98-235 ENR
CRS Report for Congress
Received through the CRS Web
Global Climate Change: Reducing Greenhouse
Gases — How Much from What Baseline?
March 11, 1998
Larry Parker and John Blodgett
Environment and Natural Resources Policy Division
Congressional Research Service ˜ The Library of Congress

---

Global Climate Change: Reducing Greenhouse Gases —
How Much from What Baseline?
Summary
At the Kyoto meeting on Global Climate Change, the United States agreed to
reduce emissions of six greenhouses gases. Specifically, under the terms of the Kyoto
Protocol, from a baseline of 1990 for Carbon dioxide (CO ), Methane (CH ), and
2
4
Nitrous Oxide (N O), and of 1995 for Hydrofluorocarbons (HFCs), Perfluoro-carbons
2
(PFCs), and Sulfur Hexafluoride (SF ), the U.S. committed to reduce by 7% the
6
average annual tons of carbon equivalent released during the 5-year period 2008-
2012.
Projecting the reductions that would be required if the U.S. were to ratify the
treaty is difficult. While emissions of CO are fairly well established and account for
2
about 85% of total carbon equivalent emissions, emissions of the other gases,
especially N O, are more uncertain. Once the baselines are set, uncertainties in factors
2
affecting sources of emissions—e.g., the rate of economic growth, changes in energy
prices, the rate at which nuclear facilities are retired, and the rate of adoption of
energy-efficient technologies — will have to be overcome in determining the actual
magnitude of the reductions required. And uncertainties in how some reductions
might be accomplished under the Agreement — e.g., the extent of emissions trading
among different countries and whether and how to account for “sinks” that sequester
carbon — affects assumptions about how (and at what cost) reductions will actually
be achieved.
Given these uncertainties, it is not surprising that a range of estimates emerges
from various studies making different assumptions on these variables. The U.S. has
prepared a Climate Action Report specifically to address these issues. Based on its
baseline of 1,596 million metric tons of carbon equivalent (MMTCE), this report
estimates that to meet its Kyoto commitment the U.S. will have to reduce emissions
in 2010 by 462 MMTCE, or 23.7% from “business as usual” emissions that would
occur then. Projections of CO emissions by other studies suggest reductions
2
necessary to meet the Kyoto Agreement vary from 21% to over 30% from “business
as usual” 2010 emission levels. These high and low projections differ only in
assumptions about CO emissions. None of the estimates quantitatively integrates the
2
full range of potential variables that could affect CO and other greenhouse gas
2
emissions in the future, which include economic growth, electricity restructuring,
electricity demand, and technological change and penetration, among others.
The reviewed estimates of the reduction necessary to meet the commitment —
i.e., the reduction below “business as usual” emissions projected for 2008-2010 —
range from approximately 390 to 660 MMTCE. Even ignoring numerous
uncertainties, then, there remains a -70% difference from the lower to higher
reduction projected necessary to achieve the target. To comply with the higher
compared to the lower estimate would represent a substantial escalation of effort and
makes estimating potential costs difficult. In short, projecting future greenhouse gas
emissions, the amount that they might have to be reduced if the U.S. ratifies the
Kyoto agreement, and potential costs, are all fraught with considerable uncertainty.

---

Contents
The Kyoto Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Projecting Emissions in 2008-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The CAR Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Economic Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Energy Policy Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Carbon Sequestration Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Scope of Reductions: Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reducing Emissions from Six Gases, Not One . . . . . . . . . . . . . . . . . . . . . . 9
Emissions Trading Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reduction Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Table 1. U.S. Baseline Year Greenhouse Gas Emissions . . . . . . . . . . . . . . . . . . 3
Table 2. Projected 2010 U.S. Greenhouse Gas Emissions — CAR Data . . . . . . 5
Table 3. Projected 2010 U.S. Greenhouse Gas Emissions —
EIA CO Data for Three Economic Growth Scenarios . . . . . . . . . . . . . . . . 7
2
Table 4. Projected 2010 U.S. Greenhouse Gas Emissions —
Interlaboratory Working Group CO Data for Energy Efficient Scenario . . 8
2
Table 5. Projected 2010 Reduction Requirements to Achieve
the Kyoto Accord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 6. Selected Uncertainties in Projected Reduction Requirements . . . . . . . 13

