UNCLASSIFIED· f The Kyoto Protocol on Climate Change State Department Fact Sheet January 15 1998 RELEASED IN FULL BACKGROUND - • At a conference held December l - 11 1997 in Kyoto- ·Japan the Parties to the lJN Framework Convention on Climate Change agreed to an historic Protocol to redu ce greenhouse gas emissions by harnessing the forces of the global marketplace to protect the environment The Kyoto Protocol in key respects - including emissions targets and timetables for industrialized nations and market-based measures for meeting those targets - reflects proposals ad anced by the United States The Protocol makes a down payment on the meaningful participation of developing countries but more needs to be done in thts area Securing meaningful developing country participation remains a core U S goal EMISSIONS TARGETS • A central feature of the Kyoto Protocol is a set of binding emissions targets for developed nations The specific limits vary from country to country though those for the key industrial powers of the European Union Japan and the United States are similar- 8% below 1990 emissions levels for the EU 7% for the U S 6% for Japan • The framework for these emissions targets is based largely on U S proposals • Emissions targets are to be reached over a five-year budget period as proposed by the U S rather than by a single year Allowing emissions to be averaged across a budget period increases flexibility by helping to smooth out short-term fluctuations in economic perfonnance or weather either of which could spike emissions in a particular year • The first budget period will be the U S proposal of 2008-2012 The Parties rejected proposals favored by others including bu get periods beginning as early as 2003 that were neither realistic nor achievable Having a full decade before the start of the binding period will allow more time for U S companies to make the transition to greater energy efficiency and or lower carbon technologies · • The emissions targets include all six major greenhouse gases The EU and Japan initially favored counting only three gases - carbon dioxide methane arid nitrous oxide Ensuring the inclusion of the additional gases synthetic substitutes for ozone-depleting CFCs that are highly potent and long-lasting in the atmosphere provides more comprehensive environmental protection and lends more certainty concerning the treatment of the additional gases UNITED STATES DEPARTMENT OF STATE REVIEW AlITHORITY DAVID W COX DATE CASE ID 21 FEB 2008 200600952 l UNCLASSIFIED UNCLASSIFIED • Activities that absorb carbon such as planting trees will be offset against emissions targets The treatment of these so-called sinks was another controversial issue at Kyoto Many countries wanted sinks to be excluded The United States insisted that they be included in the interest of encouraging activities like afforestation and reforestation Accounting for the role of forests is critical to a comprehensive and environmentally responsible approach to climate change It also provides the private sector with low-cost opportunities to reduce emissions Is the target the United States agreed to actually 7% lower t zan what the President proposed in October No The 7% target represents at most a 3% real reduction below the President's initial proposal of reducing greenhouse gases to 1990 levels by 2008-2012 The remaining -4 percent ge points result from certain changes in the way gases and sinks are calculated and do not reflect any increas in effort as compared to the President's original proposal • Changing the baseline for the three synthetic greenhouse gases from 1990 to 1995 accounts for about 1 % of the 7% reduction Use of these three gases has grown since 1990 so that permitting a 1995 baseline allows for a higher overall baseline than the Administration assumed last October when the President announced his goal of reaching 1990 levels by 2008-2012 Making reductions to meet a higher baseline is of course easier than making reductions to meet a lower baseline Had the United States maintained the same level of effort assumed by the President in October and no other factqrs had changed the shift to a 1995 baseline for the three synthetic gases would alone have transformed the President's goal of 1990 levels into a goal equivalent to 1% below 1990 levels • Altering the accounting method for carbon-absorbing activities such as planting trees accounts for about 3% of the 7% reduction The President's original goal assumed that the 1990 baseline would be lowered by carbon-absorbing activities but under the method agreed in Kyoto such activities do not lower the 1990 baseline Because the 1990 level baseline is thus higher under the Kyoto agreement the U S target becomes somewhat less stringent Specifically had the U S maintained the same level of effort assumed by the President in October and no other factors had changed the shift in the accounting method for carbon-absorbing activities would alone have transformed the President's goal of 1990 levels into a goal equivalent to at least 3% below 1990 levels As noted above certain carbon-absorbing activities will count against emission reduction commitments in the budget ·period INTERNATIONAL EMISSIONS TRADING • The United States prevailed in securing acceptance of emissions trading among nations with emissions targets This free market approach pioneered in the U S will allow countries to seek out the cheapest emissions reductions substantially lowering costs for the U S and others 2 UNCLASSIFIED - - UNCLASSIFIED • Under an emissio° s trading regime countries or companies can purchase less expensive emissions permits ·from countries that have more permits than they need because they have met their targets with room to spare Structured effectively emissions trading can provide a powerful economic incentive to cut emissions while also allowing important flexibility for taking cost-effective actions • The Kyoto Protocol enshrines emissions trading Rules and guidelines - in particular for _ verification reporting and