol fixed the use of 100 year Global Warming Potentials (GWPs) as
specified by the IPCC Second Assessment Report (SAR) for the first commitment
period. Accordingly, the 2001 update of GWPs by the Third Assessment Report(TAR) has not been followed by the Kyoto Protocol. A procedure has to be developed
how updates are done. Also, the 100 year timeframe may not be seen as adequate.
Choosing a different time horizon might lead to significant differences in the GWP ofa given greenhouse gas (see table 18).
Moreover, indirect effects (e.g. due to the atmospheric chemistry properties) should
be taken into account. In the case of methane they increase the GWP by over 35%(IPCC 2001, p 387).

table 18: GWP changes over timeGas

Average lifetime (years)

CO2
CH4
N2O
HFCs
PFCs

Variable, about 150
12114
0.3-260 (majority doubledigit)
2600-50,000

SF6

3200

20 years
TAR
1
62
290
40-9400

Kyoto
SAR
1
21
310
14011,700
65009200
23,90039008000
15,100100 years
TAR
1
23
296
12-12,000

500 years
TAR
1
7
156
4-10,000

570011,900
22,200890018,000
32,400

Data source: IPCC (2001), p. 388-389

7.5

Length of commitment periods

Currently the climate negotiations develop in “rounds” of about five years. This
structure is very similar to the world trade negotiations. Apparently, a five year period
to show results is a timeframe that is still attractive for policymakers who have arelatively high chance to survive two policy cycles in power. Obviously,
policymakers try to shift burdens to future periods. This may explain why emission
target dates have always been set more than a decade in the future.

64

Evolution of the Kyoto Regime

A decision on a concentration target far in the future could be possible but the shortterm initiation of a path that deviates from business as usual is politically difficult.
Nevertheless, a long-term perspective through the definition of an emission pathwould be a clear signal for decision makers to invest in low-emission technologies.

7.6

Coverage of international transport

The Kyoto Protocol exempted international air and sea travel from the emission
reductions commitment of Annex B targets.
This exemption should be lifted. Emissions could be allocated to the countries where
trips originate and end or the International Maritime Organisation (IMO) and theInternational Air Transport Association (IATA) would be allocated a distinct target(see Bode et al. 2002). Emissions from air travel should use a special conversion
factor that includes the indirect effects due to the specific chemistry of aircraft
emissions in the high troposphere. Using IPCC results, this factor amounts to 2 to 4
(IPCC 1999). Contrail effects are not included in this estimate but should enhance thisfactor further as recent findings have reconfirmed their significance (Travis et al.
2002).

65

Evolution of the Kyoto Regime

8. The role of policies and measures in the international climate
regimeIf effective, absolute emissions targets cannot be negotiated on a global scale, acommon set of policies would be a possible alternative and might enhance developing
country participation. In fact in the early stages of international climate policy the
discussion concentrated on policy harmonisation. The EU supported such an approachagainst US opposition until Kyoto.
In the following, an overview of potential instruments is given. It should be noted,
however, that absolute emission targets are to be preferred from the ecologicalperspective.

8.1

Global greenhouse gas tax with local recycling

Proponents of an efficient climate policy based on a uniform price signal have long
favoured a co-ordinated greenhouse gas tax. It was already proposed prior to UNCED
and has been revived from time to time. The main problem of a tax is the reluctanceof policymakers to introduce pervasive new taxation and the issue of revenue
recycling. Proposals that revenue should be administered by a global institutions are
not viable. Recycling of revenues collected by each country may be a more acceptable
solution. A problem of the co-ordinated tax is how changes in exchange rates anddifferences in national abilities to pay are addressed because otherwise “tax havens”
would come into being. Another basic drawback of taxes is that a defined global
emissions targets cannot precisely be met, but that there will be an – eventuallycomplex and time-intensive – trial-and-error process to define an appropriate tax
level.

8.2

Co-ordinated efficiency standards

For consumer goods, a co-ordination of efficiency standards could boost efficiency
improvements. The U.S. Energy Star programme for computers has been adopted inmany countries.

8.3

Technology Marshall Plan to develop backstop technologies

Recently, a global subsidy programme to develop renewable or carbon-freetechnologies has been suggested (Philibert/Pershing 2002, p. 84-88, Barrett 2001).
The problem with such an approach is that governments have a mixed record inpicking technological winners. Other observers (Hoffert 2001) argue “the history of
the last 50 years shows that all of the important innovations that have spurred the66Evolution of the Kyoto Regime

growth in wealth have all come from government sponsored military R&D, first inWorld War II and then in the Cold War. It is simply not cost effective, because there
is no profit for many years, for the private sector to invest in the development of thekinds of transformative technology that will be necessary to solve this problem”.

