7.9 Effectiveness of and experience with policies
As noted in the TAR (IPCC, 2001b), industrial enterprises of all sizes are vulnerable to changes in government policy and consumer preferences. While the specifics of government climate policies will vary greatly, all will have one of two fundamental objectives: constraining GHG emissions or adapting to existing or projected climate change. And while consumers may become more sensitive to the GHG impacts of the products and services they use, it is almost certain that they will continue to seek the traditional qualities of low-cost, reliability, etc. The challenge to industry will be to continue to provide the goods and services on which society depends in a GHG-constrained world. Industry can respond to the potential for increased government regulation or changes in consumer preferences in two ways: by mitigating its own GHG emissions or by developing new, lower GHG emission products and services. To the extent that industry does this before required by either regulation or the market, it is demonstrating the type of anticipatory, or planned, adaptation advocated in the TAR (IPCC, 2001b).
7.9.1 Kyoto mechanisms (CDM and JI)
The Clean Development Mechanism (CDM) was created under the Kyoto Protocol to allow Annex I countries to obtain GHG emission reduction credits for projects that reduced GHG emission in non-Annex I countries, provided that those projects contributed to the sustainable development of the host country (UNFCCC, 1997). As of November 2006, over 400 projects had been registered, with another 900 in some phase of the approval process. Total emission reduction potential of both approved and proposed projects is nearly 1.5 GtCO2 (410 MtC). The majority of these projects are in the energy sector; as of November 2006, only about 6% of approved CDM projects were in the industrial sector (UNFCCC, CDM, n.d.). The concept of Joint Implementation (JI), GHG-emissions reduction projects carried out jointly by Annex I countries or business from Annex I countries, is mentioned in the UNFCCC, but amplified in the Kyoto Protocol. However, since the Kyoto Protocol does not allow JI credits to be transferred before 2008, progress on JI implementation has been slow. Both CDM and JI build on experience gained in the pilot-phase Activities Implemented Jointly (AIJ) programme created by the UNFCCC in 1995 (UNFCCC, 1995). A fuller discussion of CDM, JI and AIJ appears in Section 13.3.3.