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RL30692: Global Climate Change: The Kyoto Protocol (pdf)

Susan R. Fletcher

Senior Analyst in International Environmental Policy
Resources, Science, and Industry Division

Updated April 11, 2001

CONTENTS

Summary

Negotiations on the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) were completed December 11, 1997, committing the industrialized nations to specified, legally binding reductions in emissions of six "greenhouse gases." The treaty was opened for signature on March 16, 1998 through March 16, 1999; the United States signed the Protocol on November 12, 1998.

This treaty would commit the United States to a target of reducing greenhouse gases by 7% below 1990 levels during a "commitment period" between 2008-2012. Because of the way sinks, which remove these gases from the atmosphere, are counted and because of other provisions discussed in this report, the actual reduction of emissions within the United States required to meet the target is estimated to be lower than 7%. The Clinton Administration did not submit the protocol to the Senate for advice and consent, acknowledging that one condition outlined by S.Res. 98, passed in mid-1997-meaningful participation by developing countries in binding commitments-had not been met.

At the November 1998 meeting of the parties in Argentina, the Buenos Aires Plan of Action (BAPA) was agreed upon for a number of these issues, with an expected deadline for completion by the sixth Conference of the Parties (COP-6) in The Hague, Netherlands, November 13-24, 2000. When COP-6 began, preparatory work had produced some agreement on limited technical issues, but little progress had been made on the more difficult political issues, such as how much of a nation's commitment could be met through emissions trading systems, compliance and consequences for non-compliance, and the extent to which carbon sinks such as forests and soils can be included in measuring greenhouse gas emission reductions. The COP-6 negotiations collapsed November 25, when the United States and the European Union failed to reach agreement on these key issues, with particular controversy centering on how much credit a nation could be allowed for carbon uptake - sequestration- by forests. Talks were suspended until a meeting announced, now termed "COP-6 bis," in Bonn, Germany, the last two weeks of July.

In late March, the Bush Administration made a determination to consider the Kyoto Protocol "dead" in terms of U.S. policy, and instead announced a cabinet-level review of climate policy. This initiated a high-level effort by the European nations to re-engage the United States in the Kyoto process. This effort was reported as having been "rebuffed" by the United States, in favor of an effort to find new approaches, centered on market-based incentives, to international cooperation to address climate change concerns. The implications for the international process are under discussion in a number of forums, and the outcome is at present unclear.

Background

Responding to concerns that human activities are increasing concentrations of "greenhouse gases" (such as carbon dioxide and methane) in the atmosphere, most nations of the world joined together in 1992 to sign the United Nations Framework Convention on Climate Change (UNFCCC). The United States was one of the first nations to ratify this treaty. It included a legally non-binding, voluntary pledge that the major industrialized/developed nations would reduce their greenhouse gas emissions to 1990 levels by the year 2000, and that all nations would undertake voluntary actions to measure, report, and limit greenhouse gas emissions.

However, as scientific consensus grew that human activities are having a discernible impact on global climate systems, possibly causing a warming of the Earth that could result in significant impacts such as sea level rise, changes in weather patterns and health effects--and as it became apparent that major nations such as the United States and Japan would not meet the voluntary stabilization target by 2000--Parties to the treaty decided in 1995 to enter into negotiations on a protocol to establish legally binding limitations or reductions in greenhouse gas emissions. It was decided by the Parties that this round of negotiations would establish limitations only for the developed countries (those listed in Annex I to the UNFCCC, including the former Communist countries, and referred to as "Annex I countries." Developing countries are referred to as "non-Annex I countries"). (1)

During negotiations that preceded the December 1-11, 1997, meeting in Kyoto, Japan, little progress was made, and the most difficult issues were not resolved until the final days--and hours--of the Conference. There was wide disparity among key players especially on three items: (1) the amount of binding reductions in greenhouse gases to be required, and the gases to be included in these requirements; (2) whether developing countries should be part of the requirements for greenhouse gas limitations; and (3) whether to include emissions trading and joint implementation, (which allow credit to be given for emissions reductions to a country that provides funding or investments in other countries that bring about the actual reductions in those other countries or locations where they may be cheaper to attain).

