The Kyoto Protocol

The 1997 Kyoto Protocol, which came into force only two weeks ago, is considered by environmental lawyers and NGOs alike as one of the most complex and demanding international environmental treaties ever drafted.

The protocol supplements the 1992 UN Framework Convention on Climate Change (UNFCCC), which mandated its parties to stabilise greenhouse gas emissions to the atmosphere 'at a level that would prevent dangerous anthropogenic interference with the climate system' (Article 2).

However, although there was a basic agreement that a global effort was needed to safeguard the Earth's climate system in the face of increasing greenhouse gas emissions, the parties to the 1992 UNFCCC fell short of setting clear-cut targets or acceptable emission levels. This task was effectively postponed until 1997, when the Kyoto Protocol was eventually signed.

The parties to the 1997 Kyoto Protocol are mainly industrialised countries listed in Annex B of the protocol, and include both OECD countries and the so-called 'eco-nomies in transition', that is, the ex-Soviet bloc countries. This list of countries clearly includes the world's major greenhouse gas emitters, most of which also have the strongest economies.

Apart from setting a milestone in international co-operation and legislation in agreeing to a target for the reduction of greenhouse gas emissions, the protocol is also very significant in that it represents a collective effort by the industrialised nations alone in safeguarding the interests of the global community.

The great achievement of the 1997 Kyoto Protocol was the legally binding target contained in Article 3 (1). Under this Article, Annex B parties to the protocol (these are also the Annex I parties to the 1992 UN Framework Convention on Climate Change) committed themselves to reducing their overall emissions of greenhouse gases (listed in Annex A of the protocol and including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and also sulphur hexafluoride) by about five per cent below 1990 levels in the commitment period 2008-2012.

The parties also committed themselves to make demonstrable progress in achieving this target by 2005. However, the meaning of 'demonstrable progress' and how this would be measured remained unspecified.

The modus operandi of the 1997 Kyoto Protocol is through a tripartite approach. First of all, the emissions trading scheme approach can be described as the keystone to the protocol. In 1997, the US strongly advocated an emissions trading regime in the greenhouse gas emissions management. The US went as far as to threaten not to sign the protocol unless a proper article on emissions trading was introduced.

At the time of the protocol, several countries argued that the practical implementation of emissions trading schemes was still a long way off even though the economic theory underlying this approach had already been rapidly evolving.

Also, developing countries together with the EU perceived the imposition of the emissions trading approach in the protocol as a legal loophole enabling the major industrialised countries particularly the US, not to abide to the protocol's provisions.

The industrialised countries would be able to resort to the excuse that proper emissions trading systems had not yet been developed and thus, in practice very little could be done to constrain emissions. On a more positive note, however, the EU is now already developing a plan to implement a credit trading system that would enable it to meet some of its Kyoto obligations.

This does not mean that some form of international emissions trading scheme is already at hand. Far from it! The problem with emissions trading is that it requires solving the nearly impossible problem of having governments allocating the emission permits among themselves. No country knows its future emissions levels or how much the costs of controlling the emissions will be. This means that no country knows the number of permits it will need. Some countries might actually feel harmed by the number of permits allocated to other countries since they might feel economically disadvantaged in this respect.

The allocation of emission permits (i.e. pollution permits) effectively constitutes partitioning the atmosphere, as if this common resource can be conveniently divided between states. The theoretical background may have been developed but certainly we are still a long way from its practical implementation, particularly at the global level. Unless this issue is resolved, the successful implementation of the 1997 Kyoto Protocol provisions is destined to fall short of being as economically efficient as the Kyoto signatories may have originally desired.

A second system, known as "joint implementation", allows industrialised countries to earn credits when they jointly implement specific projects that reduce emissions. Thirdly, there is the "Clean Development Mechanism", CDM, which permits the industrialised nations to earn credits for projects implemented within the developing nations. Through the CDM developing countries could attract new investment into projects that limit emissions of greenhouse gases, stem other environmental problems such as urban smog associated with dirty fossil fuels, and also modernise their energy systems.

Yet again, a considerable element of scepticism also exists as far as the efficient implementation of these mechanisms is concerned. One case in point is the operation of an accreditation system by which the benefits accrued by one country (or group of countries) for investing in a particular project or technology in a developing country is accounted for in terms of complying with the protocol.

Together, these three systems constitute an attempt at reducing greenhouse gas emissions at the least costs - because after all the 1997 Kyoto Protocol is much more than yet another international environmental agreement. The economic implications of implementing the provisions under Kyoto must not be underestimated. Reducing greenhouse gas emissions, particularly carbon dioxide, should entail a substantial reduction in fossil fuel use. Unless non-greenhouse gas emitting energy alternatives are in place, economic measures would have to be imposed intended at constraining fossil fuel energy use.

Malta is party to both the 1992 UN Framework Convention on Climate Change and the 1997 Kyoto agreement. Presently, our obligations under Kyoto do not include curbing greenhouse emissions in line with strict targets as imposed on the Annex B parties. However, as an EU member state, a situation may easily evolve whereby our country should eventually have to comply to similar or even more stringent targets in any future post-2012 agreements.

The need for our country to implement non-polluting renewable energy is therefore becoming ever more important. Some environmental scientists and economists have also argued that insofar as the 1997 Kyoto Protocol provisions fail to be satisfied, a stop-gap solution may be the imposition of emissions taxes. This is something our country should strive to avoid.

Mr Galdes is the Opposition's spokesman on the environment.