---

Global Climate Change: Reducing Greenhouse
Gases — How Much from What Baseline?
At the Kyoto meeting on Global Climate Change, the United States agreed to
reduce emissions of greenhouses gases. Specifically, under the terms of the Kyoto
1
Protocol, the United States committed that over the 5-year period 2008-2012, it
would reduce its average annual net carbon-equivalent emissions of 6 gases by 7%
below specified baseline years. The gases and the baseline years are as follows:
2
Greenhouse Gas
Baseline Year
Carbon dioxide (CO )
1990
2
Methane (CH )
1990
4
Nitrous Oxide (N O)
1990
2
Hydrofluorocarbons (HFCs)
1995
Perfluorocarbons (PFCs)
1995
Sulfur Hexafluoride (SF )
1995
6
If the U.S. were to ratify the Kyoto Agreement, what would this commitment mean
for the U.S.? What reductions would be required? Ascertaining the reductions
necessary is a prerequisite to determining how the reductions might be achieved and
what the impacts of those efforts might be.
Projecting the required reductions is a two-step process. First, emissions of the
six greenhouse gases in their specified baseyear must be calculated in order to
determine the targeted emission levels — i.e., 7% below baseyear level. This
calculation is complicated because the existing 1990/1995 data for the six greenhouse
gases are of uneven quality. While data for energy-related emissions of CO are fairly
2
On
1
the Agreement, see Susan R. Fletcher, Global Climate Change Treaty: Summary of the
Kyoto Protocol, CRS Report 98-2, December 22, 1997; on the science and policy of global
climate change, see Wayne A. Morrissey and John R. Justus, Global Climate Change, CRS
Issue Brief 89005. For the Protocol, see http://www.UNFCCC.DE/
2Technically, the net carbon-equivalent emissions of the 6 greenhouse gases for the 5-year
period 2008-2012 are not to exceed 5 times 93% of the baseline emissions. Kyoto Protocol,
Article 3(1). This is equivalent to the average annual emission load during the 5 year period
being 7% below the baseline.

---

CRS-2
robust, emissions data for the remaining five gases are less certain. Uncertainties also
arise in comparing the relative global warming effects of the several gases, which
involves converting them to metric tons of “carbon equivalents.”
Second, because the Kyoto Agreement caps greenhouse gas emissions below
current levels, emissions growth that would have normally occurred up through the
2008-2012 time period must be offset in order to maintain the reduction. This
requirement introduces numerous uncertainties into the calculations, including:
! Growth rates for the six greenhouse gases will be influenced by economic
factors that are difficult to project into the future;
! Fossil fuel consumption (the major source of CO emissions) will be influenced
2
by energy policy considerations, including development of non-carbon based
substitutes, deployment of energy efficient technologies, and other factors such
as the future of the nuclear industry. Like economic factors, these factors are
difficult to predict in lieu of a discrete climate change policy;
! Net effects of post-1990 human-induced activities that influence carbon sinks,
such as forestry practices, will affect necessary reduction requirements in the
2008-2012 period;
! The Kyoto Agreement establishes mechanisms for achieving reductions jointly
among nations. In effect, the inventory of emissions from which any one
nation can achieve reductions is international. This does not influence the
amount of reductions the U.S. would be required to accomplish; however, it
offers the opportunity for the U.S. to achieve some portion of its reductions
in other countries. Thus the actual amount by which greenhouse gases would
be reduced within the U.S. will be influenced by any bilateral agreements
through which U.S. interests sponsor emission reductions in other countries
(and how much other countries seek reductions in the U.S.).
The Kyoto Baseline
The first step in calculating the reductions required to meet the Kyoto
Agreement begins with estimating baseline year emissions. From this baseline, the
mandated emissions limit can be calculated. This is no easy task.
The 1997 Submission of the United States of America Under the United National
Framework Convention on Climate Change, the Climate Action Report (CAR),3
contains U.S. emissions data relied upon during the Kyoto negotiations. Table 1
depicts the baseline emissions as reported by the CAR. Carbon dioxide accounts for
about 85% of the greenhouse effect of the 6 greenhouse gases; about 98% of this CO2
comes from fossil fuel combustion. Fuel use data, which are relatively robust, provide
3Office of Global Climate Change, Climate Action Report, 1997 Submission of the United
States of America Under the United Nations Framework Convention on Climate Change
(Department of State Publication 10496, July 1997).