Following completion of the Protocol in December of 1997, details of a number of the more difficult issues remained to be negotiated and resolved (see below). At the fourth Conference of the Parties (COP-4) held November 2-13, 1998, in Buenos Aires, Argentina, it was apparent that these issues could not be resolved as had been expected during this meeting. Instead, parties established a two-year "Buenos Aires Plan of Action" to deal with these issues, with a deadline for completion at the COP-6 meeting in The Hague, November 13-24, 2000. The difficulty in resolving these issues was underlined by the collapse of discussions in The Hague without agreement. A "COP-6 bis" will attempt to continue the negotiations, probably in May 2001 in Bonn, Germany.

Major Provisions of the Kyoto Protocol

The Kyoto Protocol was opened for signature March 16, 1998, for one year, and would enter into force-become legally binding for countries that have ratified--when 55 nations have ratified it, provided that these ratifications include Annex I Parties that account for at least 55% of total carbon dioxide emissions in 1990. This provision is likely to be hard to meet in the absence of U.S. ratification, since the United States accounted for well over 20 percent of such emissions. On November 12, 1998, the United States signed the Protocol, in part because the Clinton Administration wanted to revitalize what was seen as some loss of momentum during COP-4. As of November 27, 2000, 84 countries had signed the treaty, including the European Union and most of its members, Canada, Japan, China, and a range of developing countries. Some 31 countries were reported by the UNFCCC Secretariat to have ratified the treaty, but to date, no Annex I developed nation has ratified the Protocol. Nations are not subject to its commitments unless they have ratified it and it enters into force.

The major commitments in the treaty on the most controversial issues are as follows:

Emissions Reductions. The United States would be obligated under the Protocol to a cumulative reduction in its greenhouse gas emissions of 7% below 1990 levels for three major greenhouse gases, including carbon dioxide, (and below 1995 levels for the three other, man-made gases), averaged over the commitment period 2008 to 2012. The Protocol states that Annex I Parties are committed--individually or jointly--to ensuring that their aggregate anthropogenic carbon dioxide equivalent emissions of greenhouse gases do not exceed amounts assigned to each country in Annex B to the Protocol, "with a view to reducing their overall emissions of such gases by at least 5% below 1990 levels in the commitment period 2008 to 2012." Annex A lists the 6 major greenhouse gases covered by the treaty (2).

Annex B to the Kyoto Protocol lists 39 nations, including the United States, the European Union plus the individual EU nations, Japan, and many of the former Communist nations (the same countries as Annex I to the UNFCCC). The amounts for each country are listed as percentages of the base year, 1990 (except for some former Communist countries), and range from 92% (a reduction of 8%) for most European countries--to 110% (an increase of 10%) for Iceland. The United States agreed to a commitment on this list to 93%, or a reduction of 7%, to be achieved as an average over the 5 year commitment period, 2008-2012.

Based on projections of the growth of emissions using current technologies and processes, the reduction in greenhouse gas emissions required of the United States would likely be between 20% and 30% below where it would be otherwise by the 2008-2012 budget period. (3) However, inclusion of greenhouse gas sinks (4) -- which the Protocol adopted as urged by the United States -- and emissions trading, means that the domestic U.S. emission reductions from fossil fuels needed to meet a 7% target would be substantially less. However, two of the most difficult issues unresolved at Kyoto, and responsible in large part for the breakdown of the COP-6 negotiations in November 2000, are related to (1) emissions trading-specifically, how much of a country's obligation to reduce emissions can be met through purchasing credits from outside, vs. taking domestic action; and (2) the extent to which carbon sequestration by forests, soils and agricultural practices can be counted toward a country's emission reductions.

Developing Country Responsibilities. The United States had taken a firm position that "meaningful participation" of developing countries in commitments made in the Protocol is critical both to achieving the goals of the treaty and to its approval by the U.S. Senate. This reflects the requirement articulated in S.Res. 98, passed in mid-1997, that the United States should not become a party to the Kyoto Protocol until developing countries are subject to binding emissions targets. The U.S. government also argued that success in dealing with the issue of climate change and global warming would require such participation. The developing country bloc argued that the Berlin Mandate--the terms of reference of the Kyoto negotiations established at COP-1 in 1995--clearly excluded them from new commitments in this Protocol, and they continued to oppose emissions limitation commitments by non-Annex I countries.

