What Is the Kyoto Protocol?

The Kyoto Protocol was an international agreement that aimed to reduce carbon dioxide emissions and the presence of greenhouse gases. Countries that ratified the Kyoto Protocol were assigned maximum carbon emission levels and participated in carbon credit trading. Emitting more than the assigned limit would result in a penalty for the violating country in the form of a lower emission limit in the following period.

The Kyoto Protocol Explained

The Kyoto Protocol predominately targeted six greenhouse gases, including:

  • Carbon dioxide
  • Methane
  • Nitrous oxide
  • Hydrofluorocarbons
  • Perfluorocarbons
  • Sulphur hexafluoride

The Kyoto Protocol was not renewed following the end of the commitment period in 2012.

The Kyoto Protocol separated countries into two groups. Annex I included developed nations, while Non-Annex I referred to developing countries. Emission limitations were only placed on Annex I countries.

Non-Annex I nations participated by investing in projects designed to lower emissions in their countries. For these projects, they earned carbon credits, which could be traded or sold to Annex I countries, allowing them a higher level of maximum carbon emissions for that period.

Under the protocol industrialized nations were to reduce greenhouse gases by 5.2% on average by 2012, but each country had its own target. For example, when the agreement was finalized European Union members had a target of reducing emissions by 8% by 2012. The U.S. had a reduction target of 7% while Canada's target was 6%.

However, the U.S. did not sign onto the Kyoto agreement citing that the reductions were only limited to industrialized nations and would therefore unfairly hurt the U.S. economy.