The United Nations have ruled out extending greenhouse gas limits in the Kyoto Protocol after current obligations expire in 2012, leaving in place doubts about the future of a $2.7 billion a year part of the carbon market.
Japan, has also announced that it is not in favor of extending the Kyoto limits.
The agreement negotiated in 1997 in Kyoto, Japan, binds 37 developed nations and the European community to cut emissions from 1990 levels by a collective 5.2% in the five years through 2012. The treat was never ratified by USA, and developing countries such as China don’t have targets.
UN climate talks in 2008 in Poland also tried to extend Kyoto’s emission targets to the U.S. and China, the world’s biggest emitters, but failed to do so. This was followed by Copenhagen in 2009 where again the discussion collapsed over divisions between developed and developing nationals and difference between USA and China.
India and China want to make sure that the Kyoto Protocol is continued; Japan, Russia and Canada prefer to have USA and China onboard before any decisions are taken.
USA is unlikely to agree to binding targets until atleast 2013 because it needs to have domestic legislation in place first.
Without the active participation of the two biggest emitters, namely China and the United States, experts feel that the extension does not have the feel of global effort.
This is likely to result in the collapse of the UN-backed CDM carbon offset market that will impact the source of funding for renewable energy projects in developing countries. The CDM financing is an important pillar for climate change mitigation efforts in developing countries.