The Kyoto negotiations concluded without such commitments, and the Clinton Administration indicated that it would not submit the Protocol for Senate consideration until meaningful commitments were made by developing countries. At the COP-4 in Buenos Aires, Argentina became the first nation to indicate that it will make a commitment to take on a binding emissions target for the period 2008-2012. Kazakhstan also announced its intention to take similar action. At this meeting, the United States announced it would sign the Kyoto Protocol, which it did on November 12, 1998. To date, none of the largest developing countries, such as China, India or Brazil, have shown a willingness to make commitments to reducing greenhouse gas emissions. The United States has continued to attempt raising this issue at COP meetings, generally under the agenda item "adequacy of commitments." However, at the COP-6 meeting, this item was not discussed, and developing country resistance continues.

The Protocol does call on all Parties--developed and developing--to take a number of steps to formulate national and regional programs to improve "local emission factors," activity data, models, and national inventories of greenhouse gas emissions and sinks that remove these gases from the atmosphere. All Parties are also committed to formulate, publish, and update climate change mitigation and adaptation measures, and to cooperate in promotion and transfer of environmentally sound technologies and in scientific and technical research on the climate system.

Emissions Trading and Joint Implementation. Emissions trading, in which a Party included in Annex I "may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases" for the purpose of meeting its commitments under the treaty, is allowed and outlined in Article 6, with several provisos. Among the provisos is the requirement that such trading "shall be supplemental to domestic actions." The purpose of this proviso is to make it clear that a nation cannot entirely fulfill its responsibility to reduce domestic emissions by relying primarily on emissions trading or joint implementation to meet its targets. Joint implementation is project-based activity in which one country can receive emission reduction credits when it funds a project in another country where the emissions are actually reduced. One of the more contentious issues in on-going negotiations concerning how the Kyoto Protocol would work is this issue of "supplementarity"-finding agreement on what proportion of a nation's obligations could be met through these mechanisms versus domestic actions to reduce emissions within a nation's own borders.

A number of specific issues related to the rules on how joint implementation and emissions trading would work were left at Kyoto to be negotiated and resolved in subsequent meetings; in the years since the Protocol was completed, it became increasingly clear that this is an extremely complex issue, and an emissions trading system is not likely to be designed and implemented quickly. This has been a major element of the work on the Buenos Aires action plan, and remained far from resolved in the text introduced for negotiation in The Hague in November.

Another major "mechanism" for meeting obligations in the Protocol is provided by the establishment of a "clean development mechanism" (CDM), through which joint implementation between developed and developing countries would occur. The United States had pushed hard for joint implementation, and early proposals were formulated with the expectation that "JI" projects would be primarily bilateral. Instead, negotiations resulted in agreement to establish the clean development mechanism to which developed Annex I countries could contribute financially, and developing non-Annex I countries could benefit from financing for approved project activities; Annex I countries could then use certified emission reductions from such projects to contribute to their compliance with part of their emission limitation commitment. Emissions reductions achieved through this mechanism could begin in the year 2000 to count toward compliance in the first commitment period (2008-2012). Again, proposals on how this mechanism would operate are to be developed and negotiated under the Buenos Aires action plan. Like emissions trading, making the CDM operational appears likely to be a protracted and difficult process, given the increasing number of complexities emerging from the on-going work and discussions on how the CDM might work. However, at The Hague, how the CDM might operate became somewhat better articulated.

Buenos Aires Action Plan

Although it had been expected just after the 1997 Kyoto conference that the November 1998 COP-4 meeting in Buenos Aires would resolve some of the more difficult issues left unresolved in Kyoto, it became clear during the year leading up to COP-4 that parties were far from agreement on all of these issues. Additional time for parties to analyze, negotiate, and work on these issues would be required. Therefore, the parties arrived in Buenos Aires with an agenda focused on formulating an "action plan" that would allow for the needed additional work to be done. It was decided that the work plan would be completed by the end of 2000, and would focus on the key issues, including the following:

-- Rules and guidelines for the "market-based mechanisms" that allow flexibility to parties in meeting their obligations. These include emissions trading, joint implementation, and the Clean Development Mechanism (CDM). The list of critical issues to be considered include whether there should be quantified limits on how much of a country's emission reduction requirement could be met through these mechanisms, as argued by the European Union, or no quantified limit, as argued by the United States; "transparency" in making it possible to effectively track emission units; allocating risk in emissions trades--including the question of assigning liability, or responsibility, when emissions trading involves "false" credits; and key measurement, reporting and verification issues.

