INTRODUCTION

UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (UNFCCC)

The UNFCCC is an intergovernmental treaty developed to address the problem of climate change through efforts of stabilizing greenhouse gas concentrations that lead to global warming. Negotiations on what became the convention were launched in December 1990 by the UN General Assembly. An Intergovernmental Negotiating Committee (INC) was convened to conduct these negotiations, which were concluded in just 15 months. The Convention was adopted on 9 May 1992, and opened for signature on June 1992 at the UN Conference on Environment and Development in Rio de Janeiro, Brazil. It entered into force on 21 March 1994, after receiving the requisite 50 ratifications.

OBJECTIVE

The ultimate objective of this Convention and any related legal instruments that the Conference of the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.

DEFINITIONS

For the purposes of this Convention:

1. “Adverse effects of climate change” means changes in the physical environment or biota resulting from climate change which have significant deleterious effects on the composition, resilience or productivity of natural and managed ecosystems or on the operation of socio-economic systems or on human health and welfare.

2. “Climate change” means a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods.

3. “Climate system” means the totality of the atmosphere, hydrosphere, biosphere and geosphere and their interactions.

4. “Emissions” means the release of greenhouse gases and/or their precursors into the atmosphere over a specified area and period of time.

5. “Greenhouse gases” means those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorbs and re-emits infrared radiation.

6. “Regional economic integration organization” means an organization constituted by sovereign States of a given region which has competence in respect of matters governed by this Convention or its protocols and has been duly authorized, in accordance with its internal procedures, to sign, ratify, accept, approve or accede to the instruments concerned.

7. “Reservoir” means a component or components of the climate system where a greenhouse gas or a precursor of a greenhouse gas is stored.

8. “Sink” means any process, activity or mechanism which removes a greenhouse gas, an aerosol or a precursor of a greenhouse gas from the atmosphere. 9. “Source” means any process or activity which releases a greenhouse gas, an aerosol or a precursor of a greenhouse gas into the atmosphere.

GREENHOUSE GASES COVERED

The GHG data reported by Parties contain estimates for direct greenhouse gases, such as:

CO2 - Carbon dioxideCH4 - MethaneN2O - Nitrous oxidePFCs - PerfluorocarbonsHFCs - HydrofluorocarbonsSF6 - Sulphur hexafluoride as well as for the indirect greenhouse gases such as SO2, NOx, CO and NMVOC.

CONFERENCE OF PARTIES

Parties to the UNFCCC continue to adopt decisions, review progress and consider further action through regular meetings of the Conference of the Parties (COP). The Conference of Parties is the highest-decision making body of the Convention, and usually meets annually. The Conference of Parties and the Convention goals are supported by various bodies and organizations. This includes a Permanent Secretariat with various duties set out under Article 8 of the UNFCCC. A number of subsidiary bodies also advise the COP. The Subsidiary Body on Scientific and Technical Advice (SBSTA) links scientific, technical and technological assessments, the information provided by competent international bodies, and the policy-oriented needs of the COP. The Subsidiary Body for Implementation (SBI) was created to develop recommendations to assist the COP in reviewing and assessing implementation of the Convention and in preparing and implementing its decisions. The SBSTA and SBI usually meet twice each year, at the same

time and venue. One of these two yearly meetings generally takes place in parallel with the COP.

KYOTO PROTOCOL

In December 1997, delegates at COP 3 in Kyoto, Japan, agreed to a Protocol to the UNFCCC that commits developed countries and countries in transition to a market economy to achieve quantified emission reduction targets. These countries, known under the UNFCCC as Annex I parties, agreed to reduce their overall emissions of six greenhouse gases by an average of 5% below 1990 levels between 2008-2012 (the first commitment period), with specific targets varying from country to country. The Kyoto Protocol is the world's only international agreement with binding targets to reduce greenhouse gas emissions.  As such, it is the primary tool governments of the world have to address climate change. The Protocol finally entered into force as a legally-binding document on 16 February 2005.