---

CRS-3
the primary source for estimating historical CO emissions. Emissions estimates for
2
the other gases, especially N O, are considerably less certain.4
2
Table 1. U.S. Baseline Year Greenhouse Gas Emissions
Greenhouse Gas
Baseline Year
Emissions (MMTCE)
Carbon dioxide (CO )
1990
1,353
2
Methane (CH )
1990
170
4
Nitrous Oxide (N O)
1990
36
2
Hydrofluorocarbons (HFCs)
1995
21
Perfluorocarbons (PFCs)
1995
8
Sulfur Hexafluoride (SF )
1995
8
6
Total
1,596
Source: Climate Action Report, p. 56. (Note: Emissions from burning international bunker
fuel are excluded; for the U.S., this was about 22 MMTCE for 1995 [p. 60].)
These may not be the final figures. Before the next Conference of the Parties,
scheduled for Buenos Aires in November, 1998, the Kyoto Protocol requires each
Party to the Agreement “to provide ... data to establish its level of carbon stocks
in1990 and to enable an estimate to be made of its changes in carbon stocks in
subsequent years” (Article 3(4)). Methodologies for emissions estimates are to be
those accepted by the Intergovernmental Panel on Climate Change and approved by
the Conference of the Parties (Article 5 of the Protocol); guidelines for preparing
information necessary to demonstrate compliance with the Protocol are to be adopted
by the first session of the Conference of Parties to the Protocol (Article 7). To assure
that all countries are using credible and comparable means of estimating emissions,
the baseline estimates will be subject to review by “expert review teams” created
under the Protocol (Article 8(2)).
For the U.S., some adjustments to the Table 1 figures are likely. For CO the
2
changes are likely to be small; for example, Department of Energy data result in a
slightly higher figure for U.S. CO emissions. However, for the other gases, the
2
revisions could be more substantial. The Protocol also requires that further studies of
greenhouse gas emissions and removals be undertaken and incorporated in any future
commitments for reducing greenhouse gases beyond the 2008-2012 target.
For
4
example, it is possible that the nitrous oxide data contained in the CAR could be off by
as much as a factor of three.

