Understanding the

Flexibility Mechanism
of Kyoto Protocol

Dr. J. Nagendra Babu

Assistant Professor
Centre for Environmental Science and Technology
School of Environment and Earth Studies
Central University of Punjab
Mansa Road, Bathinda -151 001

Rapid Industrial Growth

Increased energy consumption

Increased CO2 and other GHG emissions

Global Warming due to increased concentration of

GHG

Increasing sea level

Changes in wind and

precipitation

Changes in Crop
yields

Major Contributors to Emission of CO 2

US
Russia
Japan
Germany
UK
Canada
Italy
Poland
France
Australia
Spain
Neherlands

Greenhouse Gases & Global

Warming Potential

Global Warming Potential based on the time-integrated global mean RF of a

pulse emission of 1 kg of some compound (i) relative to that of 1 kg of the
reference gas CO2, was developed (IPCC, 1990) and adopted for use in the
Kyoto Protocol.

where TH is the time horizon, RFi is the global mean RF of component i,

ai is the RF per unit mass increase in atmospheric abundance of
component i (radiative efficiency), [Ci(t)] is the time-dependent
abundance of i, and the corresponding quantities for the reference gas
(r) in the denominator. The numerator and denominator are called the
absolute global warming potential (AGWP) of i and r respectively.

GWP of Various GHG

Species

Chemical
formula

Lifetime
(years)

CO2
CH4
N2 O
CHF3
CH2F2
CH3F
C5H2F10
C2HF5
C2H2F4
CH2FCF3
C2H4F2
C2H3F3
C2H3F3
C3HF7
C3H2F6
C3H3F5

variable
123
120
264
5.6
3.7
17.1
32.6
10.6
14.6
1.5
3.8
48.3
36.5
209
6.6

SF6

3200

16300

23900

34900

CF4

50000

4400

6500

10000

CO2
Methane *
Nitrous oxide
HFC-23
HFC-32
HFC-41
HFC-43-10mee
HFC-125
HFC-134
HFC-134a
HFC-152a
HFC-143
HFC-143a
HFC-227ea
HFC-236fa
HFC-245ca
Sulphur
hexafluoride
Perfluoromethane

Global Warming Potential

(Time Horizon)
500
20 years 100 years
years
1
1
1
56
21
6.5
280
310
170
9100
11700
9800
2100
650
200
490
150
45
3000
1300
400
4600
2800
920
2900
1000
310
3400
1300
420
460
140
42
1000
300
94
5000
3800
1400
4300
2900
950
5100
6300
4700
1800
560
170

Approved GWP for KP

S. No.

Greenhouse Gas

Global Warming
Potential (GWP)

1.

Carbon dioxide

2.

Methane

21

3.

Nitrous Oxide

310

4.

Hydrofluorohydrocarbons

140-1170

5.

Perfluorohydrocarbons

6500-9200

6.

Sulphur Hexafluoride

23900

United Nations Framework

Convention on Climate Change
(UNFCCC)
165 nations signed the 1992 United Nations
Framework Convention on Climate Change
(UNFCCC) at Rio de Janeiro
The Convention divides countries into two main
groups - Annex I & Non-Annex I Countries
Annex I (developed countries) agreed to reduce
their GHGs by 5.2 % below 1990 levels in 1 st
commitment period 2008 2012

United Nations Framework

Convention on Climate Change
(UNFCCC)

Convention is based on three principles

Common but differentiated responsibility
Precautionary approach
Sustainable Economic Growth and
Development

The Kyoto protocol defined how to bring down the

emissions in COP 3 in 1997

Kyoto Protocol
It was adopted in Kyoto, Japan, on 11th December
1997
Objective:
stabilisation of greenhouse gas
concentrations in the atmosphere at a level
that would prevent airpollution
interference with the climate system