KYOTO PROTOCOL MECHANISMS

The Protocol also established three flexible mechanisms to assist Annex I parties in meeting their national targets cost-effectively: an emissions trading system; joint implementation (JI) of emission reduction projects between Annex I parties; and the Clean Development Mechanism (CDM), which allows for emission reduction projects to be implemented in non-Annex I parties (developing countries). Emissions Trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not "used" - to sell this excess capacity to countries that are over their targets. A Clean Development Mechanism project activity might involve, for example, a rural electrification project using solar panels or the installation of more energy-efficient boilers. The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction or limitation targets. Joint implementation offers Parties a flexible and cost-efficient means of fulfilling a part of their Kyoto commitments, while the host Party benefits from foreign investment and technology transfer. The Kyoto mechanisms’ functions are: a) to stimulate sustainable development through technology transfer and investment; b) to help countries with Kyoto commitments to meet their targets by reducing emissions or removing carbon from the atmosphere in other countries in a cost-effective way; and, c) to encourage the private sector and developing countries to contribute to emission reduction efforts.

MONITORING EMISSIONS TARGET

Under the Protocol, countries' actual emissions have to be monitored and precise records have to be kept of the trades carried out. Registry systems track and record transactions by Parties under the mechanisms. The UN Climate Change Secretariat, based in Bonn, Germany, keeps an international transaction log to verify that transactions are consistent with the rules of the Protocol.

Reporting is done by Parties by submitting annual emission inventories and national reports under the Protocol at regular intervals. A compliance system ensures that Parties are meeting their commitments and helps them to meet their commitments if they have problems doing so.

AdaptationThe Kyoto Protocol, like the Convention, is also designed to assist countries in

adapting to the adverse effects of climate change. It facilitates the development and deployment of technologies that can help increase resilience to the impacts of climate change.

The Adaptation Fund was established to finance adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol. In the first commitment period, the Fund was financed mainly with a share of proceeds from CDM project activities. In Doha, in 2012, it was decided that for the second commitment period, international emissions trading and joint implementation would also provide the Adaptation Fund with a 2 percent share of proceeds.

COMMITMENTS

Under the UNFCCC and Kyoto Protocol, the parties are divided into different groups according to their commitments.

Annex I Parties include the industrialized countries that were members of the OECD (Organization for Economic Co-operation and Development) in 1992, plus countries with economies in transition (the EIT Parties), including the Russian Federation, the Baltic States, and several Central and Eastern European States.  These Parties are classified as industrialized (developed) countries and "economies in transition" (EITs). The 14 EITs are the former centrally-planned (Soviet) economies of Russia and Eastern Europe.

Annex II Parties consist of the OECD members of Annex I, but not the EIT Parties. They are required to provide financial resources to enable developing countries to undertake emissions reduction activities under the Convention and to help them adapt to adverse effects of climate change. In addition, they have to "take all practicable steps" to

promote the development and transfer of environmentally friendly technologies to EIT Parties and developing countries. Funding provided by Annex II Parties is channeled mostly through the Convention’s financial mechanism.

Annex B parties listed in Annex B of the Kyoto Protocol are Annex I Parties with first- or second-round Kyoto greenhouse gas emissions. The first-round targets apply over the years 2008–2012. As part of the 2012 Doha climate change talks, an amendment to Annex B was agreed upon containing with a list of Annex I Parties who have second-round Kyoto targets, which apply from 2013–2020.

Non-Annex I Parties are mostly developing countries. Certain groups of developing countries are recognized by the Convention as being especially vulnerable to the adverse impacts of climate change, including countries with low-lying coastal areas and those prone to desertification and drought. Others (such as countries that rely heavily on income from fossil fuel production and commerce) feel more vulnerable to the potential economic impacts of climate change response measures. The Convention emphasizes activities that promise to answer the special needs and concerns of these vulnerable countries, such as investment, insurance and technology transfer.

The 49 Parties classified as least developed countries (LDCs) by the United Nations are given special consideration under the Convention on account of their limited capacity to respond to climate change and adapt to its adverse effects. Parties are urged to take full account of the special situation of LDCs when considering funding and technology-transfer activities.

