Concluding Negotiations on the Berlin Mandate—The Kyoto Climate Conference
At COP-3 (Kyoto, Japan, December 1997), negotiations continued based on a list of articles which had been suggested by Parties during the AGBM process for a legal instrument or protocol  and several text proposals for each article. The main focus was on the proposed Article 3 of the protocol which was about commitments for countries and which had been so heavily discussed during the AGBM process (especially whether and how to differentiate these commitments, and what flexibility to offer developed countries in terms of accounting for greenhouse gas emission reduction, location and timing).
The debate on commitments took place in the context of Estrada’s11 ‘big bubble’ proposal (IISD 1997b, p. 7). In this proposal, the EU was to reduce its emissions by 8 % below 1990 levels during a proposed commitment period of 2006-2010 (note that before AGBM-6, the EU had proposed to collectively reduce its emissions by 15 %). Estrada proposed a -5 % target for Canada, the Russian Federation, the USA, and Ukraine, and -4.5 % for Japan. Countries like Australia and Norway had to limit their greenhouse gas emissions to 5 % above 1990 levels. Together, developed countries would reduce their emissions by 5 % below 1990 emission levels. The differences in targets in Estrada’s proposal were a reflection of different national circumstances of the Parties (e.g., large reliance on renewables, or strong coal sector), although no formal calculation method for differentiation, as proposed at a number of AGBM sessions, had been used for this. The proposed targets in the ‘big bubble’ could be achieved by reducing emissions of three greenhouse gases (CO2, CH4, and N2O).
Informal discussions persuaded the Chair to make several adjustments to his proposal, especially with respect to flexibility, the number of gases covered, delaying the commitment period (the period during which countries would be held accountable for their achieved greenhouse gas emission reductions or limitations) to 2008-2012, and voluntary commitments for developing countries. On the last day of the COP, when negotiations continued ‘round the clock’, the Russian Federation and Ukraine expressed their dissatisfaction with the differentiated targets because they did not reflect both countries’ proposals to stabilise their greenhouse gas emissions at 1990 levels (when they were still part of the Soviet Union, and thus before the disintegration of the communist system). Eventually, Article 3 was adopted with quantified emission reduction or limitation commitments for developed countries (QELRCs; note that the word objectives was replaced by the legally stronger term commitments), which were listed in Annex B to the Protocol (UNFCCC 1998a).
On aggregate, developed countries agreed to reduce their greenhouse gas emissions (for six gases, listed in Annex A of the Kyoto Protocol) by 5.2 % during the period 2008-2012 (the so-called first commitment period) compared to 1990 emission levels. These commitments were defined as national emission budgets (so-called assigned amounts), which were expressed as a percentage of developed countries’ emissions levels in 1990. For example, a country with an assigned amount of 93 % must reduce its emissions by 7 %.
Developed countries acquired further flexibility (next to the choice of which greenhouse gases to reduce and possibility to spread compliance with their QELRCs over five years) as they could fulfil their commitments partly in collaboration with and on the territory of other countries, using the instrument of emissions trading. For that, the protocol contained three possibilities: Joint Implementation (JI) for project-based emissions trading between developed countries, the Clean Development Mechanism (CDM) for project-based emissions trading with developing countries, and International Emissions Trading between developed countries (trading countries’ assigned amount units) (see Box 4.1).
The surprising inclusion of these three flexibility mechanisms in the Protocol cannot be seen in isolation from the hectic negotiations during the second week of COP-3. The US delegation had hold onto its stabilisation target during the first week of COP-3 [returning US emissions to the levels of 1990, as ‘instructed’ by the Byrd-Hagel Resolution (Byrd and Hagel 1997)], but was openly instructed to show more flexibility during negotiations when US Vice-President Al Gore addressed the COP in person at the beginning of the second week. The willingness of the USA to accept an emission reduction commitment was accompanied by US pressure for more flexibility in terms of emissions trading and broadening the JI concept towards collaboration with developing countries (from which the CDM resulted). In other words, in return for stronger commitments, the USA, and other developed countries, obtained the right to fulfil these on the territory of other countries, for example, where emission reduction investments could be done at lower costs.