8.4

Co-ordinated regulation

Edmonds and Wise (1999) proposed that all new fossil fuelled power plants shouldhave to sequester the carbon geologically. Their proposal was even discussed as likely
to be adopted by the Bush Administration in mid-2001. Such an approach suffersfrom all the efficiency problems that characterises regulation. Costs may be muchhigher than under a market-based solution.

8.5

Voluntary commitment to no-regret policies

Countries could give a commitment to implement all macroeconomically sensible
policies with greenhouse gas benefits. A narrow approach would be to address all
projects that are pure monetary no regrets. Krause (2000, p. 30f) estimates thepotential at 1.7 to 6.7 billion t CO2 for the first commitment period.
A wider perspective would be to take positive local pollution externalities into
account (“ancillary benefits“, OECD 2000). In severely polluted areas, theexternalities can be higher than the costs for greenhouse gas abatement and reachvalues of above 10 €/t CO2 eq..

8.6
Subsidisation of mitigation and adaptation action in developing
countries
Winkler, Spalding Fecher, Mwakasonda and Davidson (2002) propose thatindustrialised countries can subsidise mitigation action in developing countries
without getting emission credits. As long as the alternative CDM exists, such a
proposal is completely unrealistic and unaccountable. Already the Marrakech decision
to set up several funds for developing countries raises the question how an effective
use of these funds can be assured. Lessons from development co-operation show that
disbursement of multilateral funds without a clear vision did not lead to sustained
impacts, especially in countries with ineffective institutions and bad policies. For
example, in Tanzania, $2 billion were spent on building roads over 20 years. The road
network did however not improve due to lack of maintenance as roads deteriorated
faster than they could be built (World Bank 1998, p. 1). It should be avoided that thesame can be said about mitigation and adaptation fund spending 20 years from now,
especially as many countries are vying for a share of the relatively small funds.
Instead of spreading it equitably, climate change financing should go only to countries

67

Evolution of the Kyoto Regime

with a strong track record in policy reform and an interest in effective institutions.
Mitigation and adaptation targets have to be specified clearly in quantitative terms toallow a check of effectiveness and there has to be an ex-ante defined monitoring
strategy. A warning sign is that purely political targets of development spending were
often not reached and had to be scaled down or to be referred to a more distant future(Carvalho 2002, p. 5). It is crucial that the rules for disbursement of the Marrakech
funds are defined clearly and that incentives are set that provide for long-term
continuation of projects. Goals must be country-specific and have a clear timetable.
Then it may be possible to match or surpass World Bank performance, where project
evaluation finds that about three quarters of projects can be labelled as satisfactory at
the end of donor involvement (Carvalho 2002, p. 8).

8.7

Regional/sectoral CDM

A recurrent theme in CDM negotiations has been the question whether CDM only
includes concrete projects where a technology is installed or whether it could beinterpreted in a broader sense as covering policies. Especially under a unilateral CDM
policies would be an attractive option but a tough determination of additionality
becomes crucial to avoid “CDMisation” of business-as-usual behaviour and reward of
past suboptimal policies. Samaniego and Figueres (2002) suggest even to extend
CDM to national policies which exacerbates the additionality problem. However, inthe context of a scheme to involve countries with high absolute but with low per
capita emissions and low GDP, a national CDM may be able to mobilise a highamount of reductions.

8.8

Biofuel obligation

Read (2002) suggests a mandatory use of biofuel of sinks plantations which would
substitute fossil fuels. Such a regulation suffers from the risk that other promising
renewable options are not taken up. Read argues that biofuel provision supports
developing countries and avoids the permanence problem of sinks.

8.9

Targets for trans-national companies

Trans-national companies (TNCs) under the current conditions will be subject todifferent domestic policy instruments, depending on the respective country of theiroperation, which complicates environmental documentation and controlling. Many
TNCs have implemented strict standards all over their operations, trying to bring costs
down. On the other hand, TNCs have the opportunity and will always be suspected byNGOs to transfer emission-intensive parts of their production to Non-Annex-B
countries. Companies like BP Amoco and Shell have been gathering experiences within-house trading systems in order to detect the lowest cost GHG reduction

68Evolution of the Kyoto Regime

opportunities. Taking their world-wide activities together, some TNCs cause
emissions of an order of magnitude of whole nations. It could thus be an option forfurther commitment periods to offer TNCs of a certain size an opt-in to Annex B
Party status, under the condition that they are willing to accept binding targets that are
more stringent than their commitments broken down over the Annex B country
Parties they are active in. This would however not include any voting rights in the
UNFCCC process. TNCs may be willing to accept these for several reasons: They may chose for themselves the globally lowest-cost in-house reductions.
 They will value reduction potentials as an additional asset when planningmergers and acquisitions.
 They will be exempted from national climate mitigation instruments, as longas they are in compliance with their company target.
 They can drastically reduce compliance costs while avoiding CDM or JI
transaction costs.

