The Kyoto Protocol

The Kyoto Protocol supplements the United Nations Framework Convention on Climate Change (UNFCCC) and promotes the achievement of its objectives by setting legally binding obligations concerning greenhouse gas emissions of the developed countries. The emission reduction objectives also take account of the impacts of carbon sinks (forests, soil).

The Kyoto Protocol entered into force in 2005. It is the first legally binding agreement on the reduction of emissions on an international scale.

The first commitment period of the Kyoto Protocol was 2008­–2012. Finland and the other EU Member States ratified the Protocol in 2002. Finland has also succeeded in keeping the emissions at the level of 1990, in accordance with the accounting rules established in the Protocol.

The decision on the second commitment period of the Kyoto Protocol 2013–2020 was made at the Conference of Parties in Doha in 2012. The second commitment period will enter into force when three-fourths of the Parties to the Kyoto Protocol have ratified the Doha Amendment. In May 2020, the number of countries that had committed to the amendment was still too small and the amendment had not entered into force. Because of the limited global coverage of the Kyoto Protocol and especially the entry into force of the Paris Climate Change Agreement, the second commitment period has little practical relevance. Now the preparations for the implementation of the Paris Agreement guide the international climate policy more broadly and with a more long-term perspective than the Kyoto Protocol.

Objectives of the second commitment period

Fewer countries have committed to the second commitment period of the Kyoto Protocol than to the first. The following countries have reported their emissions reduction targets for 2013–2020 in relation to the base year (1990 in most cases):

  • Australia (–0.5%)
  • EU (–20%)
  • Iceland (–20%)
  • Kazakhstan (5%)
  • Croatia (–20 %)
  • Liechtenstein (–16%)
  • Monaco (–22%)
  • Norway (–16%)
  • Switzerland (–15.8 %)
  • Kazakhstan (–5%)
  • Ukraine (–24%)
  • Belarus (–12%)

Furthermore, the assigned amounts of greenhouse gas emissions will be cut during the second commitment period, insofar as they surpass actual emissions in 2008–2010. Emission units left unused during the first commitment period can be transferred to the new period in full, but major limitations have been imposed on their purchase and they will be transferred to a separate reserve. Nearly all countries participating in the second commitment period of the Kyoto Protocol, EU Member States included, have decided not to buy unused emission units.

The use of flexibility mechanisms was also limited so that they cannot be used by countries participating in the second commitment period.

Measures to reduce emissions

Countries committed to the binding obligations of the Kyoto Protocol may decide, either alone or with other countries, on how they intend to fulfil these obligations. The Kyoto Protocol allows to use flexibility mechanisms and carbon sinks for this purpose. In practice, the countries committed to the Kyoto Protocol have prepared their own climate programmes that define the national measures to be taken.

The countries must submit annual reports to the UNFCCC Secretariat on how the obligations laid down in the Kyoto Protocol have been met.

In the European Union, the emission reduction obligations under the Kyoto Protocol are fulfilled by the EU climate and energy legislation that extends until 2020 and includes a 20% emission reduction target from the levels in 1990. The key elements of the EU climate legislation are the emissions trading scheme that regulates industrial and energy production, objectives that are binding on Member States for increasing the share of renewable energy and energy efficiency, and the Effort Sharing Regulation concerning emission reductions in the non-effort sharing sectors.

Flexibility mechanisms

The parties to the Kyoto Protocol may use flexibility mechanisms and means to complement their national emission reduction measures. The purpose of flexibility mechanisms is to promote the cost-efficiency and flexibility of emission reductions. Partner countries also profit from the payments they receive. According to the Kyoto Protocol, however, a country may not fulfil its emission reduction targets through flexibility mechanisms alone, but a major part of the obligation must be fulfilled through emission reductions in that country.

The Kyoto Protocol includes three flexibility mechanisms

  • Joint Implementation (JI) allows an industrial country to fund projects to reduce emissions or increase carbon sinks in another industrial country.
  • Clean Development Mechanism (CDM) allows an industrial country to fund projects to reduce emissions or to increase carbon sinks that follow the principles of sustainable development in developing countries and transfer the emission reductions gained for its own use.
  • International Emissions Trading (IET) allows countries that exceed their permitted emission levels to buy emission units from countries whose emissions stay below the permitted levels.

Restrictions on the use of these mechanisms were imposed for the second commitment period of the Kyoto Protocol 2013–2020. Countries with no binding targets during the second commitment period are not allowed to use these mechanisms, while countries participating in the second commitment period were allowed to start using the Clean Development Mechanism and, later on, they can also use the Joint Implementation and International Emissions Trading mechanisms.

The EU and other countries also make use of other flexibilities in their climate policies.

Negotiations on the rules, practices and procedures of the mechanisms included in the Paris Agreement are conducted in the context of the Rulebook concerning its implementation.

Use of flexibility mechanisms in Finland

The Ministry of the Environment is responsible for Joint Implementation and International Emissions Trading. The Ministry for Foreign Affairs oversees the Clean Development Mechanism, and the Ministry of Employment and the Economy takes care of coordinating the emission allowance procurement programme. Finland will begin preparing a flexibility strategy in connection with the updated Climate and Energy Strategy.

Finland has also purchased emission units through international carbon funds, for example by investing in the Baltic Sea Region Testing Ground Facility (TGF), the World Bank's Prototype Carbon Fund (PCF) and the Asia Pacific Carbon Fund (APCF).

Launch of projects

Businesses have been able to participate in flexibility mechanism projects, acquiring emission units generated through these. Businesses participating in the EU Emissions Trading System can use these units to augment their emission quotas. They can also resell emission units.

Retaining emission units in a holding account, and transferring them through International Emissions Trading (IET), requires authorisation. Businesses participating in IET and which have a greenhouse gas emissions permit, as well as legal persons authorised to participate in a Joint Implementation project or a Clean Development Mechanism project, do not need separate authorisation for their holding account.

Such authorisation is granted to a legal person on the basis of a free-form application delivered to the Ministry of the Environment. The application must include the applicant's name, domicile, contact information and business ID.

Applications should be delivered to the Registry of the Ministry of the Environment by emailing them to [email protected] Authorisations are granted free of charge.

More information

Outi Honkatukia, Senior Ministerial Adviser 
Ministry of the Environment, Environmental Protection Department, Climate Environment Council  0295250272