Kyoto Protocol
The Kyoto Protocol is only binding 'industrialized or 'developed
countries. These are states listed in Annex 1 of the UNFCCC
The protocol commits developed countries to specific targets for reducing
their green house emissions
Countries (those listed in Annex I) are legally bound to reduceman-made
green house gases emissions by approximately5.2%
Individual countries have their own reduction targets outlined in Annex B
of the Kyoto Protocol
Each country has a prescribed number of 'emission units' which make up
the target emission
The Kyoto Protocol provides mechanisms for countries to meet their
emission targets

Kyoto Protocol
Annex I Partiesa

Emission limitation or
reduction (expressed in
relation to total GHG
emissions in the base
year or period inscribed
in Annex B to the Kyoto
Protocol)b

Austria, Belgium, Bulgaria, Czech Republic, Denmark,

Estonia, European Community, Finland, France, Germany,
Greece, Ireland, Italy, Latvia, Liechtenstein, Lithuania,
Luxembourg, Monaco, Netherlands, Portugal, Romania,
Slovakia, Slovenia, Spain, Sweden, Switzerland, United
Kingdom of Great Britain and Northern Ireland

8%

United States of Americac

7%

Canada, Hungary, Japan, Poland

6%

Croatia

5%

New Zealand, Russian Federation, Ukraine

Norway

+1%

Australia

+8%

Iceland

+10%

At the time of publication of this manual, the amendment to the Kyoto Protocol that contains an emissions target for Belarus (
8%) had not been ratified by a sufficient number of Parties for it to enter into force.
b
Countries with economies in transition have flexibility in the choice of base year.
c
Country which has declared its intention not to ratify the Kyoto Protocol.
a

Status of Caps & Emission

Achieved

Party

Quantified
Base
emission
year
for
limitation or
CO
2,
reduction
commitment CH4 and
(%of base
N2O
year

Base
year
for Fgases

Base year level of total

national emissions as
determined by the initial
review (tonnes CO2
equivalent)

Australia

108.0

1990

1990

Austria

87.0

1990

1990

Belarus*a

92.0

Belgium

92.5

1990

1995

Bulgaria*

92.0

1988

1995

Canada

94.0

1990

1990

Croatia

95.0

1990

1990

Czech
Republic*

92.0

1990

1995

Denmark

79.0

1990

1995

Estonia*

92.0

1990

1995

European
Union

92.0

1990

1990
or
1995

European
4,265,517,719 Union (15)

Finland

100.0

1990

1995

France

100.0

1990

1990

Germany

79.0

1990

1995

Greece

125.0

1990

1995

Hungary*

94.0

Iceland

110.0

1990

1990

Ireland

113.0

1990

1995

Italy

93.5

1990

1990

Japan

94.0

1990

1995

Latvia*

92.0

1990

1995

71,003,509 Finland
563,925,328 France (KP)
1,232,429,543 Germany
106,987,169 Greece
115,397,149 Hungary
3,367,972 Iceland
55,607,836 Ireland
Italy
516,850,887
Japan
1,261,331,418
Latvia
25,909,159

1995

1985-87 1995

547,699,841

2008
549,487,320.96
86,955,534.17

2009
547,478,363.61
79,739,349.14

2010
542,690,755.70
84,593,938.62

132,618,658 Belgium
Bulgaria
593,998,462
Canada
31,321,790
Croatia

136,686,238.71
68,603,668.24
730,598,641.36
31,048,976.64

125,186,550.63
58,895,136.31
690,015,027.41
29,056,475.66

132,459,223.20
61,427,055.16
691,710,043.05
28,597,025.08

194,248,218 Czech
Republic
69,978,070
Denmark (KP)
42,622,312 Estonia

143,662,621.14
64,273,049.35
19,705,014.55

134,722,299.48
61,312,351.50
16,391,072.16

139,157,863.09
61,780,796.68
20,516,762.21

79,049,657 Australia
Austria
145,728,763

3,999,053,774.44

3,719,154,028.68 3,797,613,005.37

70,242,849.87
537,297,119.35
975,966,969.61
131,263,403.57
73,291,666.20
4,958,679.29
67,567,039.99
541,589,393.27
1,281,257,535.66
11,724,415.71