In case of mergers with and acquisitions of other companies, they will need to reportto the UNFCCC Secretariat a correction of their target. This correction needs to be
simple to calculate. There are several options:a) Both merged companies have emission targets. The new target will be an
addition of both.
b) The acquiring company A has a target, the company B taken over has not.
i) Until the next commitment period, A will report only the emissions
occurred within its former boundary.
ii) The former company B is attached a proper emissions target on thebasis of the average emissions intensity of company A, and theallowances are added up, like in case a).
c) The acquiring company A has no target, while company B taken over has.
i) Until the next commitment period, A will take over the commitment
for the constituencies of the former company B.
ii The former company A constituencies are attached a proper emissions
target on the basis of the average emissions intensity of the former
company B, and the allowances are added up, like in case a).
iii) Company A, retroactively for the ongoing commitment period, takes
over any domestic commitments for the foregone operations ofcompany B and opts out from Annex B.

69

Evolution of the Kyoto Regime

In order to provide for non-compliance or for case c) iii, an annual payment to an
escrow account proportional to the companies’ total GHG emissions could berequested from TNCs by the COP.

70

Evolution of the Kyoto Regime

9. Summary and conclusions

As it appears today, the future climate regime has to contain three major elements:
 Adaptation to negative impacts of climate change A – hopefully significant - reduction of global GHG-emissions
 Sequestration of CO2 and eventually other GHGs from the atmosphere
Recent agreements of Bonn and Marrakech already established funds to support
developing countries in their adaptation efforts. Although those funds quantitatively
are close to negligible compared to the amounts that will be needed on the global
level, they can be considered a politically important signal to developing countries –
also with a view to potential future commitments of the latter.

The most essential but also politically most critical of the above mentioned elements
is an effective reduction of global GHG-emissions. In order to upgrade the Kyoto
Protocol to an effective climate regime in the long term, several steps must be
undertaken:
 First, the circle of countries with binding, absolute emission targets must be
expanded as far as possible. This is due to two facts: CO2-emissions of current
Annex-B-countries only account for 55% of global CO2-emissions (1999) whichmeans that 45% of global CO2-emissions currently are non-capped. Second,
whereas emissions of the Annex-B group have remained more or less constant in
the past decade (decrease of 0.8% from 1991 to 1999), total emissions of nonOECD countries have increased by 9.3% during the same period of time.
Emissions forecasts show a further increasing trend. However, the question iswhich countries are candidates to take the "burden of entering Annex-B"?
Threshold options are listed below.
 Second, substantial GHG-reduction targets need to be defined on the global level.
The best option from the ecological point of view would be to do so by defining a
global concentration path.
 Third, national emissions targets need to be derived from the global emissions
budget defined for a given year/period. Quantification can be based on several
criteria (see below).

71

Evolution of the Kyoto Regime

Possible thresholds to take emissions targets:
Several criteria that trigger joining Annex B have been developed, as: GDP (or purchasing power parities) per capita
 CO2-emissions per capita
 Combined financial indicators and emissions: graduation index
 Absolute emissions thresholds
 Institutional indicators
Variants of those approaches can be thought of concerning the reference year or
period. In our analysis of 13 threshold options, the following countries have passed
the threshold most often: Singapore, Qatar, Brunei, Saudi Arabia, Oman, Bahrain,
Cyprus, Malta, Korea, Trinidad and Tobago, South Africa, Argentina, Kazakhstan,
Turkmenistan, Azerbaijan, Barbados, Bahamas, Mexico, Iran, Turkey, North Korea,
Venezuela, Malaysia, Chile and Brazil. Some of the most important developing
countries in terms of absolute emissions as China, India or Indonesia are characterised
by low per capita and low historical emissions as well as low GDP and thus do notsurpass many of the defined thresholds. Nevertheless, future commitments of thosenations will be of crucial importance to establish an effective climate regime.

