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Kyoto Protocol and What it Means

Aug 30, 2008
The UN member countries in a convention held on climate change in Japan, in 1997, agreed to a treaty for controlling the emissions. It was named the 'Kyoto Protocol' from the name of the place where it was signed. As of now, 170 countries have committed to implement the Protocol. The only exceptions are Kazakhstan, Brazil, India, China and USA who are not bound by it.

The clearly defined objective was to achieve 'stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.'The Protocol makes a distinction between the carbon dioxide produced naturally through respiration and decomposition and the one made by burning fossil fuel. The one that is caused by man is called anthropogenic. The emission of carbon dioxide from burning of fossil fuels for generating power or for making cement is not a natural process. It is caused by man. It is therefore anthropogenic.

The Kyoto Protocol came into force on 16th February 2005. In terms of the Protocol, in a short period of five years from January 2008 to December 2012, the countries are required to reduce their greenhouse gas emissions to at least 5% below their 1990 levels. It is not an easy task. The production of the gases would have increased already from 1990 to 2007 and to roll it back seventeen years and further reduce by 5% is going to be very difficult to achieve.

But they have provided flexibility. The object is to reduce the global emission in totality. Therefore if a company could reduce it in a cheaper way than another, they could trade and benefit each other. The Kyoto Protocol has adopted a system of 'cap and trade' so that the companies can buy 'carbon credits' to offset against their emissions to comply with the reduction requirement. Carbon Credit Certificates are issued to the industries effecting reduction in the emission of carbon dioxide and other greenhouse gases by the UN agency. These Carbon Credit Certificates can be sold and cashed easily on the Stock Exchanges. Some of the polluting industries find it cheaper to buy these credits instead of reducing their own emissions. And so, the system is working. This has become a new business opportunity in the developing world as the mechanism provides easy financing of green projects. Many banks are buying the future Carbon Credit Certificates in advance at a discounted price to hasten the implementation of projects.

But if a company cannot meet its target emission reduction, many countries have adopted a system of Carbon Tax to be paid in default of compliance. The money collected from the Carbon Tax would be spent on forestation and other schemes to offset the emissions.

Thus the polluting companies like coal based thermal power plants, which spew out thousands of tons of carbon dioxide, have 3 options: (1) reduce emissions to the required level, and or (2) buy Carbon Credit Certificates to purchase the emission savings and or (3) pay the Carbon Tax. The companies can adopt a combination of the first 2 to achieve the emission reduction compliance which is labeled as 'carbon neutrality'. It's now become a fashion for companies to advertise their carbon neutrality to boost their image with the investing public.

It is a wonderful idea! The work towards emission reduction has now got the carrot and stick policy. Reduce emissions and get rewarded or else pay tax. There will be definite action as the idea is backed with money. The industry will exploit the potential of earning Carbon credits and in the process help to reduce their emissions of the greenhouse gases. We must give kudos to those who thought of it.

But will it solve the problem of Global warming? eMaya the expert on Climate Control has done an extensive analysis and has found a solution how to stop Global warming notwithstanding the burning of fossil fuel. Read all about it in the book 'eMaya' which is available on Amazon, or you can see it at www.trafford.com/08-0434
About the Author
Dilip Dahanukar studied engineering in India and management in the USA. He has rich experience in corporate management and finance. He is interested in environment which has resulted in the book eMaya: How to stop Global warming. Married to an artist (painter) he has 2 daughters both married, one of them residing in the US. He loves gardens and plants and spends his weekends in his forest-garden abode in the hills in India.
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