66,118,734.22
74,555,635.33
514,568,024.27
522,372,577.88
911,802,225.43
936,543,816.86
124,692,765.37
118,286,730.18
66,864,213.79
67,679,050.24
4,700,224.22
4,542,054.06
61,741,498.86
61,313,916.10
491,528,492.77
501,317,658.71
1,207,379,826.82 1,257,981,874.17
10,961,899.77
12,077,033.94

Status of Caps & Emission

Achieved
Party

Base year level of

Quantified
Base
total national
emission
Base
year for year
emissions as
limitation or
CO2, CH4 for Fdetermined by the
reduction
commitment and N2O gases initial review (tonnes
CO2 equivalent)
(%of base year)

2008

Liechtenstein

92.0

1990

1990

229,483

Lithuania*

92.0

1990

1995

49,414,386

Luxembourg

72.0

1990

1995

13,167,499

Monaco

92.0

1990

1995

107,658

Netherlands

94.0

1990

1995

213,034,498

Netherlands

New Zealand

100.0

1990

1990

61,912,947

New Zealand

Norway

101.0

1990

1990

49,619,168

Norway

Poland*

94.0

1988

1995

563,442,774

Poland

Portugal

127.0

1990

1995

60,147,642

Romania*

92.0

1989

1989

278,225,022

Russian
Federation*

100.0

1990

1995

3,323,419,064

Slovakia*

92.0

1990

1990

72,050,764

Romania
Russian
Federation
Slovakia

Slovenia*

92.0

1986

1995

20,354,042

Slovenia

Spain

115.0

1990

1995

289,773,205

Sweden

104.0

1990

1995

72,151,646
52,790,957

Switzerland

92.0

1990

1990

Ukraine*

100.0

1990

1990

920,836,933

UK and
Northern
Ireland

87.5

1990

1995

779,904,144

Liechtenstein

2009

2010

264,576.16

248,535.08

233,172.19

Lithuania

24,330,849.56

19,959,466.95

20,809,736.94

Luxembourg

12,047,394.47

11,515,121.23

12,075,340.05

95,574.21

90,938.92

87,791.94

204,568,959.96

198,931,064.70

210,053,016.34

74,197,678.93

71,482,867.58

71,657,158.39

53,820,490.92

51,470,471.93

53,895,679.32

401,338,537.93

381,769,667.12

400,865,393.68

77,824,630.56

74,371,586.06

70,599,090.59

146,668,381.17

123,382,298.86

121,354,547.98

Monaco

Portugal

2,227,609,083.81 2,111,548,993.69 2,201,885,044.49

50,077,761.39

44,190,912.44

45,981,701.50

21,430,659.03

19,469,247.68

19,522,127.24

403,818,576.02

366,266,170.62

355,897,709.94

Sweden

63,599,207.82

59,671,175.64

66,232,369.77

Switzerland

53,772,087.09

52,435,351.32

54,220,080.98

421,321,046.33

365,275,832.53

383,181,581.76

629,831,774.55

576,127,030.10

594,021,498.72

Spain

Ukraine
United Kingdom
of Great Britain
and Northern
Ireland

Kyoto Protocol
Kyoto is a cap and trade' system that imposes
national caps on the emissions of Annex I
countries. On average, this cap requires countries
to reduce their emissions 5.2% below their1990
baseline over the 2008 to 2012 period.

