Climate deal reached by offering 'flexibility'

The Kyoto Protocol of 1997 was meant to represent a breakthrough in the way the environment is treated.

The Kyoto Protocol of 1997 was meant to represent a breakthrough in the way the environment is treated.

But it has taken four years and countless hours of sleep-defying negotiations in Bonn forthe world's leading industrial nations to come up with the rules that will allow the protocol's recommendations on climate change, and the greenhouse gases thought to cause it, to be put into practice.

Part of the problem has been the scale of Kyoto's ambitions. The US, for example, was asked to cut its emissions of greenhouse gases by 36 per cent, or 600 million tons, by 2010 – an almost impossible task.

So the protocol included a number of "flexible mechanisms" – most importantly, one that allowed countries emitting much less than their carbon dioxide target to sell surplus "credits" for cash to those, notably the US, who were exceeding their limit.

The worst offenders could also score brownie points by, for example, helping developing countries replace coal-fired power stations with environmentally friendly wind-powered projects.

A more controversial mechanism, and one which divided delegates in Bonn, allows countries to be rewarded for the capacity of their forests – or "carbon sinks" – to take carbon dioxide out of the air through photosynthesis. This is fair if a country has planted a new forest. In that case, it is providing new and real cuts in emissions. But some countries wanted to claim credits for forests which are already there and which they are merely "managing", an activity that has not been clearly defined. Both types of sinks are now included in the protocol.

Other issues that the treaty covers include the provision of funding so that developing countries can also combat climate change, and the issue of compliance, which coverswhat happens to nations that fail to meet their commitments.

The fine detail of how all these processes are to be carried out in the protocol's first commitment period, which ends in 2010, has been discussed at painstaking length, with some nations arguing over the construction of a single phrase.

The negotiations were launched in Buenos Aires in November 1998 and were due to be completed at The Hague last November. Those talks, however, failed. The points of contention have now been sorted out by yesterday's agreement on the following key issues:

Flexible mechanisms

General: The EU wanted to make it a rule that all countries had to make at least 50 per cent of their cuts by genuine domestic action rather than the mechanisms. This has been thrown out, which is a big defeat for Europe.

The treaty, the Hague draft of which said action had to be "primarily" in the domestic economy, now says that use of the mechanisms will be "supplemental", without specifying the degree to which countries can rely on them.

Emissions Trading: Emissions trading will be limited for all countries except Russia and The Ukraine, which will have an enormous allowance because of their special circumstances.

Clean Development Mechanism: Nuclear power projects are excluded, which is a victory for the EU and its anti-nuclear member countries such as Germany and Denmark.

The inclusion of carbon sinks, however, is a defeat for Europe – even though a limit has been placed on the degree to which sinks can be used to gain brownie points.

Joint Implementation: Nuclear power projects are excluded, another big European gain.

Carbon sinks

The inclusion of carbon sinks is a huge victory for Canada, Russia, Japan and Australia – and would also be for the US, if it were still involved.

However, the use of sinks is strictly limited, except for Canada and Japan, which have been given special allowances until 2010. After that, sinks will only be allowed on the basis of "sound science", which in theory means there will be no more special deals.

Funding

Four new climate change funds for developing countries have been established under the treaty. They are worth a total of $530m (£374m), per year. More than half of this money will be provided by the EU, and Britain's share will be between $40m and $60m per year.

Two of the funds are for adaptation to climate change for projects such as building walls to counter an expected rise in sea level. One of these two funds is specifically for the least developed nations.

The third fundis for building capacity by, for instance, training scientists to measure carbon dioxide emissions.

The fourth is to encourage economic diversification for the oil-producing countries of the OPEC bloc, which believe that the world's move away from fossil fuels will damage their economies considerably.

Compliance

These are the rules to punish countries who fail to meet their targets.

The main point of contention with this issue was to what degree it should be enshrined in the law. At the insistence of the Japanese, and with the support of Australia and Russia, the regulations have been made "diplomatically" rather than legally binding.

But the compliance regime that has been agreed upon is tough. It stipulates, for example, that for every ton of carbon dioxide by which a country misses its 2010 target, it must cut an extra 1.3 tons after 2010.

Furthermore, countries which do not meet their targets will be banned from emissions trading.