About Us
About the Kyoto Protocol
In 1997, a number of nations adopted the Kyoto Protocol (Protocol) as an addition to the United Nations Framework Convention on Climate Change. The Protocol came into force on 16 February 2005 and provides for more powerful and legally binding targets and measures for Annex 1 Parties to limit or reduce their greenhouse gas emissions. Only Parties that have also ratified the Protocol are bound by its commitments.
New Zealand ratified the Kyoto Protocol on 19 December 2002. During the 2008 to 2012 commitment period (commonly known as CP1), New Zealand is required to reduce its greenhouse gas emissions to an annual average equal to or below its 1990 emissions level, or to take responsibility for the excess emissions.
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United Nations Framework Convention on Climate Change
National Registry Systems under the Kyoto Protocol
United Nations Framework Convention on Climate Change
In 1994, the United Nations Framework Convention on Climate Change (UNFCCC) was signed by 192 countries. The Convention sets an overall framework for inter-governmental efforts to tackle the challenge posed by climate change. It recognises that the climate system is a shared resource whose stability can be affected by industrial and other emissions of carbon dioxide and greenhouse gases. Under the Convention, governments:
- gather and share information on greenhouse gas emissions, national policies and best practices;
- launch national strategies for addressing greenhouse gas emissions and adapting to expected impacts, including the provision of financial and technological support to developing countries; and
- co-operate in preparing for adapting to the impacts of climate change.
Kyoto Protocol Mechanisms
Under the Protocol, Parties must meet their targets primarily through national measures. However, the Protocol offers Parties an additional means of meeting their targets by way of three market-based mechanisms. These are:
1. Clean Development Mechanism
The Clean Development Mechanism (CDM) establishes a process for Annex I Parties to implement project activities that reduce emissions in non-Annex I Parties, in return for certified emission reduction units (CERs). Annex I Parties can use the CERs to help meet their emissions targets under the Kyoto Protocol.
Further information on the Clean Development Mechanism is available from the UNFCCC.
2. Joint Implementation
Joint Implementation (JI) is a mechanism by which one Annex I Party can invest in a project that reduces emissions or enhances sequestration in another Annex I Party, and receive credit for the emission reductions or removals achieved through that project. The Kyoto unit associated with JI is called an emission reduction unit (ERU).
Further information on Joint Implementation (JI) projects is available from the UNFCCC.
In addition, the Ministry for the Environment has information on how the JI projects apply to New Zealand.
3. Emissions Trading
Annex I Parties may acquire emission units from other Annex I Parties and use them towards meeting their emissions targets under the Kyoto Protocol. Each emission unit represents emissions equivalent to one metric tonne of CO2, and may be one of the following unit types depending on its origin:
- an assigned amount unit (AAU) issued by an Annex I Party based on its agreed emissions target;
- a removal unit (RMU) issued by an Annex I Party on the basis of land use, land-use change and forestry (LULUCF);
- an emission reduction unit (ERU) generated by a Joint Implementation (JI) project;
- a certified emission reduction (CER) generated from a Clean Development Mechanism (CDM) project
Annex I Parties can also choose to implement domestic emissions trading schemes for entity-level emissions trading, such as the New Zealand Emissions Trading Scheme, which has been established by the Climate Change Response Act 2002.
National Registry Systems under the Kyoto Protocol
Each Annex I Party is required to establish and maintain a national registry system to track its holdings of and transactions of Kyoto units. The New Zealand Emission Unit Register (NZEUR) is New Zealand's national registry system. Each national registry must connect to the International Transaction Log (ITL).
The ITL is maintained by the UNFCCC Secretariat. Its purpose is to ensure transactions involving Kyoto units comply with the Kyoto Protocol rules. If the ITL determines any transaction to be incorrect, the national registry making the transaction is required to terminate the transaction.
Compliance with emissions targets
The purpose of the registry system is to check that the Party has met its emissions target at the end of a commitment period. This will be done by comparing the Party's emissions during the commitment period with its holdings of ERUs, CERs, AAUs and RMUs. The registry system will also contain accounts for setting units aside for compliance purposes (retirement) and removing units from the system (cancellation).
Transactions between account holders or between Parties will take place within and between the national registries.
What does this mean in practice?
At the end of the first commitment period (2008 to 2012), New Zealand must ensure that there are enough emission units in the NZEUR retirement account to meet New Zealand's commitment to keep average annual greenhouse gas emissions at or below the 1990 level.
If our emissions exceed this level, we will need to acquire units. If we manage to reduce our average emissions over that period to below the 1990 level, the Crown may have excess units to sell.
