U.N. Completes Carbon Trading Link Under Kyoto
By Gerard Wynn
LONDON (Reuters) - Japan on Wednesday became the first country to take delivery of carbon offsets which it can use to help it stay within its binding greenhouse gas emissions limits under the Kyoto Protocol, the U.N. climate body said.
Kyoto allows rich countries to stay within emissions caps by buying carbon offsets from developing nations, investing in emissions-cutting projects there.
Last year Japan was 150 million tonnes of greenhouse gas emissions, or some 13 percent, above its Kyoto limit of 1.2 billion tonnes, making it a likely big buyer.
Targets are based on countries' average emissions from 2008-12.
Japan was the first country to use the trading link, called the International Transaction Log (ITL), which the U.N. said became operational on Wednesday.
"The entry of the ITL into real-time operation sends a clear signal to the carbon market that trading can go ahead as planned," said U.N. climate chief Yvo de Boer.
"Market players now have the assurance that the cornerstone of the Kyoto trading system is in place before the actual start of the Kyoto accounting period on 1 January 2008," he added.
Countries and companies in Europe and Japan have been buying carbon offsets for some time, but have had to await delivery while the U.N. constructed the ITL registry to track purchases.
And European Union countries are still waiting, as they decide whether or not to link to the Kyoto ITL system simultaneously in one group of 27 nations, a complication which could cause further delays.
Collectively the EU's 15 older members in western Europe were at least some 160 million tonnes over their 3.9 billion tonnes Kyoto target in 2005, implying likely big carbon offset purchases there, too.
The United States didn't ratify the Kyoto Protocol, and so isn't participating in the trading scheme, while Canada has said it can't meet its targets.
Japan is the first Kyoto member country to go live, and Switzerland and New Zealand are scheduled to start real-time operations in November or December, the U.N. said.
A further complication remains, however, where industrialized countries have to get official U.N. "eligibility to trade" carbon offsets before they can trade these between themselves.
(Reporting by Gerard Wynn; Editing by James Jukwey)