Possible criteria to quantify national emission targets:
The criteria listed below differ concerning data demand and the underlying approach
to allocate emission rights in a “fair” way and thus favour different country groups.
For those reasons, one can hardly expect that the international community can agree
on one methodology that is to be applied to all countries.
 Grandfathering (historical emissions in an agreed reference year) Per capita allocation
 Contraction and convergence (appears the most elaborate and easy-tounderstand option)
 Cumulative emissions
 Preference score Triptych
 Multi-sector convergence 2 – group approach (developed - non-developed countries)

72

Evolution of the Kyoto Regime

Developing countries that evaluate if they want to join Annex-B or not will find that
there are important differences concerning the institutional requirements andmonitoring and reporting requirements between Annex-B status and Non-Annex-B
status. Transaction costs that currently apply for the CDM - e.g. establishment ofbaselines - can be reduced if a country participates in IET. On the other hand, there
are additional reporting requirements, e.g. concerning the establishment of national
inventories. Probably, the most crucial issue for many developing countries is thatthey are afraid of adopting stringent targets that reduce their chances of economic
development.
Finally, there are some technical issues concerning the evolution of the Kyoto regime.
The most relevant points are:
 Establishment of a consistent reporting system which allows the creation of
capacity in developing countries
 Future coverage of gases
 Coverage of international transport
 Length of commitment periods

73Evolution of the Kyoto Regime

10.

Policy recommendations

Relevant issues concerning the evolution of the Kyoto Protocol are:
 The need to define effective targets. No new hot or tropical air must be created forthe period after 2012. Absolute emissions targets are the best choice from theecological perspective.
 The CDM must be accompanied by strong rules, especially on investment
additionality and baseline determination.
 Emissions resulting from international transport (aviation, shipping) must be
included.
The inclusion of developing countries in Annex-B is a very sensitive issue in politicalterms but also a crucial element of the future climate regime. Recent statements ofrepresentatives from DCs have shown that strong opposition of many developing
countries against targets and target negotiations can be expected. A two-fold strategy
might therefore be the best choice.
This implies the need to create incentives for DCs to join Annex B on the one hand
and to allow flexibility concerning emissions targets on the other hand. Also, potential
institutional and/or administrative barriers to join Annex-B should be identified andeliminated.
Concerning the selection of "Annex-B accession candidates", the best strategy might
be to start from objective, uniform rules/thresholds as discussed in chapter 4, but
simultaneously allow to consider for special national circumstances and the need forsustainable development. The consideration of the latter factors might also take placewhen defining and quantifying the (type of) emissions target. As an example, forsome developing countries a mixed target - e.g. combination of relative and absolutetargets - might open the door to take any commitment at all. Also, the definition of
initially lax absolute targets for joining countries might be a political compromise in
the short to medium term. A minimum condition should however be that any target isstricter than a sensible estimate for the business-as-usual emissions path.

74

Evolution of the Kyoto Regime

11.

References

Agarwal, Anil (2000): Making the Kyoto Protocol work: ecological and economic
effectiveness and equity in the climate regime, Centre for Science and Environment,
New Delhi
Agarwal, Anil; Narain, Sunita (1991): Global warming in an unequal world: a case ofenvironmental colonialism, Centre for Science and Environment, New Delhi
Babiker, Mustafa; Eckhaus, Richard (2000): Rethinking the Kyoto emissions targets,
MIT Global Change Joint Program Report 65, Boston
Barrett, Scott (2002): Towards a better climate treaty, FEEM Nota di Lavoro 54.2002CLIM, Milan
Bartsch, Ulrich; Müller, Benito (2000): Fossil fuels in a changing climate, Oxford
University Press, Oxford
Baumert, Kevin; Bhandari, Preety; Kete, Nancy (1999): What might a developing
country commitment look like?, WRI, Washington
Baumert, Kevin; Blanchard, Odile; Llosa, Silvia, Perkaus, James (eds.) (2002):
Building on the Kyoto Protocol. Options for protecting the climate, WRI, Washington
Baumert, Kevin; Llosa, Silvia (2002): Conclusion: Building an effective and fairclimate protection architecture, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia,
Perkaus, James (eds.): Building on the Kyoto Protocol. Options for protecting theclimate, WRI, Washington, p. 223-236
Baumol, William; Oates, Wallace (1971): The use of standards and prices for theprotection of the environment, in: Swedish Journal of Economics, 73, p. 42-54.
Bayer, Stefan (2000): Intergenerationelle
Klimaschutzes, Metropolis, Marburg

DiskontierungamBeispiel

desBeckerman, Wilfred; Pasek, Joanna (1995): The equitable international allocation of
tradable carbon emission permits, in: Global Environmental Change, 5, 5, p. 405-413
Beg, Noreen; Corfee-Morlot, Jan; Davidson, Ogunlade; Afrane-Okesse, Yaw; Tyani,
Lwazikazi; Denton, Fatma; Sokona, Youba; Thomas, Jean-Philippe; La Rovere,
Emilio; Parikh, Jyoti; Parikh, Kirit; Rahman, Atiq (2002): Linkages between climatechange and sustainable development, in: Climate Policy, 2, 2-3, p.129-144

