Compliance and Emissions Trading under the Kyoto Protocol: Rules for Uncertain Inventories

A solution is proposed for proving compliance with emission targets and for emissions trading in the event of uncertainties in reported emission inventories. The solution is based on the undershooting concept, from which the mathematical conditions for both proving compliance with a risk α and calculating effective emissions for trading are derived. Based on the reported emission units, the number of permits granted is reduced in proportion to the uncertainty in the inventory. A country whose inventory has higher uncertainty is thereby allotted fewer permits than a country with the same inventory but smaller uncertainty.     

Extension of EU Emissions Trading Scheme to Other Sectors and Gases: Consequences for Uncertainty of Total Tradable Amount

Emissions trading in the European Union (EU), covering the least uncertain emission sources of greenhouse gas emission inventories (CO₂ from combustion and selected industrial processes in large installations), began in 2005. During the first commitment period of the Kyoto Protocol (2008–2012), the emissions trading between Parties to the Protocol will cover all greenhouse gases (CO₂, CH₄, N₂O, HFCs, PFCs, and SF₆) and sectors (energy, industry, agriculture, waste, and selected land-use activities) included in the Protocol. In this paper, we estimate the uncertainties in different emissions trading schemes based on uncertainties in corresponding inventories. According to the results, uncertainty in emissions from the EU15 and the EU25 included in the first phase of the EU emissions trading scheme (2005–2007) is ±3% (at 95% confidence interval relative to the mean value). If the trading were extended to CH₄ and N₂O, in addition to CO₂, but no new emissions sectors were included, the tradable amount of emissions would increase by only 2% and the uncertainty in the emissions would range from −4 to +8%. Finally, uncertainty in emissions included in emissions trading under the Kyoto Protocol was estimated to vary from −6 to +21%. Inclusion of removals from forest-related activities under the Kyoto Protocol did not notably affect uncertainty, as the volume of these removals is estimated to be small.