Enhancing the Environmental Integrity of International Climate Action by Solving the Kyoto Protocol Allowance Surplus

Assigned Amount Units (AAUs) are the greenhouse gas (GHG) emission allowances under the Kyoto Protocol. One AAU allows a country to emit 1 tonne of CO2 equivalent. Kyoto Protocol rules allow countries to carry over unused emission allowances into the next commitment period. A number of countries, such as Russia, Ukraine and Poland, have very large surplus amounts of AAUs. By the end of 2012, up to 13 billion surplus AAUs could be carried over into the next commitment period. This is almost three times the annual emissions of the European Union or more than twice those of the United States. In addition, the carry-over of offsets from the Clean Development Mechanism (CDM) and Joint Implementation (JI) could further weaken the 2020 commitments by up to 6 percent.

If no restrictions are placed on the carry-over of surplus AAUs, as presented in a new peer-reviewed study published in Climate Change, the current emission reduction pledges of developed countries will not lead to additional emissions reductions. In other words, weak pledges in conjunction with the surplus will allow countries to emit at business-as-usual levels through 2020. This holds true even if the largest surplus, that of Russia, is excluded.

A new policy brief called “The Phantom Menace: An Introduction to the Kyoto Protocol Allowance Surplus” by CDM Watch and CCAP-Europe explains the emission allowance surplus issue and lays out possible solutions. The policy brief explains that the issue has to be addressed by the end of 2012 when the first commitment period of the Kyoto Protocol ends, otherwise the existing rule that allows full carry-over will be applied by default. The brief demonstrates that a range of solutions are available to address this issue.

At the most recent UNFCCC climate negotiations in Bangkok last week, the G77 group of developing countries united behind a proposal to contain the AAU surplus, opening the door to further discussion and resolution of the issue. Specifically, the G77 proposes to allow the carryover of AAUs into the second commitment period, but would not allow trading. These AAUs would expire after the second commitment period. This proposal, a breakthrough in the climate negotiations, would only allow the surplus to benefit the countries hosting the surplus AAUs; other Annex 1 countries would need to find other ways to meet their commitments. Tomas Wyns, Director at CCAP-Europe said: “We particularly welcome that the proposal next to containing the current surplus also aims to avoid another surplus after 2012.” This would happen through the cancellation of the difference between the target of second commitment period (CP2) and the actual emissions in 2012, if these emissions are lower than the target set for the period after 2012.

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  1. Kwadwo Anane-Binfo

    I think the proposal by the G77 group is in the right direction if we are actually serious about reducing emissions.