The Kyoto mechanisms and the prospects for renewable energy technologies

Abstract

The Kyoto Protocol to the Climate Change Convention sets out legally binding emission targets and timetables for developed countries. In order to ease compliance, it allows countries to achieve their emission targets through the ‘Kyoto Mechanisms’. These mechanisms comprise International Emissions Trading (ET), Joint Implementation (JI), and a Clean Development Mechanism (CDM). This paper analyses the capacity of the proposed mechanisms of the Kyoto Protocol to promote investment in renewable energy technologies (RETs). Analysis of abatement costing studies indicates that the increasing use of renewable energy tends to be a higher cost option compared with other greenhouse gas (GHG) abatement technologies. This finding, however, does not make RETs unattractive for GHG mitigation as such because, apart from their vast technical potential to reduce GHG emissions, RETs have great capacity to contribute to other aspects of sustainable development. The extent of investment into renewable energy induced by the Kyoto mechanisms will depend on whether the rules and guidelines that are to be developed in the coming years will explicitly support renewables. The Kyoto mechanisms could be instrumental in leading to significant investment into these resources if rules are defined appropriately.