Kyoto Treaty

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The Kyoto Treaty [1] is a treaty created to reduce global warming by cutting greenhouse gases. The Kyoto Protocol was signed in 1997 following negotiations and it became a legally binding treaty on Feb. 16, 2005.

Kyoto now covers around 180 countries globally and more than 60% of countries in terms of global greenhouse gas emissions. As of December 2007, the US and Kazakhstan were the only signatory nations not to have ratified the act.

Kyoto stipulates that, between 2008 and 2012, the emissions should be decreased to an average level 5.2% lower than that of 1990.[2]


At Kyoto, the members of the Organisation For Economic Co-Operation And Development as of 1992 and the countries of the former Soviet Union and Eastern Europe pledged to cut anthropogenic emissions of six greenhouse gases during a five-year commitment period, 2008 to 2012. The covered greenhouse gases are: carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perfluorocarbons and sulfur hexaflouride.[3]The Kyoto Protocol is an amendment to the United Nations Framework Convention on Climate Change.

A revised Kyoto agreement made considerable compromises allowing countries like Russia to offset their targets with carbon sinks - areas of forest and farmland which absorb carbon through photosynthesis.

U.S. Concerns About The Agreement[edit]

Kyoto does not commit Mexico, or any other developing nation for that matter, to limits on greenhouse gas emissions. This is problematic because climate change from an increased atmospheric concentration of greenhouse gases inherently is a global issue. Whatever their earthly origin, the gases are dispersed widely in the upper atmosphere. American concessions on binding reductions will be completely ineffectual if new Asian, African and Latin American emissions overwhelm U.S. savings. The World Resources Institute estimates that current carbon dioxide emissions from human sources - mostly from the burning of fossil fuels - average more than 7 billion metric tons of carbon per year. Merely keeping carbon dioxide emissions roughly at today's levels would result in a doubling of the concentration in the atmosphere from its pre-industrial level by the end of the 21st century, with the carbon dioxide concentration continuing to rise for another century after that before stabilizing. Though projections vary substantially with assumptions about rates of economic growth, it appears that sometime between 2010 and 2020 China will overtake the United States as the world's largest greenhouse gas emitter, and that sometime thereafter emissions in the developing world will exceed those of the developed world. The World Resources Institute summed up the situation in its Guide to the Global Environment.[4]

The Bonn agreement also reduced cuts to be made to emissions of six gases believed to be exacerbating global warming - from the original treaty's 5.2% to 2%. It was hoped that these slightly relaxed provisions would allow the US to take up the Kyoto principles.[5]

The successor agreement to Kyoto must be negotiated by 2009. It is unclear what form it will take.

Markets Develop Out Of Kyoto[edit]

EU emissions trading started in 2005 to help members meet commitments to Kyoto.

National allocation plans for the amount of carbon dioxide - the gas most blamed for global warming - that energy-intensive installations may emit were sent by member states. Governments then began to break down the accepted plans among companies, which bought or sold allowances to regulate the release of polluting gases. While carbon credits accommodate more pollution in the short term, their rising price should gradually eliminate the cost advantage of coal, prompting a switch back to cleaner fuels.[6]

The Amsterdam-based European Climate Exchange is a wholly-owned subsidiary of the Chicago Climate Exchange, which in turn is owned by Climate Exchange, an Isle of Man-based company that is listed on the Alternative Investment Market in London.

The Asia Carbon Exchange aims to trade up to eight million tons of credits a year from 2009.