Greenhouse gas emissions from energy, industry and agriculture, and the concentration of atmospheric greenhouse gases have been increasing during the past 200 years and are threatening to raise global temperatures. The changes in the Earth's climate patterns that could result may disrupt the natural environment and many essential human activities. The main greenhouse gas is carbon dioxide (CO2) resulting mainly from the use of fossil fuels and accounting for about half the enhanced greenhouse effect. Other greenhouse gases with increasing atmospheric concentrations include methane, nitrous oxide, methyl chloroform, ozone, carbon tetrachloride, carbon monoxide and a number of chlorofluorocarbons, particularly CFC-11 and CFC-12. If the atmosphere were the size of an average swimming poll, it would contain the equivalent of more than a barrel of CO2, some 8 litres of methane, 30 teaspoons of nitrous oxide, one drop of CFC-12, half a drop of CFC-11 and just a quarter of a drop each of methyl chloride and carbon tetrachloride. Although these gases have much lower concentrations that CO2, because of their chemistry and lifetimes in the atmosphere they may still have very significant greenhouse effects. Molecule for molecule, for example, methane's potential contribution is 21 times larger than that of CO2; the contribution of CFC-12 is 15,800 times larger. Overall, about one-half of potential global warming will be caused by the presence of CO2 in the atmosphere, the other half by the remaining greenhouse gases.
At the December 1997 Conference of the Parties (COP3) meeting in Kyotoa, government representatives from 168 countries and regions gathered to discuss reducing emissions of global greenhouse gases. The outcome of COP3 was the adoption of binding targets for emissions reductions. Specifically, in the five years between 2008 and 2112, economically advanced countries are to reduce their total emissions of greenhouse gases to below 1990 levels by 5.2%.
Countries have been granted some flexibility. The basic domestic and international policy instruments available for reducing emissions include: (a) emission reduction targets; (b) domestic emissions taxes; (c) international emissions taxes; (d) external offsets ([eg] household energy conservation scheme or investments in public transport); and (e) tradable permits for emission entitlements.
A policy instrument that is designed to achieve reductions in the emissions of greenhouse gases must fulfil several other conditions simultaneously if it is to be accepted by the international community. These are that: (a) it must allow continued development in all countries and unimpeded industrialization in developing countries; (b) it must be fair to all countries; (c) it must minimize the overall costs of implementing the agreement; and (d) it must include some means of transferring both technical and financial resources from the developed to the developing countries to enable the latter to participate effectively. Equity, economic efficiency and resource transfer are thus essential to efforts to reduce greenhouse gas emissions, and so policy instruments to achieve this goal should be determined largely by the extent to which they meet these criteria and also enable a sufficient degree of autonomy to countries in their selection.
Among the most attractive options for reducing or offsetting CO2 emissions are energy efficiency, better municipal planning, technology transfer to less developed countries (LDCs), carbon sequestration in agro-forest ecosystems and use of biomass and alternative fuels. Options for reducing other greenhouse gases suggest it may be technically feasible to reduce methane emission by 33% and nitrous oxide by 10%. Within Europe, best scenarios suggest a 46% reduction in methane emissions and 45% for nitrous oxide should be possible by 2000.
Monitoring a system of tradeable emission taxes would be easier than with a system of external offsets because the latter cannot be monitored unless values are put on what is saved. This means knowing what the emission level would be if the offset had not happened and measuring what the emission was after it happened.
By continuing with business-as-usual approaches to economic development, certain countries have made their life more difficult or will be forced to make liars of themselves. For example, at Kyoto in 1997, Australia pledged to curtail 2008 emissions to 108% of 1990 levels. However, stronger-than-expected economic performance since then in the absence of concerned industrial restructuring, probably means that the challenge will resemble a reduction of more like an estimated 120% to 150% of 1990 levels. Increases in greenhouse gas emissions from energy generation have been in part offset by a reduction in agricultural emissions, but there are three new coal-fired power stations proposed to be built in Queensland.