Substantially, it is the ineffectiveness of the signing of the UNFCCC took place at the Rio Earth summit that led to the need of amendments. The ineffectiveness was due to the fact that no legally binding targets were agreed among the UNFCCC committed signatories. The legally binding emission targets however were not agreed until 1997 in Kyoto through a protocol that we know as Kyoto protocol.

The Protocol's major feature is that it has mandatory targets on greenhouse-gas emissions for the world's leading economies which have accepted it. These targets range from -8 per cent to +10 per cent of the countries' individual 1990 emissions levels "with a view to reducing their overall emissions of such gases by at least 5 per cent below existing 1990 levels in the commitment period 2008 to 2012." In almost all cases -- even those set at +10 per cent of 1990 levels -- the limits call for significant reductions in currently projected emissions. Future mandatory targets are expected to be established for "commitment periods" after 2012. These are to be negotiated well in advance of the periods concerned.

Commitments under the Protocol vary from nation to nation. The overall 5 per cent target for developed countries is to be met through cuts (from 1990 levels) of 8 per cent in the European Union (EU[15]), Switzerland, and most Central and East European states; 6 per cent in Canada; 7 per cent in the United States (although the US has since withdrawn its

support for the Protocol); and 6 per cent in Hungary, Japan, and Poland. New Zealand, Russia, and Ukraine are to stabilize their emissions, while Norway may increase emissions by up to 1 per cent, Australia by up to 8 per cent (subsequently withdrew its support for the Protocol), and Iceland by 10 per cent. The EU has made its own internal agrement to meet its 8 per cent target by distributing different rates to its member states. These targets range from a 28 per cent reduction by Luxembourg and 21 per cent cuts by Denmark and Germany to a 25 per cent increase by Greece and a 27 per cent increase by Portugal.

To compensate for the sting of "binding targets," as they are called, the agreement offers flexibility in how countries may meet their targets. For example, they may partially compensate for their emissions by increasing "sinks" -- forests, which remove carbon dioxide from the atmosphere. That may be accomplished either on their own territories or in other countries. Or they may pay for foreign projects that result in greenhouse-gas cuts. Several mechanisms have been set up for this purpose. (See the sub-chapters on "emissions trading," the "clean development mechanism," and "joint implementation.")

Some mechanisms of the Protocol had enough support that they were set up in advance of the Protocol's entry into force. The Clean Development Mechanism, for example -- through which industrialized countries can partly meet their binding emissions targets through "credits" earned by sponsoring greenhouse-gas-reducing projects in developing countries -- already had an executive board before the Kyoto Protocol entered into force on 16 February 2005.

COMPLIANCE

KYOTO PROTOCOL COMPLIANCE MECHANISM

The Kyoto Protocol compliance mechanism is designed to strengthen the Protocol’s environmental integrity, support the carbon market’s credibility and ensure transparency of accounting by Parties.  Its objective is to facilitate, promote and enforce compliance with the commitments under the Protocol.  It is among the most comprehensive and rigorous systems of compliance for a multilateral environmental agreement.  A strong and effective compliance mechanism is key to the success of the implementation of the Protocol.

The Compliance Committee is made up of two branches: a facilitative branch and an enforcement branch.  As their names suggest, the facilitative branch aims to provide advice and assistance to Parties in order to promote compliance, whereas the enforcement branch has the responsibility to determine consequences for Parties not meeting their commitments.  Both branches are composed of 10 members, including one representative from each of the five official UN regions (Africa, Asia, Latin America and the Caribbean, Central and Eastern Europe, and Western Europe and Others), one from the small island

developing States, and two each from Annex I and non-Annex I Parties.  The Committee also meets in a plenary composed of members of both branches, and a bureau, made up of the chairperson and vice-chairperson of each branch, supports its work.  Decisions of the plenary and the facilitative branch may be taken by a three-quarters majority, while decisions of the enforcement branch require, in addition, a double majority of both Annex I and non-Annex I Parties.

