The Flexibility Mechanisms

In one line

Three articles of the Kyoto Protocol let a Party meet its target by paying for a reduction somewhere else, and one of them, the clean development mechanism, is the only part of the Protocol that mattered to India.

In exam wording: the Kyoto Protocol's flexibility mechanisms are joint implementation under article 6, by which an Annex I Party may acquire emission reduction units from a project in another Annex I Party; the clean development mechanism under article 12, by which an Annex I Party may acquire certified emission reductions from a project in a Party not included in Annex I; and emissions trading under article 17, by which Annex B Parties may transfer parts of their assigned amounts; all three being supplemental to domestic action.

Why they exist

Because a tonne of carbon dioxide has the same effect wherever it is emitted, and abating it costs very different amounts in different places. If State GG must reduce by a hundred tonnes and abatement costs it fifty dollars a tonne at home and ten dollars a tonne in State HH, then paying for the reduction in HH achieves the same climate result for a fifth of the money.

The environmental objection is that it lets a rich country buy its way out of changing its own economy. The word supplemental in articles 6 and 17 is the compromise, and it was never quantified.

Article 6: joint implementation

For the purpose of meeting its commitments under article 3, any Annex I Party 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 removals by sinks, provided that:

• the project has the approval of the Parties involved;
• it provides a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur;
• the acquiring Party acquires no units if it is not in compliance with its obligations under articles 5 and 7 on methodologies and reporting; and
• the acquisition of units is supplemental to domestic actions.

Between two Annex I Parties, because both have targets, the transaction is a transfer between two capped totals.

Article 12: the clean development mechanism

Paragraph 2 states the purpose: to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their commitments.

Two purposes, in that order. The sustainable development of the host is named first, and it is the reason developing States accepted the mechanism.

Paragraph 3: Parties not included in Annex I will benefit from project activities resulting in certified emission reductions, and Parties included in Annex I may use those certified reductions to contribute to compliance with part of their commitments.