Introduction to Climate Change
11. The Flexibility Mechanisms: Trading, Joint Implementation and the Clean Development Mechanism
One of the most controversial and complicated issues in the climate change negotiations has been the extent to which industrialized (Annex I) countries will be allowed to meet their own obligations by financing or undertaking activities in other countries. In some respects, the nature of climate change is ideal for establishing global trading markets in pollution; the reduction of one ton of carbon dioxide emissions anywhere in the world reduces climate change as much as any other ton of reduction. This has led many observers to develop different trading schemes to allow greater flexibility in meeting climate change targets. In theory, at least, such trading schemes can result in lowering the costs of compliance.
Many controversies continued beyond Kyoto regarding how the flexibility mechanisms would operate. Among the controversies was whether the use of emissions trading under Article 17 and the other flexibility mechanisms should be capped or not. In other words, would countries be forced to meet most or at least some amount of their emission reduction targets by reducing emissions at home, or could they simply purchase all of their needed emissions from Russia or other countries that had emission reduction units to sell. Ultimately, the Parties could not agree to any numerical cap on emissions trading under Article 17, deciding instead on general language requesting that countries through their actions move toward narrowing per capita emissions.