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Combatting a surplus of Kyoto Allowances

At the Doha COP climate conference last November, the parities came to a decision concerning the large surplus of Assigned Amount Units (AAUs or carbon allowances) from the First Kyoto Commitment Period (CP1) (2008-2012) to the Second Kyoto Commitment Period (CP2) (2013-2020). The decision also tried to solve how to prevent an even further accumulation of a surplus in the CP2.

The surplus in CP1 is around 13 billion tonnes of CO2 allowances. Russia, Ukraine, Poland, Romania, the UK and Germany are the largest surplus holders. There are various reasons for the accumulation of AAUs in various countries. For some countries emission targets were very weak. At the time when the targets for the Kyoto protocol were defined, emissions for some countries were already below the targets established for CP1. Other countries have also had a drastic reduction in their emissions due to the low production levels caused by the economic crisis.

There are three important decision made concerning this topic at COP 18:

  • A carry over of allowances from CP1 to CP2 is allowed, however, there are limits set on their use in CP2.
  • It is impossible for countries that have dropped out of the Kyoto Protocol (i.e Russia or Canada) to sell their surplus allowances.
  • Countries have a restriction on the number of AAUs a country initially receives for CP2.

To read in greater detail about the decisions made concerning the surplus of allowances, please read the paper Doha Decisions on the Kyoto Surplus Explained published by Carbon Market Watch.

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