Background on the Kyoto Protocol and CDM

The Kyoto Protocol (Protocol) entered into force with effect from 16 February 2005. Under the Protocol, participating developed countries (Annex 1 countries) undertook a cap on their greenhouse gas emissions for the period 2008-12. This cap was established as a percentage of their 1990 emissions. The European Union member countries are obligated under the Protocol to reduce the emission of greenhouse gasses by an average of 8% on 1990 levels for the period 2008-12.

The Linking Directive, which allows emission credits arising from the flexible mechanisms of the Kyoto Protocol to be admitted and traded into the European Emission Trading Scheme (ETS), was approved on 20 April 2004 by the European Parliament and came into force on 13 November 2004. The ETS is a cap and trade scheme on carbon dioxide only and commenced on 1 January 2005. It is mandatory for all installations involved in the following sectors:

• energy activities
• production and processing of ferrous metals
• mineral industry
• pulp and paper industry

Each installation is required to obtain a greenhouse gas emissions permit and will receive an allocation of allowances in tonnes of carbon dioxide from its national authority. The emissions from each installation will need to be covered by the allowances it holds or the installation will be fined for each tonne of carbon dioxide emissions it emits greater than its holding of allowances. An estimated 16 000 installations fall within the ambit of the directive.

For more detail on CDM, click here www.cdmafrica.org