Theres a good reason why the North and the South have common but differentiated responsibility it is estimated that the Organisation for Economic Co-operation and Development nations (the richest among the Annex I countries) together contribute between 50-60 per cent of the worlds aggregate GHG emissions and 47 per cent of the worlds total CO2 emissions (1998 data from the United Nations Climate Change secretariat).
Presently, Kyoto is neither in force nor has it assumed a final form. But New Delhi is fortunate in that most contentious issues have been fundamentally resolved, and the eighth Conference of Parties (to the 1992 UN Framework Convention on Climate Change) is unlikely to witness any major fireworks of the sort evident at previous COPs at The Hague or Bonn. Indeed, COPs 1-7 have thrashed out most of the rules of the game, worked out operational modalities and put in place new institutions for accomplishing the task at hand.
Theres also little doubt that Kyoto is almost a done deal. Fifty-five countries, including industrialised countries representing 55 per cent of the total 1990 CO2 emissions, must ratify it for it to come into force. Presently, 96 parties, including 26 Annex 1 countries representing 37.4 per cent of CO2 emissions, have done so. With Russia, which accounts for 17.4 per cent of CO2 emissions, expected to ratify it by the year-end, the Protocol will be operational early next year.
Therefore, the current focus is almost entirely upon implementation. Since industrial emissions are a major villain, national targets will translate into sectoral targets. Corporates are thus expected to lead the charge. Having recognised this reality, the treaty relies heavily on three market-based mechanisms emissions trading, joint implementation and the clean development mechanism (CDM). Through the former, corporates based in developed countries can trade emission credits with each other. The latter two allow businesses based in developed countries to earn credits for clean projects set up in other developed and developing countries (DCs). These can be set off against their national commitments.
For example, Holland can buy emissions credits from Australia and/or set up renewables projects in India instead of changing its energy use policy. Clearly, the former two are cheaper alternatives to the last. India, on the other hand, gets foreign investment and access to superior technology a belief reflected in this countrys recent endorsement of six Dutch renewable energy projects. Additionally, the North can earn CDM credits from afforestation projects undertaken in the South and make emission reduction purchases by giving DCs money to establish clean projects. Again, India has recently received $10 million for the same.
Another major aspect of implementation is funding. The Special Climate Fund, the Least Developing Country fund and the Adaptation fund have all been set up to help DCs clean up their act. Funds disbursed from them will be in addition to disbursements made by the 1992 Global Environment Facility (over the past 10 years, GEF has doled out $1.5 billion), regular Official Development Assistance (ODA) and the World Banks Prototype Carbon Fund.
Will Kyoto succeed unlike other ambitious multilateral environmental agreements Well, over the past decade, the United Kingdom, Finland, Luxembourg and Germany and the transition economies have all reduced their GHG emissions (see graph). Of course, in the latters case, the whopping 38 per cent decline has been almost entirely on account of the painful industrial restructuring underway throughout the 90s. But on the whole, OECD countries are not on track the UNFCCC believes their GHG emissions are currently 8.4 per cent higher than their 1990 levels.
Moreover, given the Norths past inability to honour its ODA pledges, there is scepticism over whether the monetary pledges will materialise. Even if the $800-odd million promised by GEF during 2002-2006 do, can the same be hoped for the Norths annual pledge of $410 million over 2001-2005 Perhaps, the developing world would be better off relying on CDM funds.
Here too, there remains a vital caveat. The Protocol is, essentially, a toothless treaty. A country that doesnt meet its emission reduction target has nothing to fear; the consequences outlined for non-compliance are not legally binding as a result of which non-compliance doesnt attract any punishment. If national governments arent under any pressure to meet their commitments, will corporate enthusiasm to invest in the South hold up
A final thorn in the flesh is Uncle Sams refusal to jump on board. Over the last decade, US GHG emissions have gone up by 14 per cent, its CO2 emissions by 17 per cent. If the single largest contributer to CO2 emissions in the world it spews out one-fourth of global CO2 emissions carries on in this vein, Kyotos effectiveness remains in doubt. To be fair, the US intends to reduce its GHG intensity by 18 per cent over this decade, but scientists believe that that would only slow down the rate of growth of emissions, not reverse it.
Clearly, the next three years will be crucial. In 2005, the UNFCCC will undertake a formal review of the progress made by Annex 1 countries.
By then, a better fix can also be had on the actual flow of funds and of the popularity of the CDM mechanism. If the current high expectations are dashed, may be the world should make a bonfire of toothless protocols!