75

Evolution of the Kyoto Regime

Berk, Marcel; den Elzen, Michel (2001): Options for differentiation of futurecommitments in climate policy: how to realise timely participation to meet stringent
climate goals, in. Climate Policy, 1, 4, p. 465-480
Berk, Marcel; Gupta, Joyeeta; Jansen, Jap (2001): Options for differentiating of futurecommitments under the Climate Convention – examples of a comprehensive
approach, RIVM, Bilthoven
Biagini, Bonizella (2000): Confronting climate change: Economic priorities andclimate protection in developing nations, National Environmental Trust, Washington
Blanchard, Odile (2002): Scenarios for differentiating commitments: A quantitative
analysis, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia, Perkaus, James (eds.):
Building on the Kyoto Protocol. Options for protecting the climate, WRI,
Washington, p. 203-222
Blanchard, Odile; Criqui, Patrick; Kitous, Alban (2002): After The Hague, Bonn andMarrakech: the future international market for emissions permits and the issue of hot
air, Cahier de Recherche 27bis, IEPE, Grenoble
Bode, Sven; Isensee, Jürgen; Krause, Karsten; Michaelowa, Axel (2002): Climate
policy: analysis of ecological, technical and economic implications for international
maritime transport, in: International Journal of Maritime Economics, 4, p. 164-184
Böhringer, Christoph; Helm, Carsten (2002): On the fair division of greenhouse gas
abatement cost, mimeo, ZEW, Mannheim
Bouille, Daniel; Girardin, Osvaldo (2002): Learning from the Argentine voluntarycommitment, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia, Perkaus, James(eds.): Building on the Kyoto Protocol. Options for protecting the climate, WRI,
Washington, p. 135-156
Bradford, David (2001): Succeeding Kyoto: A no cap but trade approach togreenhouse gas control, mimeo, Princeton
Brazil (1997): Proposed elements
FCCC/AGBM/1997/Misc.1/Add.1, Bonnofaprotocoltothe

UNFCCC,

Bruckner, T., Petschel-Held, G.; Toth, F. (2001): The tolerable windows approach toglobal warming, in: Abele; Hanns; Heller, Thomas; Schleicher, Stefan (eds):
Designing climate policy. The challenge of the Kyoto Protocol, Service-Fachverlag,
Vienna, p. 49-87
Byrne, John; Wang, Young-Doo; Lee, Hoesung; Kim, Jong-dall (1998): An Equityand Sustainability-Based Policy Response to Global Climate Change, in: Energy
Policy, 26, 4, p. 335-343

76

Evolution of the Kyoto Regime

Carraro, Carlo (1998): Beyond Kyoto: A Game-Theoretic Perspective, Proceedings ofOECD Workshop "Economic Modelling of Climate Change", 17-18 September, 1998,
http://www1.oecd.org/dev/news/Environment/Modelling.htm
Carraro, Carlo (ed.) (1999): International Environmental Agreements on Climate
Change, Kluwer, Dordrecht
Carvalho, Soniya (2002): 2002 Annual Review of Development Effectiveness Achieving Development Outcomes: The Millennium Challenge, Report No. 25159,
World Bank, Washington
Chisholm, Sally; Falkowski, Paul; Cullen, John (2001): Dis-crediting ocean
fertilization, in: Science, 294, p. 309-310
Claussen, Eileen; McNeilly, Lisa (1998): Equity and climate change, Pew Center,
Arlington
Cooper, Richard (1998): Toward a real treaty on global warming, in: Foreign Affairs,
77, 2, p. 66-79
Den Elzen, Michel (2002): Exploring post-Kyoto climate regimes for differentiationof commitments to stabilise greenhouse gas concentrations, RIVM report
728001020/2002, Bilthoven
den Elzen, Michiel; Both, S. (2002): Modelling emissions trading and abatement costsin Fair 1.1.: Case study: the Kyoto Protocol under the Bonn-Marrakesh Agreement,
RIVM report 728001021/2002, Bilthoven
Depledge, Joanna (2002): Continuing Kyoto: extending absolute emission caps todeveloping countries, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia, Perkaus,
James (eds.): Building on the Kyoto Protocol. Options for protecting the climate,
WRI, Washington, p. 31-60
Dooley, J.; Edmonds, Jae; Wise, Marshall (1999): The Role of Carbon Capture &Sequestration in a Long-Term Technology Strategy of Atmospheric Stabilization, in:Eliasson, Baldur;. Riemer, Pierce; Wokaun, Alexander (eds.): Greenhouse Gas
Control Technologies, Pergamon Press, p. 857-861
Dutschke (2003), Fractions of permanence – Squaring the circle of sink carbon
accounting, Mitigation and Adaptation Strategies for Global Change (upcoming)
Edmonds, Jay; Wise, Marshall (1999): Exploring a technology strategy for stabilizing
atmospheric CO2, in: Carraro, Carlo (ed.): International environmental agreements on
climate change, Kluwer, Dordrecht, p. 131-154

