Mondial Energy Inc.Recent Energy News

 

Mondial Energy Inc. logo

Mondial Energy Inc.
2240 Queen Street E.
Toronto ON Canada
M4E 1G2

Phone: 416-698-6190
Fax: 416-698-5149

Climate Change and the Kyoto Protocol


What is Climate Change?

According to the US National Academy of Sciences, the Earth's surface temperature has risen by about 1°F in the past century, with accelerated warming during the past two decades. There is new and stronger evidence that most of the warming over the last 50 years is attributable to human activities. Human activities have altered the chemical composition of the atmosphere through the build-up of greenhouse gases (GHG) - primarily carbon dioxide, methane, and nitrous oxide.

Greenhouse gases have always existed. Without this natural "greenhouse effect", temperatures would be much lower than they are now, and life as we know it would not be possible. Energy from the sun drives the earth's weather and climate, and heats the earth's surface; in turn, the earth radiates energy back into space. Atmospheric GHGs trap some of the outgoing energy, retaining heat somewhat like the glass panels of a greenhouse.

Certain human activities, however, add to the levels of most of the naturally occurring GHG. Since the beginning of the industrial revolution, atmospheric concentrations of carbon dioxide have increased nearly 30%, methane concentrations have more than doubled, and nitrous oxide concentrations have risen by about 15%.

These increases have enhanced the heat-trapping capability of the earth's atmosphere and thus, may cause the global temperature to climb from 1.4 to 5.8 °C in the 21st century; the sea level may rise from 9 to 88 cm. Still the minimum warming forecast for the next 100 years is more than twice the 0.6 °C increase that has occurred since 1900 and that earlier increase is already having marked consequences. Extreme weather events, as predicted by computer models, are striking more often and can be expected to intensify and become still more frequent. Sea levels already have risen by 10 to 20 cm over pre-industrial averages and are certain to climb farther. A future of more severe storms and floods along the world's increasingly crowded coastlines is likely, and will be a bad combination even under the minimum scenarios forecast.

The Kyoto Protocol

In response, the nations that are party to the United Nations Framework Convention on Climate Change (UNFCCC) drafted the Kyoto Protocol in 1997. The Kyoto Protocol provides a framework for remedial and precautionary action to tackle adverse effects of climate change. The protocol commits industrial countries to limit their GHG emissions, assigning country-specific goals to reduce overall industrial-country emissions to 5.2% below 1990 levels over five years beginning in 2008.
The Protocol could only enter into force after at least 55 Parties to the Convention had ratified it, including enough industrialized countries listed in UNFCCC’s Annex I to encompass 55% of that group’s carbon dioxide emissions in 1990. The first Parties ratified the Protocol in 1998. With the ratification by the Russian Federation on November 18, 2004, the prescribed 90-day countdown was set in motion: The Kyoto Protocol entered into force on February 16, 2005.

The UNFCCC and the Kyoto Protocol divides countries into three main groups with differing commitments:

  • ANNEX I Parties: industrialized countries plus countries with economies in transition including the Russian Federation, the Baltic States, and several Central and Eastern European States
  • ANNEX II Parties: Annex I parties without the economies in transition parties
  • NON-ANNEX I Parties: mostly developing countries.

The Kyoto Protocol broke new ground with three innovative mechanisms:

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

These mechanisms are designed to boost the cost-effectiveness of climate change mitigation by opening ways for Parties to cut emissions, or enhance carbon ‘sinks’, more cheaply abroad than at home. Since GHGs mix uniformly in the atmosphere, it is equivalent from an environmental standpoint to reduce emissions anywhere in the world regardless of political jurisdiction.

The Carbon Market

Among the markets for environmental services currently in operation, the carbon market is the only one with worldwide reach. Since abatement costs are thought to be lower in transition economies and in developing countries, the carbon market is an opportunity not only to generate global efficiency gains, but also to contribute to sustainable development by bringing new public and private investment in clean technologies to economies in transition and to developing countries.

In the carbon market, project-based transactions (i.e. CDM and JI) are expected to dominate the global trade of GHG emission reductions. Price expectations vary and will be influenced by a range of factors that will become more certain as the commitment period of the Kyoto Protocol approaches. However, a US$ 6 per tonne CO2e would be an appropriate indicative estimate of the price of a Kyoto permit.

With the signing of the Kyoto Protocol different countries have developed Emission Trading Schemes. These trading schemes are developed as part of the commitments of the countries to reduce their GHG emission in which the most cost effective options are left to the market to develop. Examples include the United Kingdom Emission Trading Scheme (UK ETS), the European Union Emission Trading Scheme (EU ETS) and the Chicago Climate Exchange (CCX).

Links

Additional information on climate change and the Kyoto Protocol can be found at the following websites [links open in new window]:

Chicago Climate Exchange, http://www.chicagoclimatex.com/

Climate Change, Government of Canada, http://www.climatechange.gc.ca/

CO2e.com, http://www.co2e.com/

European Commission, Environment, Climate Change, http://www.europa.eu.int/comm/environment/climat/home_en.htm

European Union Greenhouse Gas Emission Trading Scheme (EU ETS), http://europa.eu.int/comm/environment/climat/emission.htm

Germany, Federal Environment Ministry, http://www.bmu.de/english/topics_a-z/content/7886.php

Greenhouse Gas Protocol Initiative, http://www.ghgprotocol.org/

Intergovernmental Panel on Climate Change (IPCC), http://www.ipcc.ch/

International Emissions Trading Association (IETA), http://www.ieta.org

International Institute for Sustainable Development, http://www.iisd.org/climate/

Prototype Carbon Fund, http://carbonfinance.org/

The Pew Centre on Global Climate Change, http://www.pewclimate.org/

UK Department for Environment, Food and Rural Affairs (Defra), http://www.defra.gov.uk/environment/climatechange/index.htm

UK Climate Change Projects Office (CCPO), http://www.dti.gov.uk/ccpo/index.htm

United Nations Framework Convention on Climate Change Convention (UNFCCC), http://unfccc.int

US Environmental Protection Agency’s Global Warming site, http://yosemite.epa.gov/OAR/globalwarming.nsf/content/index.html

World Resource Institute, http://climate.wri.org/index.cfm

Prepared for Mondial Energy by Marina Prada, BEng, MBA. September 2005.
Copyright © 2005 Mondial Energy Inc.