---

CRS-4
Based on the figures in Table 1, under the Kyoto agreement, the U.S. would be
committed to emitting no more than 1,484 MMTCE annually on average during
2008-2012. This represents a reduction of 112 MMTCE annually below 1990 levels.
Projecting Emissions in 2008-2012
While the 1990/1995 baseline for the greenhouse gases contains uncertainties,
those figures will be effectively frozen once the U.S. submits for review its
compliance information as required by Articles 7 and 8. The reductions that will be
required of the U.S. to meet its commitment under the Protocol will be the difference
between 5 times 93% of the 1,596 MMTCE baseline (based on the emissions
estimates from the 1997 U.S. Climate Action Report) and what would be “business
as usual emissions” for the period 2008-2012. Estimating those “business as usual
emissions” for 2008-2012 introduces the most uncertainty into the calculation of the
reductions necessary to meet the terms of the Kyoto Protocol.
If emissions increase, the reductions required will be more than the 7% that
would be required if average annual emissions during 2008-2010 were the same as for
the base-years. But already, by 1995, emissions of the three 1990 baseyear
greenhouse gases — CO , CH , and N O — had increased 9.5%. If the U.S. had
2
4
2
reduced its 1995 emissions of these three gases to the level required by the Kyoto
Protocol (7% below the baseline), the U.S. would have had to reduce its actual 1995
emissions of greenhouse gases by 155 MMTCE, or 9.4%.
But this 1995 calculation is based on historical data: the comparable calculation
for 2008-2012 involves projections of substantial uncertainty. Such projections
depend on a number of crucial assumptions involving economic activity and growth,
interest rates, energy consumption, consumer behavior, technological change, policy
interventions and their effectiveness, and others.
The CAR Projections
The 1997 Climate Action Report projects greenhouse gas emissions for the years
2000, 2005, 2010, and 2020. For evaluating the impact of the Kyoto Protocol, the
2010 projection falls in the middle of the target period. The projections presume
continued funding support for the Administration’s Climate Change Action Programs
comparable to the 1997 levels approved by Congress. The projected 201
5
0
greenhouse emissions are shown in Table 2 (the report discusses uncertainties,6 but
does not indicate potential error bars for these point estimates).
Based on the projection that net emissions will be 1,946 MMTCE in 2010, the
average reduction necessary for the U.S. to meet its Kyoto commitment would be 462
MMTCE per year, or 23.7% below the “business as usual” emissions projected. This
The
5
Climate Action Report discusses this and other variables affecting projections, pp. 117-
124.
The
6
Climate Action Report discusses uncertainties, pp. 127-130.

---

CRS-5
calculation does not include any net, human-induced change in U.S. carbon sinks from
afforestation, reforestation, and deforestation that could affect the 2010 reduction
estimate.
Sensitivity Analysis
Inevitably, such projections depend on assumptions. Other analyses result in
different projections. At the current time, virtually all alternative analyses focus on
CO emissions, the largest component of greenhouse gases.
2
Economic Variables. The Energy Information Administration (EIA) publishes
a projection of U.S. energy production and consumption annually, including projected
CO emissions from energy-related activities. The Annual Energy Outlook 1998
2
projects carbon emissions for energy use under three economic growth scenarios.
Table 3 substitutes the EIA CO projections (with its 1990 baseline adjusted to CAR
2
estimate) for the CAR projection, while retaining the CAR projections for the other
5 greenhouse gases.
Table 2. Projected 2010 U.S. Greenhouse Gas Emissions — CAR Data
Baseline Year
2010
Greenhouse Gas
Emissions
Emissions
(MMTCE)
(MMTCE)
Carbon dioxide (CO )
1,353
1,669
2
Methane (CH )
170
152
4
Nitrous Oxide (N O)
36
34
2
Hydrofluorocarbons (HFCs)
21
Perfluorocarbons (PFCs)
8
91
Sulfur Hexafluoride (SF )
8
6
Total
1,596
1,946
Source: Climate Action Report, p. 111
Using EIA’s low economic growth scenario, projected total greenhouse gas
emissions are about the same as CAR’s point estimate (just 1% higher), while the
reference case and high growth projections are considerably higher, implying greater
reductions to meet the Kyoto commitment. For its reference case, EIA’s projections
would result in an average annual reduction of 577 MMTCE, or 28% below the
1990/1995 baseline, to meet the target in 2010. Under the high economic growth
case, the U.S. emission reduction from the 1990/1995 baseline necessary to meet the
target would be 657 MMTCE, or 30.7%, while under the low growth case it would
be 487 MMTCE, or 24.7%.