The enforcement branch is responsible for determining whether a Party included in Annex I (Annex I Party) is not in compliance with its emissions targets, the methodological and reporting requirements for greenhouse gas inventories, and the eligibility requirements under the mechanisms.  In case of disagreements between a Party and an expert review team, the enforcement branch shall determine whether to apply adjustments to greenhouse gas inventories or to correct the compilation and accounting database for the accounting of assigned amounts.

The mandate of the facilitative branch is to provide advice and facilitation to Parties in implementing the Protocol, and to promote compliance by Parties with their Kyoto commitments.  It is responsible for addressing questions of implementation by Annex I Parties of response measures aimed at mitigating climate change in a way that minimizes their adverse impacts on developing countries and the use by Annex I Parties of the mechanisms as “supplemental” to domestic action.  Furthermore, the facilitative branch may provide “early warning” of potential non-compliance with emissions targets, methodological and reporting commitments relating to greenhouse gas inventories, and commitments on reporting supplementary information in a Party’s annual inventory.

In the case of the enforcement branch, each type of non-compliance requires a specific course of action.  For instance, where the enforcement branch has determined that the emissions of a Party have exceeded its assigned amount, it must declare that that Party is in non-compliance and require the Party to make up the difference between its emissions and its assigned amount during the second commitment period, plus an additional deduction of 30%.  In addition, it shall require the Party to submit a compliance action plan and suspend the eligibility of the Party to make transfers under emissions trading until the Party is reinstated.

“FLEXIBILITY” MECHANISMS

Under the Protocol, countries must meet their targets primarily through national measures. However, it also provides a range of “flexibility” mechanisms that Annex I Parties can employ to meet their commitment targets. Among these are Clean Development Mechanism (CDM), Joint Implementation (JI), and International Emissions Trading (IET). The economic basis for providing these is that the marginal cost of reducing or abating emissions differs among countries. At the time of the original Kyoto targets, studies

suggested that the flexibility mechanisms could reduce the overall cost of meeting the targets.

1. Clean Development Mechanism

The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. It is the first global, environmental investment and credit scheme of its kind, providing a standardized emissions offset instrument, CERs.

A CDM project activity might involve, for example, a rural electrification project using solar panels or the installation of more energy-efficient boilers. The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction or limitation targets.

Under the Protocol, only the Annex I Parties have committed themselves to national or joint reduction targets (formally called "quantified emission limitation and reduction objectives" (QELRO).  Parties to the Kyoto Protocol not listed in Annex I of the Convention (the non-Annex I Parties) are mostly low-income developing countries, and may participate in the Kyoto Protocol through the Clean Development Mechanism.

2. Joint ImplementationThe mechanism known as “joint implementation,” defined in Article 6 of the Kyoto

Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex B Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project in another Annex B Party, each equivalent to one tonne of CO2, which can be counted towards meeting its Kyoto target.

Joint implementation offers Parties a flexible and cost-efficient means of fulfilling a part of their Kyoto commitments, while the host Party benefits from foreign investment and technology transfer.

A JI project must provide a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to what would otherwise have occurred.  Projects must have approval of the host Party and participants have to be authorized to participate by a Party involved in the project.

The CDM and JI are called "project-based mechanisms," in that they generate emission reductions from projects. The difference between IET and the project-based mechanisms is that IET is based on the setting of a quantitative restriction of emissions, while the CDM

and JI are based on the idea of "production" of emission reductions. The CDM is designed to encourage production of emission reductions in non-Annex I Parties, while JI encourages production of emission reductions in Annex I Parties.The production of emission reductions generated by the CDM and JI can be used by Annex I Parties in meeting their emission limitation commitments. The emission reductions produced by the CDM and JI are both measured against a hypothetical baseline of emissions that would have occurred in the absence of a particular emission reduction project. The emission reductions produced by the CDM are called Certified Emission Reductions (CERs); reductions produced by JI are called Emission Reduction Units(ERUs). The reductions are called "credits" because they are emission reductions credited against a hypothetical baseline of emissions.Each Annex I country is required to submit an annual report of inventories of all anthropogenic greenhouse gas emissions from sources and removals from sinks under UNFCCC and the Kyoto Protocol. These countries nominate a person (called a "designated national authority") to create and manage its greenhouse gas inventory. Virtually all of the non-Annex I countries have also established a designated national authority to manage their Kyoto obligations, specifically the "CDM process". This determines which GHG projects they wish to propose for accreditation by the CDM Executive Board.

