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Kyoto Protocol initiatives
The Kyoto Protocol is designed to reduce greenhouse gases at the global level. The burden presently falls on the developed world as developing countries currently do not yet have targets under the Protocol. A number of developed countries that were given reduction targets based on their baseline emissions in 1990 will meet their reduction targets domestically. For some economies however, the cost of reducing emissions domestically may increase to the point where it becomes cheaper to purchase emission units from other countries. At the micro level, companies may find themselves in a similar dilemma within the New Zealand Emissions Trading Scheme. Companies may reach the stage where cost effective reduction options cease to be feasible, and (in an emissions trading scenario) are forced to purchase reductions from companies that are found to be under the imposed compliance target.
Companies or countries in these situations will have to invest in projects such as landfill gas recapture and wind power. Because global warming is occurring within a global air shed, the location of greenhouse gas reduction is unimportant. To respond to the limitations of domestic reduction efforts, the Kyoto Protocol established three flexibility mechanisms: Clean Development Mechanism (CDM), Joint Implementation and International Emissions Trading.
