International Energy and Climate Policy - International Climate Policy

Kyoto Mechanisms

The Kyoto Protocol introduced three mechanisms to enable Annex I countries to reduce the costs of their emission limitation commitments by means of transactions abroad. These so-called 'flexible instruments' or 'Kyoto Mechanisms' include:

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

ECN carries out projects (a) to increase the insight in the role and operation of the Kyoto Mechanisms - including their interaction (b) to analyse the contribution and cost implications of these mechanisms in meeting the emission limitation commitments of Annex I countries, and the Netherlands in particular, and (c) to assist in the practical implementation of the JI/CDM programmes. In the beginning, ECN focused on the three mechanisms separately, on the issues of ceilings and burden sharing, as well as on studies to analyse domestic GHG abatement options and related policies and measures. In 2000, ECN has integrated the gained knowledge and carried out quantitative analysis that cover all GHGs, all Kyoto Mechanisms and all major countries and regions of the world. The underlying methodology is based on technology `bottom-up' models developed under previous ECN studies on GHG emission scenarios and mitigation analysis.

The studies showed that the reduction potential in Central and Eastern Europe and in the non-Annex I countries amounts to approximately 4.4 Gton CO₂ equivalent in the year 2010, which is more than enough to meet the total required reduction of OECD countries (incl. US). All included GHG abatement options can be obtained at a price of US$ 50 per ton CO₂ or lower. Over one third of the identified GHG abatement options is even achievable at negative or zero incremental costs (no regret options).

In case the Kyoto Mechanisms can be used unrestrictedly, Annex I countries will meet, on average, 65 to 85 percent of their reduction requirements by means of foreign transactions. As a result, global abatement costs could tumble from 76 billion USD 'before trade' to 1.5-10 billion USD 'after trade' (i.e. after relying on the Kyoto Mechanisms). In relative terms, i.e. as a share of GDP, the countries that benefit most include Italy, Japan, Austria and Denmark, mainly due to their relatively high domestic reduction costs. Some countries, however, can even make profits by exporting emission credits to Annex I countries. Such profits will be mainly realised by CDM countries in Asia and JI countries in the Annex I region of Central and Eastern Europe/Former Soviet Union (CEE/FSU). All results are subject to some shortcomings and limitations and should therefore be interpreted cautiously.

Publications

• Greenhouse gas marginal abatement cost curves for the non-Annex I region
  B. Wetzelaer, N.H. van der Linden, H. Groenenberg, H.C. de Coninck, 2007
• Technology transfer in the Clean Development Mechanisms
  H.C. de Coninck, F. Haake, N.H. van der Linden, 2007
• A guide to bundling CDM projects
  J. Mariyappan, N. Bhardwaj, N.H. van der Linden, H.C. de Coninck, 2005
• Realising the potential for small-scale CDM projects in India
  H.C. de Coninck, C.J. Roos, N.H. van der Linden, N. Bhardwaj, B. Parthan, J. Green, J. Mariyappan, 2004
• Implementing clean coal projects under Kyoto
  H.C. de Coninck, S.J.A. Bakker, J. Kessels, A. Clemens, C. Gaza, 2005
• An overview of Carbon transactions: General Characteristics and Specific Peculiarities
  H.C. de Coninck, N.H. van der Linden, 2003
• The economics of including carbon sinks in climate change policy; Evaluating the carbon supply curve through afforestation in Latin America
  P.C. Ben?tez, 2003
• Kyoto mechanisms: the role of JI, CDM and ET in reducing greenhouse gas emissions
  J.P.M. Sijm, F. Ormel, J.W. Martens, S.N.M. van Rooijen, M.H. Voogt, M.T. van Wees, C. de Zoeten-Dartenset, 2000
• Potential and costs of greenhouse gas emission reduction options in the Netherlands and abroad - an overview
  N.H. van der Linden, J.R. Ybema, M. Beeldman, S.N.M. van Rooijen, 2000

For more information please contact Heleen de Coninck