-- Rules and procedures that would govern compliance, including provisions covering non-compliance with the treaty's commitments. This issue was left entirely open at Kyoto and remains one of the major challenges facing negotiators.

-- Issues concerning development and transfer of cleaner, lower-emitting technologies, particularly to developing countries.

-- Consideration of the adverse impacts of climate change and also the impacts of measures taken to respond to it, an issue of particular importance to developing countries, who argue the need for financial assistance in order to help them cope with these impacts.

Carbon sinks. Another issue under active negotiation and consideration by the parties outside the action plan itself is defining application of the concept of carbon sinks, including how to measure and verify the categories of carbon sinks. The scientific panel that provides analysis to the parties, the Intergovernmental Panel on Climate Change (IPCC), conducted a comprehensive study on land use, land-use change, and forestry activities to identify their roles as carbon sinks and deal with the measurement and verification issues related to them.

Following the release of this report, which indicated that a large amount of carbon could be stored in a variety of carbon sinks, including not only forests, but in soils, vegetation, grazing lands, etc., the United States made a comprehensive proposal for the COP-6 negotiations to broaden the scope of acceptable carbon sinks. The Kyoto Protocol accepts in principle that a nation's forests-management practices, reforestation or afforestation-may be included in the accounting of net greenhouse gas emissions and their reduction. This is important to the United States, as its large land area and extensive potential for greater absorption of carbon due to land management changes could greatly reduce the amount of emissions reductions needed from energy production. In a submission to the Secretariat of the UNFCCC, the United States proposed in late summer 2000 that elaboration at COP-6 of land use changes acceptable under the Protocol should also include soil carbon sequestration and vegetation.

Few decisions were reached, nor were they expected, on the more difficult issues outlined in the Buenos Aires Plan of Action at the COP-5 meeting in Bonn, Germany, held October 25-November 24, 1999.

COP-6 Negotiations

There were two intersessional negotiation sessions of the UNFCCC Subsidiary Bodies (the key mechanisms for considering Kyoto issues between COP meetings) in 2000, June 12-16 and September 11-15, dealing with the issues of the Buenos Aires workplan and attempting to fashion a negotiating text for final consideration at the November 13-24 COP-6 meeting. At the conclusion of the meeting in Lyon, it was reported that language on aspects of some issues had been agreed upon, but that the negotiating text had been expanded to some 200 pages, much of it "bracketed." [Brackets indicate that no agreement has been found on the language in brackets, and often several alternative possibilities are reflected in the brackets.] Thus, though there was negotiating text on most issues, disagreements remained on most key issues. Observers reported that political positions remained entrenched and little movement toward compromise appeared evident in Lyon. The end result was that many participants felt doubtful that many of the key issues could be completely resolved in November, 2000, at COP-6.

As talks began at COP-6 in The Hague November 13, they centered initially on the "Buenos Aires Plan of Action" (BAPA), but evolved into a high-level negotiation over the major political issues. These included major controversy over the United States' proposal to allow credit for carbon "sinks" in forests and agricultural lands, satisfying a major proportion (between half and one-quarter, according to various versions of the U.S. proposal) of the U.S. emissions reductions in this way; disagreements over consequences for non-compliance by countries that did not meet their emission reduction targets; and difficulties in resolving how developing countries could obtain financial assistance to deal with adverse effects of climate change and meet their obligations to plan for measuring and possibly reducing greenhouse gas emissions.

In the final hours of COP-6, despite some compromises agreed between the United States and some EU countries, the EU countries as a whole, reportedly led by Denmark and Germany, rejected the compromise positions, and the talks in The Hague collapsed. Jan Pronk, the President of the COP, suspended COP-6 without agreement. Discussions between the EU and the "Umbrella group" that includes the United States, Canada, Japan and Australia, were held in Ottawa, Canada, during the week of December 4, 2000, in order to try and salvage some of the agreement reached at the end of the talks in The Hague. However, the U.S. negotiators reported that these talks were "inconclusive" and the differences were still in place, or even exacerbated, after this meeting.