77

Evolution of the Kyoto Regime

Eyckmans, Johan; van Regemorter, Denise; van Steenberghe, Victor (2001): Is Kyoto
fatally flawed? An analysis with MacGEM, Working paper 2001-18, Center for
Economic Studies, Catholic University of Leuven, Leuven
Forner, Claudio; Jotzo, Frank (2002): Future restrictions for sinks in the CDM: How
about a cap on supply?, in: : Climate Policy, 2, 4, p.353-365
Frankel, Jeffrey (1999): Greenhouse gas emissions, Policy Brief 52, Brookings
Institution, Washington
Goldberg, Donald; Porter, Stephen; Lacasta, Nuno; Hillman, Eli (1998a):
Responsibility for Non-compliance under the Kyoto Protocol’s Mechanisms for
Cooperative Implementation. Discussion paper, Center for International
Environmental Law and Euronatura, Washington, Lisbon.
Goldberg, Donald; Wiser, Glenn; Porter, Stephen; Lacasta, Nuno (1998b): Building aCompliance Regime under the Kyoto Protocol. Discussion paper, Center forInternational Environmental Law and Euronatura, Washington, Lisbon.
Groenenberg, Heleen (2002): Development and convergence: a bottom-up analysis
for the differentiation of future commitments under the Climate Convention,
University of Utrecht, Utrecht
Groenenberg, Heleen; Phylipsen, Dian; Blok, Kornelis (2000): Differentiating theburden world wide: global burden differentiation of GHG emissions reductions basedon the Triptych approach, University of Utrecht, Utrecht
Grubb, Michael (1995): Seeking fair weather: ethics and the international debate on
climate change, in: International Affairs, 71, p. 463-496
Ha-Duong, Minh;. Grubb, Michael; Hourcade, Jean-Charles (1997): Influence ofsocioeconomic inertia and uncertainty on optimal CO2-emission abatement, in:
Nature, 390, p. 270-273
Hargrave, Tim (1998): Growth baselines: reducing emissions and increasing
investment in developing countries, Center for Clean Air Policy, Washington
Hargrave, Tim; Helme, Ned; Kerr, Suzi; Denne, Tim (1999): Defining Kyoto Protocol
Non-compliance Procedures and Mechanisms, Discussion Paper, Center for Clean Air
Policy, Washington.
Heister, Johannes; Stähler, Frank; Mohr, Ernst; Stoll, Tobias; Wolfrum, Rüdiger(1997): Strategies to Enforce Compliance with an International CO2-Treaty.
International Environmental Affairs 9, p. 22-53.
Helm, Carsten (1999): Applying fairness criteria to the allocation in climate
protection burdens: An economic perspective, in: Toth, Ferenc (ed): Fair weather?
Equity concerns in climate change. Earthscan Publications, London, p. 80-94
78Evolution of the Kyoto Regime

Hoffert, Martin (2001): Response to Jae Edmonds paper, in: IPIECA (ed.): Long termcarbon and energy management: Issues and approaches, Cambridge
IEA (2001): CO2 emissions from fossil fuel combustion 1971-1999, IEA Statistics,

