The UN has ruled Greece and Canada to be in breach of the Kyoto Protocol over monitoring and reporting of greenhouse gas emissions. The rulings mean the two countries are prevented from international emissions trading under the Kyoto markets.

This means they cannot buy or sell emission allowances known as AAUs, nor buy CER offset credits from developing countries under the CDM. The UN decisions may well help raise the credibility of the UN’s climate treaty in the demonstration of tough enforcement of its rules, but there is unlikely to be any great impact on its carbon markets.

Canada’s Harper government has already said on coming to power in 2006 that it does not intend to comply with its Kyoto obligations because its emission reduction target is too hard to meet and will impose too great a burden on the economy. Greece is only just outside its Kyoto target and may not have a great need to trade in those carbon markets.

Like other rich industrialised countries that have signed and ratified the Kyoto Protocol (all except the US), Greece and Canada take on a legal obligation to reduce emissions to agreed targets and are allowed to participate in carbon trading mechanisms to help reduce the cost of doing so.

The UN climate convention authority, the UNFCCC, ruled Greece to be “in non-compliance” with the Kyoto Protocol over its national emissions accounting and registry practices which are not up to standard. In particular, the UN climate convention authority says Greece has overestimated its emissions and has applied for more AAU national emissions allowances than it needs. AAUs are tradable among developed countries in the Kyoto fold and any surplus can sold into the emerging global carbon market.

A preliminary ruling on Canada over similar issues means it will receive the same non-compliance order unless it takes immediate steps to correct its breaches. Its registry is not up to Kyoto standards and an emissions reporting deadline was missed, the UNFCCC says.

The Canadian government just this week released data for 2005 showing emissions to be 25 per cent above 1990 levels, compared to a Kyoto target to limit them to 6 per cent above by the period 2008-12.

Norway, Belgium, Finland, Lithuania and Slovenia have all passed the tests that Greece failed and are cleared for international trade in emissions allowances and offset credits.

Reuters, Bloomberg 22/4/08

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