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Great Seal The Kyoto Protocol on Climate Change
Fact Sheet released by the Bureau of Oceans and International Environmental and Scientific Affairs
January 15, 1998
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BACKGROUND
At a conference held December 1 - 11 1997, in Kyoto, Japan, the Parties to the UN Framework Convention on Climate Change agreed to an historic Protocol to reduce 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 advanced by the United States. The Protocol makes a down payment on the meaningful participation of developing countries, but more needs to be done in this 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:

Is the target the United States agreed to actually 7% lower than what the President proposed in October?

No. The 7% target represents at most a 3% real reduction below the Presidentís initial proposal of reducing greenhouse gases to 1990 levels by 2008-2012. The remaining 4 percentage points result from certain changes in the way gases and sinks are calculated and do not reflect any increase in effort as compared to the Presidentís original proposal.

Changing the baseline for the three synthetic greenhouse gasses 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 factors 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 Presidentís 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.

Under an emissions 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 be 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 Ukraine, 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 AMONG 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 implementation for credit" in developing countries.

With the Clean Development Mechanism, 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.

Under the Clean Development Mechanism, companies can choose to make investments in projects or to buy emissions 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 reductions 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 early action.

DEVELOPING COUNTRIES

Various Protocol provisions, taken together, represent a down payment on developing country participation in efforts to reduce greenhouse gas emissions:

Developing countries may, as a prerequisite for engaging in emissions trading, voluntarily assume binding emissions targets through 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.

MILITARY EMISSIONS

The Kyoto Protocol achieves the objectives identified by the Department of Defense where international agreement was necessary to protect U.S. military operations.

COMPLIANCE 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 mechanism 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 in 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.

Return to: Climate Change | Environment and Development

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