---

CRS-6
Energy Policy Variables. EIA also conducts sensitivity analysis on several
energy policy variables that could affect future energy production, consumption, and
emissions. Three of these variables include: (1) the rate of development and
penetration of energy efficient technologies, (2) trends in electricity demand, and (3)
retirement of nuclear capacity. Using the reference case to freeze the economic
variables, EIA varies these energy policy factors to determine how they would affect
energy consumption, production, and emissions. With respect to CO emissions, EPA
2
projects:
! If energy efficient technologies are developed faster and penetrate markets
more quickly than the reference case, 79 additional MMTCE would be saved
in 2010. Conversely, if technological development and use stalls at 1998
levels, EIA estimates that 2010 emissions would be 31 MMTCE higher than
the reference case ;
7
! If electricity demand rises faster than anticipated, as might happen if electricity
restructuring reduces prices, EIA estimates that 2010 emissions would be 29
MMTCE higher than for the reference case ;
8
! If nuclear facilities (which displace carbon-emitting fossil fuel facilities) are
held in service longer than assumed in the reference case, EIA estimates that
42 additional MMTCE would be saved in 2010; conversely, if nuclear facilities
are retired faster than anticipated (as might happen if electricity restructuring
reduces electricity prices) EIA estimates that 2010 emissions would be 15
MMTCE higher than assumed in the reference case.9
7EIA, p. 193.
EIA
8
, p. 195.
Interpolated from
9
EIA, p. 55.

---

CRS-7
Table 3. Projected 2010 U.S. Greenhouse Gas Emissions —
EIA CO Data for Three Economic Growth Scenarios
2
Baseline Year
2010
Greenhouse Gas
Emissions
Emissions
(MMTCE)
(MMTCE)
Carbon dioxide (CO )
1,353
High growth: 1,864
2
Reference: 1,784
Low growth: 1,694
Methane (CH )
170
152
4
Nitrous Oxide (N O)
36
34
2
Hydrofluorocarbons (HFCs)
21
Perfluorocarbons (PFCs)
8
91
Sulfur Hexafluoride (SF )
8
6
Total
1,596
High growth: 2,141
Reference: 2,061
Low growth: 1,971
Source: Energy Information Administration, Annual Energy Outlook 1998, with
projections through 2020, DOE/EIA-0383(98) (December 1997), p. 152 [adjusted
to equate to CAR baseline].
Thus EIA finds that the uncertainties injected by energy policy variables are
comparable to the uncertainties resulting from economic variables.
Another analysis, prepared by the Interlaboratory Working Group on Energy-
Efficient and Low-Carbon Technologies (IWG) focuses on technology development
and penetration and its potential impact on projected 2010 CO emissions (see Table
2
4). To examine the potential for technology development to reduce CO emissions,
2
the analysis compares a “business as usual” case (based on EIA’s 1997 reference case
assumptions) with an efficiency case that assumes that 35% of cost-effective
efficiency is captured. As stated by the report: “The general philosophy of the
efficiency case is that it reduces, but does not eliminate, various market barriers and
lags to the adoption of cost-effective energy efficient technology.”
10
Interlaboratory
10
Working Group on Energy Efficient and Low-Carbon Technologies [Oak
Ridge National Laboratory, Lawrence Berkeley National Laboratory, Argonne National
Laboratory, National Renewable Energy Laboratory, Pacific Northwest National Laboratory,
Scenarios of U.S. Carbon Reductions, p. 1.2
http://www.ornl.gov/ORNL/Energy_Eff/CON444/labweb.htm

---

CRS-8
Table 4. Projected 2010 U.S. Greenhouse Gas Emissions —
Interlaboratory Working Group CO Data for Energy Efficient
2
Scenario

