Kyoto policy measures
By S.M. Enzler MSc
Suggested measures for the achievement of Kyoto standards
When the Kyoto Protocol was agreed upon, a number of measures were introduced as possibilities for countries to be able to achieve their emissions standards for greenhouse gases. These measures, as they are discussed in the IPCC SRES summary, are briefly described on this page.
Government authorities can make agreements with one or more private parties. Most of these agreements are not legally binding. Some of the agreements are between the government and a set of firms, but in other cases industry associations represent firms. The agreements may be about general issues, such as emission reporting or energy efficiency, but they may also be more specific, for example agreements on emissions targets.
Although voluntary agreements are a relatively new policy instrument, they are gaining popularity. The number of voluntary agreements already applied in Europe suggests that this instrument is administratively and politically feasible. Most industries seem to prefer voluntary agreements over other policy tools. Environmental organizations are also encouraging the application.
There is no clear evidence on the cost-effectiveness of voluntary agreements. However, studies by the European Environment Agency (EEA) have resulted in the recognition of the use of voluntary agreements. Five out of six studies showed that applicants feel voluntary agreements incur lower costs than alternative instruments.
The OECD has set some conditions under which a voluntary agreement should be implemented to increase effectiveness. These include clear targets, a baseline for improvements, clear monitoring and reporting mechanisms, availability of technical solutions, limited costs that are equally distributed and the involvement of third parties in design and application. The European Union demands similar conditions.
Some governments still doubt whether voluntary agreements are really a satisfactory substitute for efficiency standards. They claim the main reasons for industries to join these agreements is to avoid implementation of carbon or energy taxes and other financial instruments. It seems that the level of abatement when voluntary agreements are made is related to the probability of regulatory action when agreements are not made.
Voluntary agreements are applied in the USA to increase energy efficiency. This makes it a tool that can help achieve Kyoto goals. Large-scale voluntary agreements on greenhouse gas mitigation are already made in Japan and the Netherlands.
Taxes may be imposed for greenhouse gas emissions. These emission taxes require emitters to pay a fixed fee for every ton of carbon dioxide equivalents emitted to the atmosphere. The aim of these taxes is to encourage greenhouse gas emission reductions by adding a price to all emissions. Measures to decrease emissions would than be undertaken by companies when these are less expensive than the initial emissions tax. This provides an economic advantage, namely that taxes limit the costs of emission reduction programmes by allowing emissions to rise if costs are unexpectedly high.
In reality, taxes do not always achieve implementation of emission reduction measures by companies, because markets are not perfectly competitive. Emissions taxes may have distribution effects, meaning that they will not affect all companies in the same way. Therefore, taxes must always be compared to alternative policy measures before they are implemented.
After the Kyoto Protocol was signed emissions trading, rather than emissions taxes, was suggested as a general policy measure. This is because emissions trading is more likely to guarantee a certain emissions level. Taxes would only guarantee this if they are adjusted to meet an international commitment level. When the costs of emission reductions would be too high, taxes would cause emissions to increase rather than decrease. This would mean Kyoto targets could not be met.
Greenhouse gas emission subsidies pay entities a specific amount of money per ton of carbon dioxide equivalent that is reduced. Measures that are less costly than the subsidy are therefore implemented by companies. Subsidies usually yield the same outcome as pollution taxes in the short term. Usually a tax is more efficient because subsidies may increase the number of companies in a certain branch of industry, increasing pollution. Subsidies may cause firms to continue operating that would close in case of a pollution tax. Subsidies do not guarantee a certain emissions level. It is therefore advisable to make sure the subsidy is adjusted to meet an international emission reduction commitment.
See our page on efficiency of emissions trading.
Educational programmes are an example of an informational instrument governments can apply to raise awareness on an environmental issue. Information on greenhouse gas emissions reduction is provided through a number of channels. Examples of entities that provide this information are government offices, equipment vendors, energy efficiency centers, professional organizations and educational committees. Examples of educational activities are workshops, mass-media campaigns, training programmes, audits, publications and environmental labeling.
Most of today's energy efficiency programmes use educational campaigns as a tool. Brochures are distributed, special TV items are broadcasted and databases are created. Large public awareness programmes such as 'Energy Conservation Day' in Japan have booked some success in the past. Some authors have published books on energy efficiency, guidelines and policies. They are trying to make the public aware of its role in climate change prevention. The costs of these educational programmes largely depend on the size of the audience and the media type that is applied.
Environmental and energy efficiency labeling is an example of an informational instrument that is used increasingly to raise awareness of environmental issues, such as the global warming issue. There are both mandatory and voluntary forms of labeling. Labels have an impact on consumer behavior and the acceptance of clean technologies.
Voluntary labels are a non-official instrument and can therefore be applied without going through the long procedures of policy making. They strengthen information exchange between various stakeholders and are therefore very beneficial.
There are some drawbacks to environmental labeling. For example, consumers may have some trouble interpreting messages on labels, particularly when acronyms are used. When one product may have multiple labels the circulation of products with unreliable labels may undermine the trust of the consumer in a label.
The eventual success of environmental labeling largely depends upon the rate in which it is applied. When it is too strict market coverage may be too low, but when it is too lenient environmental effectiveness may be limited.
Research and development policy
Private firms can contribute to greenhouse gas emission reduction by research and development activities. This is usually funded by the private sector itself. Government funding used to focus mainly on nuclear and coal technologies. Today, research on renewable energy and energy-efficient technologies is gaining ground. However, these activities are still not the major receiver of research and development budgets. It is perhaps an opportunity for Kyoto when governments fund more renewable energy projects or energy-efficiency research. Governments may also provide a legal framework that prevents sustainable energy innovations from being copied elsewhere without compensation.
Green Power policy
Examples of green power include wind and solar energy, hydropower and biomass energy. Providing firms and private persons with these energy types may prevent the contribution of extensive fossil fuel use to the greenhouse effect and thereby assist in the realization of the Kyoto standards. This may be realized by green power policy. Green power policy obligates a significant part of the electricity supply to come from renewable energy sources. Consumers pay for renewable energy, but government funds may prevent prices from becoming much higher than those of fossil fuel energy. Green power and green pricing programmes may even stimulate consumers to voluntarily pay higher prices for more environmentally friendly forms of energy. Since 1993, green power marketing is also possible. It is implemented in the UK, the USA, Australia, Canada, Switzerland, the Netherlands and Germany.
In the Kyoto Protocol there is an article that allows countries to participate in emission reduction programmes of other Kyoto countries, thereby earning emission reduction units (ERU). These units can be used by a country to meet its national emission limitation commitment. This is marked in the Protocol as Joint Implementation or JI.
Clean Development Mechanism
Countries that have signed the Kyoto Protocol may contribute to the achievement of their own Kyoto standards by investing in sustainable development in developing countries. This is called a Clean Development Mechanism or CDM. The mechanism may also be applied in a developed country that has not signed the Kyoto Protocol.
An article in the Kyoto Protocol has specified a review board for CDM. The article specifies that 'emission reductions must represent real, measurable and long-term benefits related to the mitigation of climate change and be certified by designated operational entities'. Of course, CDM developments must be approved by the government of the country where they are carried out. This means the government must assess whether the proposed project actually contributes to sustainable development. This is carried out by comparing projected outcomes of the CDM to certain pre-proposed criteria.