The types of Flexibility mechanisms are:

International Emissions Trading (IET)
Joint implementation (JI)
Clean Development Mechanism (CDM)

Flexibility Mechanism
IET : Purchasing AAUs-emission allowances
under the KP- from other Annex B parties. (KP
Article 17)
JI : Contributing to emission-reducing projects in
other Annex B parties and acquiring emission
reduction units (ERUs) (KP Article 6)
CDM : contributing to emission-reducing
projects in non-annex B countries through the
CDM (KP Article 12)

Carbon Market
Allowance Based Transactions: The asset being traded exists before the
transaction, the main risk is delivery risk.
Project Based Transactions (Offset): Asset being traded is created
during the process. So, in addition to the delivery risk, there is a noncreation risk.

Types of Emission Certificates

Assigned Amount Unit (AAUs)

Removal Unit (RMU)
Emission Reduction Unit (ERU) (Converted from AAU & RMU)
Certified Emission Reduction (CER)
Temporary CER (tCER)
Long-term CER (lCER)
European Union Allowance (EUA)

Structure of the Carbon Market

Project-based transactions

Allowance-based transactions

EU Emission
Trading Scheme

JI and CDM

Voluntary

Retail

UK ETS
Other
Compliance

NSW Greenhouse
Gas Abatement
Scheme

Chicago Climate
Exchange

Clean Development Mechanism

(CDM)
Participation of both Annex-I and non-annex-I parties in KP
Essentially important to India in terms of its enclosure in non-annex-I
countries
Essentially India shares 31% of the total world carbon trade through CDM
If India can capture a 10% share of the global CDM market,annual CER
revenues to the country could range from US$ 10million to 300 million
The Major contributors are
Gujarat Fluoro Chemicals
Tata steels
NTPC
Kalpataru Power Transmission Ltd,
The Clarion power project in Rajasthan and
The Dehar power project in Himachal Pradesh

CDM Projects: Key Concepts

Baseline
Baseline scenario is the one
that would have occurred in
the absence of the
proposed CDM project.
Emission reductions are
calculated by comparing
baseline emissions vs.
proposed
project emissions.
Project Emissions

Additionality

A CDM project activity is

additional if GHG emissions
are reduced below those
that would have occurred in
the absence of the
registered CDM project
activity:
Economic demonstration
Baseline
(financial)
Technology demonstration
Emission Reductions
(not Business as Usual
BAU)
Institutional
Real Project Emissions
demonstration (Barrier
Beginning of the project
End of the Project
analysis)

CDM Project Categories

End Use Energy Efficiency Improvement

Supply-side Energy Efficiency Improvement

Renewable Energy

Fuel Switching

Agriculture

Industrial Processes

Solvent & other product use

Waste Management

Sinks (Afforestation and Reforestation)

Small Scale CDM Projects

Renewable energy projects with maximum output of 15MW

or equivalent

Energy efficiency improvement projects 15GWh per year

Reduce anthropogenic emissions by source and directly

emit less than 15000 tCO2e annually

Major projects under this category fall into

Renewable energy projects
Energy efficiency improvement projects
Other project activities including
Agriculture
Switching fossil fuels
Emission reduction vehicles
Methane recovery & avoidance

CDM Project Cycle

Project
Identificat
ion

Monitorin
g

Verificatio
n

Project
Idea Note
(PIN)

Registrati
on

Issuance
of CER

Project
Concept
Note
(PCN)
Governme
nt
Endorsem
ent

Validation
Project
Developm
ent
Document

Project Baseline

Baseline methodologies have been developed based on the

three principle in Marrakech Accord
Existing actual or historical emissions
Emissions from a technology that represents an
economically attractive investment
Average emission of a similar project activity undertaken
in previous 5 years under similar circumstances & whose
performance is among top 20% of their category,

Baseline Calculation for Renewable Energy

Electricity generation by user

An estimate of avg. individual consumption (in kWh)
observed in closest grid electricity systems among rural
grid-connected consumers belonging to the same
category
Or the estimated annual output of the installed RE
technology
Emission baseline = 0.9kgCO2/ kWh*kWh energy
conserved

Mechanical Energy for user

power requirement * hour operation/year * diesel EF
Diesel Consumption/h * h operation*3.2kgCO2/kg diesel