Baseline Year
2010
Greenhouse Gas
Emissions
Emissions
(MMTCE)
(MMTCE)
Carbon dioxide (CO )
1,353
Business as Usual: 1,717
2
High Efficiency: 1,597
Methane (CH )
170
152
4
Nitrous Oxide (N O)
36
34
2
Hydrofluorocarbons (HFCs)
21
Perfluorocarbons (PFCs)
8
91
Sulfur Hexafluoride (SF )
8
6
Total
1,596
Business as Usual: 1,994
High Efficiency: 1,874
Source: Interlaboratory Working Group on Energy Efficient and Low-Carbon
Technologies, Scenarios of U.S. Carbon Reductions, p. 1.6. [Adjusted to equate to
CAR baseline.]
This group’s “business as usual” baseline is somewhat lower than the EIA’s 1998
“reference case,” and a bit higher (plus 2.5%) than the CAR point estimate for
2010. The “business as usual” reduction estimate for 2010 resulting from this
scenario would be 510 MMTCE per year, or 25.6% below the baseline to achieve the
Kyoto target. However, under the group’s “efficiency case,” emissions drop
substantially and are less than the CAR’s point projection; in this case, the reductions
necessary for the U.S. to meet its Kyoto commitment in 2010 would be 390 MMTCE,
or 21% below the 1990/1995 baseline.
Carbon Sequestration Variables. A country’s contribution to greenhouse
gases not only consists of direct emissions but also is influenced by activities that
affect carbon sinks — processes that remove and sequester carbon from the
atmosphere. Activities that affect sinks include farming and forestry practices. A
positive net growth of trees removes carbon from the atmosphere; clearing forests
typically releases carbon. A nation’s emission reduction commitment can be affected
by net changes in sinks. According to the Protocol, “The net changes in greenhouse
gas emissions from sources and removals by sinks resulting from direct human-
induced land-use change and forestry activities, limited to afforestation, reforestation,
and deforestation since 1990, measured as verifiable changes in stocks ... shall be used
to meet” the 2008-2012 commitments (Article 3(3)). Also, revised methods of
accounting for “removals in the agricultural soil and land-use change and forestry
categories” may be approved by the November 1998 Conference of Parties and be

---

CRS-9
applied in meeting the 2008-2012 commitment, if the activities took place after 1990
(Article 3(4)).
The 1997 U.S. Climate Action Report estimates that in 1990 carbon
sequestration represented a sink of 125 MMTCE and projects a slight decline in the
future. However, the estimates are uncertain and may not reflect the way the
Protocol ultimately assesses sinks. In estimating reductions necessary to meet the
Kyoto commitment, a net increase in human-induced carbon sequestration from
forestry practices between 1990 and 2008-2012 would be subtracted from emissions
during the period, thereby reducing the amount of actual emissions that will have to
be curtailed. Conversely, net negative sequestration from forestry practices would be
added to the emissions that will have to be reduced.

Scope of Reductions: Other Considerations
In discussing the emission reductions required under the Kyoto agreement, there
is a tendency to focus on domestic emissions of CO , which account for 85% of U.S.
2,
greenhouse gas emissions and for which the data are the best. However, it is
important to remember that the Kyoto Agreement involves 6 gases, not 1. Also, as
the Agreement is international in terms of the emissions inventory available, the U.S.
can seek reduction opportunities through bilateral trading and joint implementation.
These considerations do not affect the amount of carbon-equivalent emissions that
U.S. would be obligated to reduce; however, they can influence where some of those
reductions may occur, and how much they would cost.
Reducing Emissions from Six Gases, Not One
While the 5 non-CO gases account for only about 15% of U.S. greenhouse gas
2
emissions, their impact on required reductions cannot be ignored. The Climate Action
Report indicates that emissions of all 5 increased from 1990 to 1995. Any increase
means that even greater reductions will probably come from CO — with most of the
2
impact of achieving those reductions falling on those burning fossil fuels. Of
particular concern are HFCs and PFCs; while their present contribution to greenhouse
gas emissions is small, their use has been growing rapidly, especially HFCs, which are
replacing chlorofluorocarbons (CFCs) that are being phased out under the Montreal
Protocol because they deplete stratospheric ozone. Unless effective means are
developed to contain or eliminate these emissions, CO emitting sources may bear an
2
even greater share of the committed reductions than would otherwise be the case.
As suggested earlier, data on the five non-CO gases are of considerably less
2
quality than for energy-related CO emissions, and their conversion to carbon
2
equivalents entails some uncertainty. With the U.S. required to provide final
estimates this year for its 1990/1995 baseline, this situation could lead to some
significant problems. If the U.S. underestimates 1990/1995 emissions of these gases,
the growth trend to 2008-2012 could be artificially increased because of the depressed
baseline. This would result in additional reductions being required. In contrast, if the
U.S. overestimates 1990/1995 emissions of these gases, the growth trend to 2008-
2012 could be artificially reduced because of the inflated baseline. This would result

