Kyoto Mechanisms: SGR statement

October 2000

At the 6th Conference of the Parties (COP-6) to the UN Framework Convention on Climate Change [1], to take place in The Hague from 13th -24th November, 2000, decisions will be made on the operating conditions of the three 'Kyoto Mechanisms':

  • Emissions Trading (ET, Article 17 of the Kyoto Protocol [2]);
  • Joint Implementation (JI, Article 6); and
  • the Clean Development Mechanism (CDM, Article 12).

The operation of these economic instruments is based on the idea that a 'donor' country with a target for reducing emissions of greenhouse gases may find it cheaper to invest in measures in a 'host' country (in either a transition economy or a developing country).

As such, these instruments have mainly been justified in terms of their ability to contribute to economic efficiency. However, economic instruments like these have never before been used in the implementation of a multi-lateral environmental agreement. Hence, there are many unresolved issues in their management and use. Further, there are concerns that the industrialised nations may exploit these measures at the expense of the global climate and the relatively poor developing countries.

Consequently, SGR believes that the rules governing their use must be robust; and caution must be exercised in their use. In practical terms, this leads to the following recommendations:

  • Strict limits on the 3 trading mechanisms. There are two main reasons why the Kyoto Mechanisms may not contribute to preventing dangerous climate change. The first is that it is very difficult to ensure that there will not be loopholes in their operation. One such loophole is the existence of 'hot air', ie the targets for certain countries (eg Russia) are so lax that they will be able to sell 'permits' under Emissions Trading without taking any emissions reduction action themselves. The second reason is that the use of the Kyoto Mechanisms is likely to shift attention away from significant action domestically within the industrialised countries, which is essential to tackle climate change in the long term. This is given further credence by the fact that emissions per capita in the industrialised countries are much higher than those in developing countries, and hence the trading measures could be used to perpetrate further global inequality. Hence, SGR believes that strict limits on the use of these mechanisms is necessary, and supports the EU proposal for defining criteria for this [3].
  • No nuclear fission projects in JI or the CDM. Nuclear fission power plants can contribute to both the proliferation of nuclear weapons and the spread of nuclear waste problems, which are currently unresolved even in western countries. SGR therefore believes that neither JI nor the CDM should be used for the export of nuclear fission technology.
  • Tight restrictions on forestry projects in JI and the CDM. There are many uncertainties concerning the ability of forest ecosystems to store CO2. Further, CO2 stored in this way can be released in the future due to, eg, forest die-back [4]. On the other hand, deforestation in many parts of the world is proceeding at a very rapid rate, leading not only to CO2 emissions, but also to other environmental problems such as loss of wildlife biodiversity, soil erosion, and flooding. Hence, SGR believes that some benefit can be gained by the inclusion of forestry in JI and the CDM, but that it should be strictly controlled to prevent loopholes becoming significant or negative local impacts occurring. To do this would require that:
      • no more than a few percent of any donor country's emissions reduction activities should include forestry;
      • only projects with unambiguous emissions reduction potential should be accepted.
      • clear local social and environmental benefits should be demonstrated before any such project is approved.
  • No 'climate-engineering' projects in JI or the CDM. SGR believes that projects involving speculative 'climate engineering' technologies (eg deep ocean carbon storage or pumping, iron fertilisation of the oceans or the injection of reflective material into the upper atmosphere) should under no circumstances be accepted because of their potential for unpredictable negative effects.
  • Tight interpretation of sustainable development criterion. As stated in the Kyoto Protocol, the CDM must assist the developing countries in which it operates 'in achieving sustainable development'. There is, as yet, no clear indication of what this means. SGR believes that clear minimum standards need to be agreed so that this criterion is not merely fudged, allowing projects with negative or inequitable local social and environmental effects to be funded. Further, SGR believes that similar standards should be agreed by recipient countries under JI so that this limitation does not act as a disincentive to carrying out CDM projects.


1. The UN Framework Convention on Climate Change was agreed at the Earth Summit in 1992 with the main aim of 'preventing dangerous anthropogenic (ie human) interference with the global climate system'. The Convention has now been ratified by 186 countries.
2. The three 'Kyoto Mechanisms' were agreed as part of the Kyoto Protocol in 1997. The Kyoto Protocol set legally binding targets for the industrialised countries to reduce their combined emissions to at least 5% below their 1990 levels. Each country was given an individual target which it can meet by domestic action and use of the Kyoto Mechanisms.
3. The EU proposal on 'supplementarity' (limits on trading) uses a formula to calculate the percentage of the emissions reduction that a given country is allowed to 'sell' to other countries. The algorithm uses factors such as population and GNP and results in a figure which is roughly 50% of the total emissions reduction.
4. According to the latest report on Climate Change by the UK Hadley Centre, there is a real danger of the large-scale death of forests by the middle of this century due to changes in the climate.

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