3. International Emissions Trading

Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not "used" - to sell this excess capacity to countries that are over their targets.Thus, a new commodity was created in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the "carbon market."

The Green Investment Scheme (GIS), a mechanism in the framework of International Emissions Trading (IET), is designed to achieve greater flexibility in reaching the targets of the Kyoto Protocol while preserving environmental integrity of IET. However, using the GIS is not required under the Kyoto Protocol, and there is no official definition of the term.

Under the GIS a Party to the Protocol expecting that the development of its economy will not exhaust its Kyoto quota, can sell the excess of its Kyoto quota units (AAUs) to another Party. The proceeds from the AAU sales should be "greened", i.e. channeled to the development and implementation of the projects either acquiring the greenhouse gases

emission reductions (hard greening) or building up the necessary framework for this process (soft greening).

Latvia was one of the front-runners of GISs. World Bank (2011) reported that Latvia has stopped offering AAU sales because of low AAU prices. In 2010, Estonia was the preferred source for AAU buyers, followed by the Czech Republic and Poland. Japan's national policy to meet their Kyoto target includes the purchase of AAUs sold under GISs. In 2010, Japan and Japanese firms were the main buyers of AAUs. In terms of the international carbon market, trade in AAUs are a small proportion of overall market value.

LULUCF

Kyoto Parties can use land use, land use change, and forestry (LULUCF) in meeting their targets. LULUCF activities are also called "sink" activities. Changes in sinks and land use can have an effect on the climate, and indeed the Intergovernmental Panel on Climate Change's Special Report on Land Use, Land-Use Change and Forestry estimates that since 1750 a third of global warming has been caused by land use change. Particular criteria apply to the definition of forestry under the Kyoto Protocol.

Forest management, cropland management, grazing land management, and revegetation are all eligible LULUCF activities under the Protocol.Annex I Parties use of forest management in meeting their targets is capped.

MONITORING EMISSION TARGETS

Under the Protocol, countries' actual emissions have to be monitored and precise records have to be kept of the trades carried out.

Registry systems track and record transactions by Parties under the mechanisms. The UN Climate Change Secretariat, based in Bonn, Germany, keeps an international transaction log to verify that transactions are consistent with the rules of the Protocol. Reporting is done by Parties by submitting annual emission inventories and national reports under the Protocol at regular intervals. A compliance system ensures that Parties are meeting their commitments and helps them to meet their commitments if they have problems doing so.

Adaptation

The Kyoto Protocol, like the Convention, is also designed to assist countries in adapting to the adverse effects of climate change. It facilitates the development and deployment of technologies that can help increase resilience to the impacts of climate change.

The Adaptation Fund was established to finance adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol. In the first commitment period, the Fund was financed mainly with a share of proceeds from CDM project activities.

KYOTO PROTOCOL IN THE PHILIPPINES

On November 20, 2003, the Kyoto Protocol was ratified by the Philippines. In pursuance thereof, The Medium Term Philippine Development Plan of 2004-2010 (MTDP) at the national level was set which underscored the need to manage the environment more effectively. Included in the Plan are targets for the development of renewable energy, expanding the use of natural gas and accelerate the development of alternative fuels such as coconut biodiesel and exhaust.

To comply with the agreements provided by the Kyoto Protocol, the Philippines passed national legislations such as the Clean Air Act of 1999 and Solid Waste Management Act of 2000 which were enacted to improve the effectiveness of the air quality management program. These ensures the Philippines’ faithful compliance to the mandates and principles contained in the UNFCCC and the Kyoto Protocol and sees to it that adequate public awareness campaign and initiatives are held to bring the issue to all the sectors of the country.