---

CRS-10
in less required reductions (though failing to meet the spirit of the commitment). As
previously noted, these baseline estimates will be subject to review by “expert review
teams” created under the Protocol.
Emissions Trading Mechanisms
Any consideration of the domestic impacts of reducing greenhouse gas emissions
under the Kyoto Agreement has to take into account the potential under the
Agreement for some of those reductions to be accomplished elsewhere. The Kyoto
11
agreement does not require the U.S. to reduce its domestic emissions by a specific
amount; rather, it requires the U.S. to reduce emissions from any certified source in
a manner that results in the reduction requirement being met.
The Protocol establishes three mechanisms that expand the inventory of
reduction opportunities.
Under article 4, the Protocol authorizes Annex I Parties “to fulfill thei
12
r
commitments under Article 3 jointly” — in effect, this allows one country to emit
greenhouse gases in excess of its commitment to the degree another country’s
emissions are lower than its commitment. Parties proposing joint fulfillment of
commitments must formally notify the secretariat of their intent when they ratify or
otherwise approve the Protocol.
Under article 6 of the Protocol, any Annex I Party “may transfer to, or acquire
from, any other such Party emission reduction units resulting from projects aimed at
reducing anthropogenic emissions by sources or enhancing anthropogenic removals
by sinks of greenhouse gases in any sector of the economy....” The protocol spells
out conditions for such emissions trading, including a requirement that it only “be
supplemental to domestic actions for the purposes of meeting commitments....” The
November 1998 Conference of Parties in Buenos Aires is to elaborate on guidelines
for implementing this article with respect to verification and reporting. Parties can
authorize private entities, such as corporations, to engage in emissions trades under
this article.
Under article 12, the Protocol defines a “clean development mechanism” by
which Annex I countries can gain credit for post-2000 emissions reductions achieved
by assisting nonAnnex I countries in sustainable development activities that reduce
emissions or enhance carbon sinks. Such “joint implementation” emissions
reductions must be real and measurable; the November 1998 Conference of the
Parties is to “elaborate modalities and procedures with the objective of ensuring
transparency, efficiency and accountability through independent auditing and
verification of project activities.”
Global
11
Climate Change: Market-Based Strategies to Reduce Greenhouse Gases, CRS
Issue Brief 97057.
Annex
12
I Parties — listed in an Annex to the 1992 U.N. Framework Convention on Climate
Change (FCCC) — include the “developed” nations and the former soviet economies; the U.S.
is an Annex I Party. Each Annex I Party that has an assigned target for greenhouse gas
emissions is listed, with its target, in Annex B of the Kyoto Protocol.

