The Kyoto Protocol to the United Nations Framework Convention on Climate Change was formally adopted by the Conference of Parties on December 11 in Kyoto, Japan. At the core of the protocol is a legally binding obligation on Annex I countries to reduce emissions of six greenhouse gases (GHGs) by around 5% below their 1990 levels by the period 2008-2012. Developing countries are not bound by limits on emissions though they are expected to take steps to limit GHGs.

Annex I parties comprise developed countries: Japan, The European Community, the Russian Federation, Canada, Australia etc. The United States has pulled out of its protocol obligations and this has put it sharply at odds with its allies in both the developed and the developing world. In an attempt to retrieve the situation, Washington last month proposed a voluntary plan to curb emissions of some gases but not the all-important carbon dioxide. The plan is also tied to US economic growth and environmentalists argue that it will result in a rise of 29% in emissions rather than the 7% mandatory cut that Washington had originally agreed to. There was also suspicion over the timing of the announcement. It came just before President Bush's visit to Japan - the object of heavy American pressure to back out of the Kyoto Protocol.

While the main target of the protocol is carbon dioxide, it also covers methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulfur hexafluoride. These gases have been targeted because of their established link to the greenhouse effect, thence to global warming and catastrophic climate change, manifestations of which have become pronounced over the last decade in particular.

Annex I countries are expected to implement cuts of GHG emissions within their own countries but a key component of the protocol is a mechanism that allows Annex 1 countries to earn Certified Emission Reductions (CERs) by undertaking projects in developing countries that result in a net lowering of GHGs. This has come to be known as the Clean Development Mechanism (CDM) and has been widely seen as a cop-out for Annex I countries by allowing them to continue spewing GHGs while claiming CER credits from developing countries to enable them to meet their average promised cuts in greenhouse gases.

Nevertheless, the emissions trading mechanism has been declared as an engine for sustainable development in Third World and industrialising countries and is an opportunity to reap assistance from developed countries in a defined number of areas once it is proven that a reduction in GHGs is realised.

The CDM has been slow to take off because of the interminable bureaucracy that attends global initiatives like this one, the need to define precisely the projects that will benefit and the damper thrown on the whole process by the American withdrawal. There are also other trading mechanisms in the market - for instance, between emitters - and this has clouded the situation even more. The Executive Director of the International Emissions Trading conference, Andrei Marcu recently described it as a "fragmented" market without standards. However, there have been several project initiatives. In December, the Dutch, always the more progressive of the Europeans on environmental and sustainable development matters, signed an agreement with Panama for the purchase of credits from clean energy projects. Under the pact, The Netherlands will procure 20 million tonnes of carbon dioxide saved through the erection of cleaner power sources in Panama. Costa Rica, already a leader in the carbon credits business, has had a head start through the CDM's precursor, the Activities Implemented Jointly pilot project. A range of other CDM projects are said to be under consideration.

So shouldn't Guyana be contemplating its opportunities under the CDM? It certainly should be. The relevant question now would be what projects would qualify. Off the bat, the most eligible would be energy projects that don't result in the emission of carbon dioxide from fossil fuel-run energy plants that we have now. One feasible prospect would be our huge hydro-electricity potential. The CDM guidelines encompass support for projects in the vicinity of 15 MW or just above or a number of smaller projects that add up to 15 MW or just above. That is an appropriate capacity for some of the new envisaged developments and townships. There are a few hydro projects in the pipeline through the private sector and the government would do well to ascertain at this stage whether Guyana could qualify for CER agreements. A direct approach to the Dutch government would be a good start. Already we have a mini hydro project powering a growing Lethem and a network of five or six of these countrywide could be viable under the CDM. There is some concern over the approvals process for projects like these, whether the value of the CERs earned would be enough to offset project costs and whether the projects would be sustainable. The price per tonne of carbon dioxide saved has also gone into a tailspin with the American withdrawal from the protocol. Whereas it was calculated that Annex I countries would fork over around US$20 per tonne of carbon dioxide saved, that price fell dramatically with the American pull-out and under 2001 modelling results presented to the International Energy Agency the price per tonne could drop to less than US$1 per tonne because the US portion of the GHG reduction was so significant. It is a salient example of how America's stance in this instance could endanger an important initiative.

Besides energy projects, the CDM also envisaged credits for land use changes which result in lower GHG emissions. Given that fact that Guyanese forests are well preserved there isn't much that might be available in this area. However, the recent burgeoning of the chainsaw timber industry might well be a possible project if its parameters are well defined and it can be shown that alternative livelihoods for these people will result in greater sequestration of carbon dioxide and reduced emissions. Conservation and sustainable development zones such as the Iwokrama International Rainforest are another project possibility and this should be explored.

The CDM is still fairly new in terms of its applicability and it's something that the government, its environmentalists and energy experts should begin focusing on.