The Treaty Compliance Challenge: Enforcement under the Kyoto Protocol

February 10, 2010, by Michael Gillenwater

Now that we have the Copenhagen Accord, which gives us some hope that eventually we will have a treaty that includes the United States and active engagement from developing countries, it seems like a good time to open our history books and look at some lessons from the Kyoto Protocol.

Many consider the Kyoto Protocol a total failure. While it is correct to see the Protocol as not achieving much of what was hoped for, accentuating what it has failed to achieve is narrow and wrongheaded. Indeed, Kyoto has accomplished a great deal in terms of constructing a global carbon market and an international regulatory structure. One issue, though, that has yet to be tested under the Protocol is the challenge of compliance and enforcement.

The constraints that national sovereignty places on multilateral environmental agreements (MEAs), such as the Kyoto Protocol, create problems for compliance systems. Compliance can be disaggregated into four components: monitoring, compliance determination, enforcement, and dispute resolution.

Monitoring relates to how an agreement provides for the collection and dissemination of information on relevant activities of parties. The relevant activities are those related to a party’s commitments. Most states will insist that they self-report information. Ensuring the credibility of self-reported information is a central concern for any MEA. Because information is always associated with some uncertainty, a process for compliance determination is required. Once a party is found noncompliant, an enforcement mechanism is needed to coerce compliant behavior. A dispute resolution process allows a party to appeal a determination of non-compliance before enforcement action is taken. The Protocol addresses all of these components, but like most MEAs, fails to overcome the fundamental problem of enforcement.

Monitoring of Annex I parties’ mitigation commitments under the Kyoto Protocol is centered on annual submissions of national reports. These reports “inventory” the party’s anthropogenic emissions from sources and removals from sinks of greenhouse gases. The parties to the UNFCCC and the Kyoto Protocol have agreed to guidelines laying out the requirements for these inventory submissions. The IPCC has also elaborated detailed technical guidelines on best practices and minimum standards for inventories. Inventory reports are prepared by some combination of experts from government, industry, consulting firms, research institutes, and academia, although final submission is the responsibility of the government.

Although developing countries (non-Annex I) have no mitigation commitments under the Kyoto Protocol, they must still meet strict monitoring requirements for Clean Development Mechanism (CDM) emission reduction projects. The guidelines for monitoring under CDM rely on a “case law” approach in which project developers, with approval of their host party, submit proposed methods for crediting mitigation projects.

Under the Kyoto Protocol, the determination of compliance for Annex I parties occurs in several stages. Each party’s submission is checked by the Protocol’s secretariat as to whether it meets minimum standards of completeness. Teams drawn from a pool of trained and certified experts that have been nominated by parties to the Protocol then review the submission. The Protocol includes an incentive for submitting high quality inventory reports. The expert review teams can recommend that “conservative adjustments” be applied to specific estimates in a submission that are judged to be of insufficient quality. (Note, that the GHG Management Institute delivers this training for the UNFCCC and Kyoto Protocol secretariat. The UNFCCC training program is based on a series of e-learning courses of which I lead the development.)

A party can then either accept the review team’s adjustment or it can appeal it to a Compliance Committee. This committee is made up of two branches: the Facilitative Branch and the Enforcement Branch. The Facilitative Branch monitors parties’ progress towards meeting their commitments and warns other parties of cases of potential non-compliance. The Enforcement Branch makes final determinations on the application of adjustments to a party’s national inventory.

Expert review teams also pass judgment on the capacity of the party—through its “national system”—to produce credible annual inventory submissions prior to the start of the commitment period in 2008 (although no procedure exists for how to handle parties that fail this test, Article 5.1).

The final determination of a party’s compliance is simply a matter of comparing its adjusted inventory totals for the commitment period (2008 through 2012) to its holdings of allowances (i.e., AAUs, CERs, ERU, and RMUs).

One of the failures of the Kyoto Protocol is its lack of any real enforcement mechanism. Although the Compliance Committee includes an Enforcement Branch, this branch actually has no power of sanction or coercion over noncompliant parties. If a party is found to be noncompliant, its eligibility to continue to participate in the Protocol’s flexibility mechanisms (i.e., national emissions trading, CDM, and JI) can be suspended by denying the party access to the international emission allowance transaction registry.

The parties to the Protocol have also agreed that any party that has insufficient allowances must surrender in a second commitment period 1.3 tons for each ton it exceeds its allowance holdings. The effectiveness of this provision, though, is limited by the fact that reduction targets for a second commitment period have not been negotiated.

Parties may appeal decisions of the Enforcement Branch to the full meeting of the parties of the Protocol, which can override a decision with a three-fourths vote.

A similar process exists for determining compliance, enforcement, and dispute resolution under the CDM through the CDM Executive Board and its Accreditation and Methodology Panels. However, the CDM also enlists the private sector to a significant degree for the work of ex ante approval of emission reduction project proposals (i.e., validation) and the ex post evaluation of actual emission reductions achieved before credits are awarded (i.e., verification).

The compliance system under the Kyoto Protocol has yet to be tested. However, even if all components work as expected, the options for enforcement are minimal. Unfortunately, there are no obvious solutions to the enforcement problem with an MEA addressing greenhouse gas emissions.

So, what does this mean for the future of the Copenhagen Accord? Since we don’t have a world government to enforce international law, the people of representative governments around the world must make it politically unacceptable for their governments to fail to comply with their treaty commitments and, equally important, they must make it politically unacceptable for their governments to look the other way while other countries fail to comply.

For the GHG Management Institute, we have to make sure that the professional capacity and other infrastructure for measurement, reporting and verification of GHG emissions exists throughout the world so that compliance is feasible.


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