---

CRS-11
These “emissions trading” mechanisms offer the possibility that actual domestic
greenhouse gas reductions will be less than the amount required to meet the U.S.
commitment. If so, the impact of reductions will be different than if the U.S. met its
full commitment through reducing emissions within its borders. The amount of
reductions that can be shifted elsewhere is unclear, but nonetheless, may offer the
possibility of avoiding some of the higher cost/higher impact reductions that otherwise
would have occurred domestically. That the rules for “emissions trading”
opportunities are not yet final and the ultimate share of reductions that might be
shifted out of the country is uncertain adds a further degree of uncertainty in
evaluating actual domestic reductions and their impacts.
Thus, while the emissions trading mechanisms of the Protocol do not reduce the
emissions reduction that the U.S. would have to achieve, those mechanisms offer the
opportunity to shift impacts of some of the reduction to other countries where,
presumably, the costs (which would be borne by U.S. interests) may be less.
Reduction Uncertainties
Table 5 depicts the range of reduction requirements implied by the analyses
reviewed above. As can be seen from Table 5, the projected reductions necessary by
2008-2010 to meet the Kyoto Agreement vary from over 30% (EIA’s high economic
growth scenario) to 21% (Interlaboratory Working Group’s high energy efficiency
case) below “business as usual” emissions. These high and low projections, which
bracket the Climate Action Report’s point estimate, differ only in assumptions about
CO emissions: the high projection is 16.7% higher than the low one; they vary from
2
the Climate Action Report’s by +11.7% to -4.3%.

---

CRS-12
Table 5. Projected 2010 Reduction Requirements to Achieve
the Kyoto Accord
Projected Net
Kyoto Reduction Requirement
Greenhouse
Projection
Gas Emissions
2010
MMTCE
%
MMTCE
CAR
1,946
462
23.7
EIA
High growth
2,141
657
30.7
Reference
2,061
577
28
Low Growth
1,971
487
24.7
IWG
Business as Usual
1,974
510
25.6
Efficiency Case
1,874
390
21
None of the estimates integrates the full range of potential variables that could
affect CO emissions in the future — economic growth, electricity restructuring,
2
electricity demand, and technological change and penetration. Thus these estimates
do not include all the uncertainties about CO emissions. And for net emissions, none
2
of these estimates explore the uncertainties inherent in the baseline estimates and
variables affecting projections of the other 5 greenhouse gases covered by the Kyoto
Agreement. The likely impact of various uncertainties on future emissions/reduction
needs is summarized in Table 6. In short, projecting future emissions and the amount
that emissions might have to be reduced to comply with the Kyoto agreement is
fraught with considerable uncertainty.
The reviewed estimates of the reduction necessary to meet the commitment —
i.e., the reduction below “business as usual” emissions projected for 2008-2010 —
range from approximately 390 to 660 MMTCE. Even ignoring numerous
uncertainties, then, there remains a -70% difference from the lower to higher
reduction projected necessary to achieve the target. To comply with the higher
compared to the lower estimate would represent a substantial escalation of effort and
makes estimating potential costs difficult.13
Larry
13
Parker and John Blodgett, Climate Change: Three Policy Perspectives, CRS Report
94-816 (1994).

---

CRS-13
Table 6. Selected Uncertainties in Projected Reduction Requirements
Impact on Future Greenhouse Gas
Variable introducing uncertainty
Emissions/Reductions Required
Baseline
Baseline revised:
upward
S [= less emissions, less reductions]
down
+ [= more emissions, more reductions]
Economic Assumptions for Projecting Emissions/Reductions in 2008-2010
Change
from
EIA
IWG
“business as
estimate
estimate
usual”
MMTCE
MMTCE
Economic growth:
higher than expected
+
+80
lower than expected
S
S 90
Energy Policy Assumptions
Energy efficient technologies:
adopted faster than expected
S
S 79
S 120
adopted slower than expected
+
+31
Energy prices (e.g., electricity, gasoline):
decline
+
+29
rise
S
Nuclear facilities retire:
faster than expected
+
+15
slower than expected
S
S 42
Sinks
Sinks:
Human-induced sequestration drops
+
Human-induced sequestration up
S
Non-CO2 Greenhouse Gases
Netting all 6 greenhouse gases:
Emission uncertainties narrow:
higher than expected in 2010
+
lower than expected in 2010
S
HFCs, PFCs & SF emissions:
6
grow faster than expected
+
grow slower than expected
S
Emissions Trading
“Emissions Trading” opportunities:
no change in emissions, but:
Many opportunities taken
reduce domestic reductions/costs
Few opportunities materialize
less reductions exported

---