On meaningful participation of developing countries, however, the US delegation did not achieve what it intended. Throughout the AGBM process, this issue had been extremely sensitive, both in terms of voluntary quantified targets and in terms of adopting policies and measures. The G-77&China demonstrated a strong determination to literally stick to the text of the Berlin Mandate and did not allow any margin for interpretation in this respect. The group repeatedly argued that developing countries would only consider adopting targets and/or policies and measures once developed countries had demonstrated real progress with meeting their UNFCCC targets (of returning their emissions to 1990 levels by the year 2000).
According to the Earth Negotiations Bulletin, the key negotiators of the G-77&China group effectively defeated the original Article 10 in the draft protocol on developing countries’ commitments: “in a clever play, India and China led off a debate on emissions trading, ambushing the US and JUSSCANZ and succeeding in delaying the pace at which trading will come into effect. In doing so in the closing hours of the negotiations, they signalled decisive opposition to the Article on voluntary commitments and exhausted all proponents. As a result, the article on voluntary commitments was dropped” (IISD 1997b, p. 15).
On Thursday, 11 December 1997 the Kyoto Protocol was adopted.
Box 4.1. Inclusion of Flexibility Mechanisms in the Kyoto Protocol
When agreeing under the UNFCCC that developed countries shall “adopt national policies and take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs” (UNFCCC 1992, p. 12, Art. 4.2a), it was also agreed that “these Parties may implement such policies and measures jointly with other Parties” (UNFCCC 1992, p. 12, Art. 4.2b). This agreement formed the basis of the concept of ‘Joint Implementation’ (JI) which created the possibility for Parties to invest in greenhouse gas emission reduction measures on the territory of and in cooperation with other countries. The main rationale for JI is that greenhouse gases mix evenly within the atmosphere so that there is no direct link between the location and the impact of GHG emissions or emission reductions (Cubasch et al. 2013, pp. 123-129). A JI project results in greenhouse gas emission reductions which are transferred as carbon credits to a party that can use these for complying with its greenhouse gas emission reduction commitments.
At COP-3, it was decided that developed countries could fulfil part of their commitments through use of the Kyoto flexibility mechanisms (UNFCCC 1998a):
- - Article 6 cooperation (Kyoto Protocol Article 6), which deals with project-based greenhouse gas emission reduction cooperation among developed countries. Credits generated through these JI projects are called Emission Reduction Units.
- - The Clean Development Mechanism (CDM) (Kyoto Protocol Article 12), which deals with project-based greenhouse gas emission reduction cooperation between developed and developing countries. Emission reductions achieved through CDM projects can be transferred to developed countries as Certified Emission Reductions.
- - International Emissions Trading (Kyoto Protocol Article 17), which allows countries with greenhouse gas emissions below their assigned amount under the Kyoto Protocol to sell these surpluses to other countries whose emissions surpass their assigned amount.
The first two (project) mechanisms are based on the JI concept as included in the UNFCCC.
By July 2016, the JI market had developed into a pipeline of 761 projects in Central and Eastern Europe, of which 604 had been registered by the JI Supervisory Committee. The CDM pipeline contained 8475 projects, of which 7724 had been registered by the CDM Executive Board as validated CDM projects (Fenhann 2016).
-  Note that throughout the Kyoto discussions Parties generally referred to a protocol instead of alegal instrument. ‘Protocol’ also appeared in Estrada’s negotiation text (UNFCCC 1997b).
-  AGBM Chairman Raul Estrada Oyela also led the negotiations in the context of the BerlinMandate at COP-3.
-  JUSSCANZ was an acronym for a group of Parties with Japan, the USA, Switzerland, Canada,Australia, Norway and New Zealand. At later negotiation, JUSSCANZ became part of theUmbrella Group (see Box 2.1 in Chap. 2).