At the end of 2000, based on discussions at The Hague and in Ottawa, the issues particularly in contention were as follows:

Mechanisms, especially emissions trading: The main issue here is "supplementarity"-- the position of the United States is that there should not be quantitative limits to the amount of emissions reductions that are allowed toward a country's obligations through emissions trading or joint implementation. The EU and others argue there should be such limitations, in order to force nations to take more extensive domestic action to reduce emissions. This issue is related to the commitment outlined in the Kyoto Protocol that emissions trading should be "supplemental" to domestic action. The United States is supported by the "umbrella group" in which it is joined by New Zealand, Japan, Canada, Australia, Russia, Ukraine, Norway and Iceland. Another related issue is whether carbon sinks can be included in the Clean Development Mechanism (CDM) in which a contributing developed country can claim credit for actions to reduce emissions in developing countries. There are significant divisions on this issue not among developed countries, but among developing countries, as well.

Compliance issues: Decisions on how non-compliance with Protocol (and UNFCCC) obligations should be handled is a very controversial issue. The United States position is that there should be binding consequences, but these should be in the form of additional obligations in subsequent commitment periods, and not in the form of financial penalties. There was considerable disagreement at The Hague over whether financial penalties should be allowed. Agreement on binding consequences would probably require an amendment to the Protocol, which would be separately agreed to and separately ratified. Opponents to binding consequences include Japan, Russia, and Australia, who are concerned, among other things, about opening the Protocol to an amendment process. On the structure of a compliance regime, there was substantial agreement on a likely outcome: a single compliance body with two functions or branches-(1) to facilitate and assist compliance (mainly for developing countries), and (2) an enforcement function where decisions would be made on whether compliance violations have occurred and what consequences should be applied. Consequences under consideration, in addition to financial penalties, include losing access to mechanisms like emissions trading and/or subtracting from future allocations of allowable carbon emissions; however, the issue of what consequences may be agreed upon is apparently far from a final decision.

Land use and land use change and forestry (LULUCF): As noted above, the Kyoto Protocol accepts in principle that a nation's forests-management practices, reforestation or afforestation-may be included in the accounting of net greenhouse gas emissions and their reduction. The United States proposed at COP-6 that land use changes acceptable under the Protocol should also include soil carbon sequestration and vegetation. Major issues are how to attain precision in measuring absorption and release of carbon from land-based sources, how permanent such land use mechanisms would be, and the extent to which land use absorption counted by a nation is "additional" to business as usual.

The United States made a series of controversial proposals on how to count carbon sequestration, beginning with basically counting most of the carbon sequestration in its extensive forest cover toward its obligations. It subsequently revised this proposal and put forward a formula that included three parts: a first "interval" allowing up to 20 million tons of carbon to be counted at 100% for any country with forests absorbing that much; a second interval of a certain amount in which credit for a certain percentage would be allowed up to a certain threshold; then full credit for tons absorbed beyond the threshold (which would be historically determined in relation to baseline absorption amounts). The EU opposed the U.S. proposal, mainly on the issue of forests, and the extent to which a country like the United States would receive credits for a "business as usual" scenario that did not involve the harder emissions reductions from fuel sources and technological measures. When the United States put numbers to this proposal, the U.S. credits from carbon sinks appeared to represent about 125 million tons of carbon, against a likely need to reduce emissions by about 600 million tons of carbon to meet its commitment in 2008-2012. This was strongly opposed by the EU and other countries, and a stalemate over this issue, despite several revisions downward of the U.S. position and tentative acceptance of a much smaller amount by the EU, is thought to be a major factor in the collapse of the COP-6 negotiations at The Hague.

Developing country participation: The United States has been seeking additional commitments from developing countries in a series of informal discussions and consultations during the nearly three years since the Kyoto Protocol was completed in late 1997, but only Argentina and Kazakhstan have shown a willingness to make such commitments. Little willingness to do so has been shown by other developing countries. This issue is key to any consideration of ratification by the United States. The possibility that it would be discussed under an agenda item dealing with "adequacy of commitments" did not occur at The Hague.