Thermal Energy
For biomass = biomass consumption*EF for biomass

IPCC CO2 Emission Factor (EF)

Fuel

tCO2/TJ

Natural gas

56.1

LPG

63.1

Gasoline

69.3

Jet Petroleum

71.5

Kerosene

71.9

Crude oil

73.3

Diesel

74.1

Fuel oil

77.4

Orimulsion

80.7

Coal

94.6

Petroleum
Coke

100.8

Lignite

101.2

Peat

106.0

Coke

108.2

Additionality

A flowchart or series of questions that lead to narrowing of

potential baseline options

A qualitative and quantitative assessment of different

potential options and an indication of why the non-project
option is more likely

A quantitative or qualitative assessment of one or more

barriers facing the proposed activity

An indication that the project type is not common practice

in the proposed area of implementation

Project Design Document

General Description of project activity

Baseline methodology
Duration of the project activity/crediting period
Monitoring methodology
Calculating GHG emissions by sources
Environmental impacts
Stakeholders comments

Annex
Annex
Annex
Annex
Annex

1.
2.
3.
4.
5.

Contact information on project participants (PP)

Information regarding public funding
New baseline methodology
New monitoring methodology
Table for baseline data

Duration of Project Activity/ CP

Duration of the project activity including the starting date

and operational lifetime

Choice of crediting period

A period of maximum 10 years
A period of maximum 7 years, with the potential for
renewal for two additional periods at most

Credits for the projects initiated after Jan 2000 and before
the adoption of decision 17/CP.7 on 10 Nov 2001, and
registered before 31st Dec 2005, may be claimed
exceptionally prior to the registration

Crediting period starts after project registration. starting

date of a CDM project activity is the date at which the
implementation or construction or real action of a project

Monitoring Methodology & Plan

PDD should include

Reference of UNFCCC approved methodology
Justification of choice of the methodology
Tables to be filled with information on data to be
monitored
Name and contact information of the person entity
determining the monitoring methodology

Monitoring plan must provide for

Collection and archiving of data necessary for
calculating emissions within project boundary
Collection and archiving of data necessary for
determining the baseline, as applicable
Collection and archiving of data necessary for
calculating leakages, where there is need to be
considered
Quality assurance and control procedure

Leakages

It is a measurable emission increase or decrease that is

attributed to the project, but which is outside of the CDM
boundary or timeframe

Leakage calculation are required for small scale CDM

except for renewable energy tech and energy efficiency
equipment is transferred for another activity

Calculating the GHG Emission by

Sources

Direct onsite emissions

Direct offsite emissions

Indirect onsite emissions

Indirect offsite emissions

Deciding on the participation of the various types of

emission in the scope of CDM project

Use of tools like the EF and the GWP

How Large Does a Project Need

to be to Develop as CDM Project?
Assume a grid emission baseline of 700 kg CO2/MWh
Assume project needs to generate >10,000 tons/year in CERs
Project size needs to save/generate ~ 15,000 MWh/year
What does that mean for the projects considered:
Wind
Solar
SWH
Lamps
W2E

35% Cap Factor

20% Cap factor
Avg 6 MWh/yr/HH
75W => 20 W 3hrs/day
85% Cap Factor

Min. Size
>5 MW
~ 5 MW
2,000 HH/Units
~250,000CFL/LEDs
>2 MW

Country-wise Distribution of ER
and CERs

Registered CDM Projects : World

Scenario

Registered CDM Projects : India

Statewise Distribution of
Registered CDM Projects

Carbon Trading at MCX

The Multi Commodity Exchange of India Ltd entered
into an alliance with the Chicago Climate Exchange
in 2005 to introduce carbon credit trading in India
MCX is the futures exchange. People here are getting
price signals for the carbon for the delivery in next
five years. The exchange is only for Indians and
Indian companies
The Indian government has not fixed any norms nor
has it made it compulsory to reduce carbon

Thank You