Dutch first to use international ‘flexible mechanisms’ under Kyoto Protocol

The Dutch government has announced that it is the first to use the so-called ‘flexible mechanisms’ permitted under the Kyoto Protocol by buying CO2 reductions from Central and Eastern Europe.

The government announced the move on 17, April paying 79 million guilders (£22.2 million) over five years for the procurement of more than 4 million tonnes of reductions in CO2 emissions which are to be carried out by a 60 Megawatt wind-power park in Poland, a hydro-power plant and two urban heating projects in Romania and a series of biomass-fuelled boilers in the Czech Republic.

Under the 1997 Kyoto agreement, the Netherlands is committed to reducing the emissions of greenhouse gases by 6% or 50 million tonnes between 2008 and 2012 compared to 1990’s levels. Joint Implementation (JI) is the mechanism whereby one country, in this case the Netherlands, invests in a project that reduces emissions in another country that has an emission reduction target, such as the ex-Soviet bloc nations. The emission reductions achieved in the other country are ‘transferred’ to the Netherlands and count towards fulfilment of its own obligations. By selling emission reductions, investors in sustainable energy and energy efficiency can increase the return on their investments, enhancing the feasibility of the projects.

In 2000, the Netherlands launched the Emission Reduction Unit Procurement Tender (Eru-PT) with the aim of procuring high-cost, low-priced emission reductions from JI projects. The contracts bring the Netherlands a step closer to compliance with the Kyoto commitments at a lower cost than through reductions in its own domestic emissions and are also the first transactions agreed on this scale in relation to the Protocol. The Dutch government believe that this will kick-start the development of an international market (price) for reductions in CO2 emissions.

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