2001 edition, p. 49
IEA (2002): CO2 emissions from fossil fuel combustion 1971-2000, Paris
IPCC (1999): Aviation and the global atmosphere, Cambridge University Press,
Cambridge
IPCC (2000): Emission scenarios, Cambridge University Press, Cambridge
IPCC (2001): Climate change 2001 – the scientific basis, Cambridge University Press,
Cambridge
Jacoby, Henry; Ellerman, Denny (2002): The safety calve and climate policy, MIT
Global Change Joint Program Report 83, Boston
Jacoby, Henry; Schmalensee, Richard; Wing, Sue (1999): Toward a usefularchitecture for climate change negotiations, MIT Global Change Joint Program
Report 49, Boston
Jansen, Jap; Battjes, J, Ormel, F; Sijm, Jos; Volkers, C; Ybema, Renko; Torvanger,
Asbjorn; Ringius, Lasse; Underdal, Arild (2001): Sharing the burden of greenhousegas mitigation: final report of the joint CICERO-ECN project on the global
differentiation of emission mitigation targets among countries, CICERO Working
Paper 2001:05, OsloKim, Yong-Gun; Baumert, Kevin (2002): Reducing uncertainty through dual intensity
targets, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia, Perkaus, James (eds.):
Building on the Kyoto Protocol. Options for protecting the climate, WRI,
Washington, p.109-134
Kopp, Ray; Morgenstern, Richard; Pizer, William; Toman, Mike (1999): A proposal
for credible early action in U.S. climate policy, Resources for the Future, Washington
Krause, Florentin (2000): Solving the Kyoto quandary: flexibility with no regrets,
IPSEP, El Cerrito
La Rovere, Emilio, de Macedo, Laura, Baumert, Kevin (2002): The Brazilian
Proposal on relative responsability for global warming, in: Baumert, Kevin;Blanchard, Odile; Llosa, Silvia, Perkaus, James (eds.): Building on the Kyoto
Protocol. Options for protecting the climate, WRI, Washington, p. 157-174
Lisowski, Michael (2002): The emperor’s new clothes: redressing the Kyoto Protocol,
in: Climate Policy, 2, 2-3, p. 161-177

79Evolution of the Kyoto Regime

Löschel, Andreas; Zhang Zhongxiang (2002): The Economic and Environmental
Implications of the US Repudiation of the Kyoto Protocol and the Subsequent Deals
in Bonn and Marrakech, ZEW Discussion Paper 02-28, Mannheim
Manne, Alan; Richels, Richard (2001): US Rejection of the Kyoto Protocol: The
Impact on Compliance Costs and CO2 emissions, AEI-Brookings Joint Center
Working Paper 01-12, Washington
Manne, Allan; Richels, Richards (2000): A multi-gas approach to climate policy,
mimeo, Stanford
Manne, Allan; Richels, Richards (2001): An alternative approach to establishingtrade-offs among greenhouse gases, in: Nature, 410, p. 675-677
Metz, Bert; Berk, Marcel; den Elzen, Michel; de Vries, Bert; van Vuuren; Detlef(2002): Towards an equitable global climate change regime: compatibility with
Article 2 of the Climate Change Convention and the link with sustainable
development, in: Climate Policy, 2, 2-3, p. 211-230
Meyer, Aubrey (2000): Contraction and convergence: the global solution to climatechange, Green Books, London
Michaelowa, Axel; Dutschke, Michael (2000) (eds.): Climate policy anddevelopment, Edward Elgar, Cheltenham
Müller, Benito (2001): Varieties of distributive justice in climate change, in: Climatic
Change, 48, p. 273-288
Müller, Benito; Grubb, Michael (2003): The framing of future emission limitationcommitments, forthcoming
Müller, Benito; Michaelowa, Axel; Vrolijk, Christian (2001): Rejecting Kyoto. A
study of proposed alternatives to the Kyoto Protocol, Climate Strategies, London
Neumayer, Eric (2002): Can natural factors explain any cross-country differences incarbon dioxide emissions?, in: Energy Policy, 30, 1, p. 7-12
New Economics Foundation (2002): Fresh Air? Options for the future architecture ofinternational climate change policy, London
OECD (1998): Ensuring Compliance with a Global Climate Change Agreement.
Discussion paper Vol. VI, No. 61, OECD, Paris.
OECD (2000): Ancillary benefits and costs of greenhouse gas mitigation, Paris
Peck, Stephen; Teisberg, Thomas (2002): Securitizing the Environment, mimeo,
Stanford80