accountability- are to pe discussed at the next meeting of the Parties at Buenos Aires in November 1998 • The inclusion of emissions trading· in the Kyoto Protocol reflects an important decision to address climate change through the flexibility of market mechanisms Led by the United States the Conference rejected proposals to require all Parties with targets to impose specific mandatory measures such as energy taxes · • The United States also reached a conceptual agreement with a number of countries including Australia Canada Japan New Zealand Russia and lJkraine to pursue an umbrella group to trade emissions permits Such a trading group could further contribute to cost-effective solutions to this problem JOINT IMPLEMENTATION AlvIONG DEVELOPED COUNTRIES • Countries with emissions targets may get credit towards their targets through project-based emission reductions in other such countries The private sector may participate in these activities • Additional details may be agreed upon by the Parties at future meetings '• CLEAN-DEVELOPMENT MECHANISM • Another important free market component of the Kyoto Protocol is the so-called Clean Development Mechanism CDM The CDM embraces the U S proposal for joint implement-ation for credit'' in developing countries • With the Clean Development Mechapism developed countries will be able to use certified emissions reductions from project activities in developing countries to contribute to their compliance with greenhouse gas reduction targets • This Clean Development Mechanism will allow companies in the developed world to enter into cooperative projects to reduce emissions in the developing world - such as the construction of high-tech environmentally sound power plants - for the benefit of both parties The companies will be able to reduce emissions at lower costs than they could at home while developing countries will be able to receive the kind of technology that can allow them to grow more sustainably The CDM will certify and score projects The CDM can also allow developing countries to bring projects forward in circumstances where there is no immediate developed country partner 3 UNCLASSIFIED UNCLASSIFIED • Under the Clean Development Mechanism companies can choose to make investments in projects or to buy imissions reductions In addition Parties will ensure that a small portion of proceeds be used to help particularly vulnerable developing countries such as island states adapt to the environmental consequences of climate change • Importantly certified emissions reductiqns achieved starting in the year 2000 can count toward compliance with the first budget period This means that private companies in the developed world will be able to benefit from taking e ly action ·• DEVELOl ING COUNTRIES • • Various Protocol· provisions taken together represent a down payment on developing country participation in efforts to reduce greenhouse gas emissions • Developing countries will be engaged through the_ Clean Development Mechanism noted above • The Protocol advances the implementation by all Parties of their commitments under the 1992 Framework Convention on Climate Change For example the Protocol identifies various sectors including the energy transport and industry sectors as well as agriculture forestry and waste management in which actions should be considered in developing national programs to combat climate change and provides for more specific report_ing on actions taken Developing countries may as a prerequisite for engaging in emissions trading voluntarily assume binding emissions targets ough amendment to the annex of the Protocol that lists countries with targets The Kyoto Protocol does not include a separate article for nations to voluntarily assume binding emissions targets • · Securing meaningful participation from key developing countries remains a priority for the United States The Administration has stated that without such participation it will not submit the Kyoto Protocol to the Senate for advice and consent to ratification i ULITARY EMISSIONS • The Kyoto Protocol achieves the objectives identified by the Department of Defense where international agreement was necessary to protect U S military operations • Emissions from bunker fuels for international maritime or aviation use are exempted from emissions limits • Emissions from multilateral operations pursuant to the United Nations Charter are exempted from emissions limits This includes not only multilateral operations expressly authorized by the UN Secutj ty Council such as Desert Storm Bosnia Somalia but also multilateral operations not expressly authorized that are nonetheless pursuant to the UN Charter such as Grenada 4 UNCLASSIFIED UNCLASSIFIED • Countries may decide arnong·t emselves how to account for emissions relating to multilateral operations for example U S training in another NATO country This provision avo ds the need to use emissions trading to allocate such emissions COMPLLl u'lCE AND ENFORCEMENT • The Protocol contains several provisions intended to promote compliance These include requirements related to measurement of greenhouse gases reporting and review of implementation • The Protocol also contains certain consequences for failure to meet obligations For example as a result of a U S -proposed provision a Party not in compliance with its measurement and reporting requirements cannot receive credit for joint implementation projects • Effective procedures and a r_nechanism to determine and address non-compliance are to be decided at a later meeting For both environmental and competitiveness reasons the United States will be working on proposals to strengthen the compliance and enforcement regime under the Protocol ENTRY INTO FORCE • The Kyoto Protocol will be open for signature jn March 1998 To enter into force it must be ratified by at least 55 countries accounting for at least 55 percent of the total 1990 carbon dioxide emissions of developed countries U S ratification will require the advice and consent of the Senate ' -UNCLASSIFIED 5