The Kyoto Mechanisms — A Framework for International Emissions Trading

Abstract

Cost considerations have been one of the key concerns for Annex I Parties when considering taking on reduction and limitation targets under the Kyoto Protocol. Incorporating an international emissions trading system into the Protocol was one of the key requirements for several countries within the climate negotiations. Without it, the adoption of an agreement with legally binding reduction and limitation targets probably would not have been possible. Or, at a minimum, the levels of the reduction and limitation targets would have been much lower. Although the targets seem relatively low, they are in fact significant when seen against the back drop of the amount of reductions an individual country will have to reduce. Some countries will have to reduce current emissions by up to 20 per cent to reach their target.

… Policies and measures to deal with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost.

(Article 3.3 of the UNFCCC)