Evolution of the Kyoto Regime

Philibert, Cedric (2000): How could emissions trading benefit developing countries,
in: Energy Policy, 28, 13, p. 947-956
Philibert, Cedric; Pershing, Jonathan (2002): Beyond Kyoto. Energy dynamics andclimate stabilisation, IEA, Paris
Pizer, William (1997): Prices vs. quantities revisited: The case of climate change,
RFF Discussion Paper 98-02, Washington
Pizer, William (2002): Combining price and quantity control to mitigate global
climate change, in: Journal of Public Economics, 85, 3
Ravindranath, N.; Sathaye, Jayant (2002): Climate change and developing countries,
Kluwer, Dordrecht
Read, Peter (2002): Precautionary climate policy and the somewhat flawed protocol:
linking sinks to biofuel and the CDM to the convention, in: Climate Policy, 2, 1, p.
89-96
Rose, Adam; Stevens, Brad; Edmonds, Jae; Wise, M (1997): International equity anddifferentiation in global warming policy: An application to tradeable emissions
permits, in: Environmental and Resource Economics, 12, 1, p. 25-51
Samaniego, Joséluis; Figueres, Christiana (2002): Evolving to a sector-based Clean
Development Mechanism, in: Baumert, Kevin; Blanchard, Odile; Llosa, Silvia,
Perkaus, James (eds.): Building on the Kyoto Protocol. Options for protecting theclimate, WRI, Washington, p. 89-108
Schlamadinger, Bernhard; Grubb, Michael; Azar, Christian; Bauen, Ausilio; Berndes,
Göran (2001): Carbon sinks and the CDM: could a bioenergy linkage offer aconstructive compromise?, in: Climate Policy, 1, 4, p. 411-417
Sijm, Jos; Jansen, Jaap; Torvanger, Asbjorn (2001): Differentiation of mitigationcommitments: the multi-sector convergence approach, in: Climate Policy, 1, 4, p. 481497
Tol, Richard (1999): Spatial and temporal efficiency in climate policy: Application of
FUND, in: Environmental and Resource Economics, 14, 1, p. 33-49
Travis, David; Carleton, Andrew; Lauritsen, Ryan (2002): Contrails reduce daily
temperature range, in: Nature, 418, p. 601
UNITAR and North-South Dialogue on Climate Change (2001): Who needs what toimplement the Kyoto protocol? An assessment of cpacity building needs in 33
developing countries, Geneva

81Evolution of the Kyoto Regime

van Vuuren, Detlef; den Elzen, Michel; Berk, Marcel; de Moor, Andre (2002): An
evaluation of the level of ambition and implications of the Bush Climate Change
Initiative, in: Climate Policy, 2, 4, p. 293-301
Victor, David (2001): The collapse of the Kyoto Protocol and the struggle to slow
global warming, Princeton University Press, Princeton
Weitzman, Martin (1974): Prices vs. quantities, in: Review of Economic Studies, 41,
p. 477-491
Wigley, Thomas; Richels, Richard; Edmonds, Jae (1996): Economic andenvironmental choices in the stabilization of atmospheric CO2 concentrations, in:
Nature, 379, p. 240-243
Winkler, Harald; Spalding-Fecher, Randall, Mwakasonda, Stanford; Davidson,
Ogunlade (2002): Sustainable development policies and measures: starting fromdevelopment to tackle climate change, in: Baumert, Kevin; Blanchard, Odile; Llosa,
Silvia, Perkaus, James (eds.): Building on the Kyoto Protocol. Options for protecting
the climate, WRI, Washington, p. 61-88
Winkler, Harald; Spalding-Fecher, Randall; Tyani, Lwazikazi (2002): Comparing
developing countries under potential carbon allocation schemes, in: Climate Policy, 2,4, p. 303-318
Wiser, Glen (2001): Kyoto Protocol Packs Powerful Compliance Punch, in:International Environment Reporter, 25, 2; p. 86
Wiser, Glen; Goldberg, Donald (1999) The Compliance Fund. A New Tool for
Achieving Compliance under the Kyoto Protocol, CIEL Discussion Paper,
Washington.
Wiser, Glen; Goldberg, Donald (2000): Restoring the balance. Using remedial
measures to avoid and cure non-compliance under the Kyoto Protocol. Discussion
paper, Center for International Environmental Law and World Wildlife Fund,
Washington
Wissenschaftlicher Beirat Globale Umweltveränderungen (1995): Welt im Wandel.
Wege zur Lösung globaler Umweltprobleme, Springer, Heidelberg
World Bank (1998): Assessing Aid: What Works, What Doesn't, and Why,
Washington
WTO(2003):
Internationaltrade
statistics
2002,
http://www.wto.org/english/res_e/statis_e/its2002_e/its02_byregion_e.htm, accessed
April 23, 2003
Yang, Zili; Jacoby, Henry (1997): Necessary conditions for stabilization agreements,
MIT Global Change Joint Program Report 26, Boston82Evolution of the Kyoto Regime

Yohe, Gary; Jacobsen, Mark (1999): Meeting concentration targets in the post-Kyoto
world: Does Kyoto further a least cost strategy?, in: Mitigation and Adaptation
Strategies for Global Change, 4, 1, p. 1-23
Zavyalova, Liliya; Michaelowa, Axel (2000): Should non-annex I countries accept
voluntary targets?, in: Joint Implementation Quarterly, 6, 1, p. 683