In early 2001, it was announced that talks will resume in the last two weeks of July 2001 at meetings in Bonn, Germany (a session now referred to as "COP-6 bis," or a continuation of the suspended COP-6 meeting in The Hague) and continue at the next COP-7, to be held in October 2001 in Marrakech, Morocco.

The Bush Administration announced in late March that it would not be interested in continuing discussion on the Kyoto Protocol, which some characterized as "dead" in terms of U.S. policy. A cabinet-level review of U.S. climate policy was announced, and the Administration indicated that it would be interested in pursuing instead international efforts to identify new cooperative approaches, such as market-based incentives, to address climate change concerns. The EU nations and others, such as Japan, expressed deep concern and dismay at the U.S. position, and a high-level delegation of EU officials visited the United States to attempt to re-engage the United States in the Kyoto Protocol process. This effort was reported as having been "rebuffed." Some observers began considering the implications of the new U.S. position for the Protocol, and whether the EU and other nations would ratify the Protocol, and try to bring it into force without the United States.

Extensive additional information from CRS and a variety of sources is also available at the CRS electronic briefing book on Global Climate Change.

Issues for Congress

Ratification. For the United States to ratify the Protocol, the treaty must be submitted to the U.S. Senate for advice and consent, with a two-thirds majority vote in the Senate required for approval. If the United States does not ratify the treaty, it is not subject to its terms and obligations. President Clinton strongly supported the Kyoto Protocol, though criticizing it for not including commitments for developing countries. The United States signed the Protocol on November 12, 1998. The U.S. signature was criticized by several Members of Congress who oppose the treaty on a number of grounds, including questions about the scientific justification for it and about the likely economic impacts that might occur if the United States were to attempt to meet its emission reduction commitments in the treaty. In recognition of the opposition expressed in the Senate by S.Res. 98, which passed 95-0, to a Protocol that does not include requirements for emissions limitations by developing countries, President Clinton did not submit the treaty to the Senate for advice and consent, citing lack of meaningful developing country participation. Given the position announced by the Bush Administration, opposing the Kyoto Protocol, it continues to be unlikely that it will come before the Senate.

Oversight. Both the House and Senate have sent delegations of Members to serve as observers on the U.S. delegation to Kyoto-related meetings. Supporters and opponents of the Protocol have been included in these delegations. A number of committees have held hearings on the implications of the Protocol for the United States, its economy, energy prices, impacts on climate change, and other related issues. While the Clinton Administration stated that it believed the treaty could be implemented without harm to the U.S. economy, and without imposing additional taxes, a number of questions related to how its goals can be achieved and at what cost, continue to be of interest to Congress. Given the position announced by the Bush Administration, it seems likely that congressional attention will shift somewhat, to a consideration of new international approaches that may be identified by the outcome of the announced policy review.

Legislation. A number of legislative proposals are under discussion related to climate change, and in particular, U.S. domestic action on research, science, and emissions trading or sequestration credit. In general, if any treaty were to be sent to the Senate for consideration, legislation that might be required for its implementation would also typically be sent to the Congress by the Administration. Legislation related to the Kyoto Protocol would not be likely unless the protocol were sent to Congress, which as noted above is not likely, given the Bush Administration's position on the protocol. (see "Legislation" Section of the CRS Global Climate Change Electronic Briefing Book -- and/or the legislation section of CRS Issue Brief 89005.

Footnotes

1. (back)For additional information on the negotiations in Kyoto and related background, see CRS Report 97-1000, Global Climate Change Treaty: Negotiations and Related Issues; and CRS Issue Brief IB89005, Global Climate Change.

2. (back)The six gases covered by the Protocol are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). The most prominent of these, and the most pervasive in human economic activity is carbon dioxide, produced when wood or fossil fuels such as oil, coal, and gas are burned.

3. (back)See CRS Report 98-235 ENR, Reducing Greenhouse Gases: How Much from What Baseline?

4. (back)Greenhouse gases, especially CO2, are absorbed by a number of processes in forests, soils, and other ecosystems. These are called "sinks."

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