Editing Kyoto Protocol (section)

===== Intergovernmental emissions trading =====
The design of the [[European Union Emissions Trading Scheme]] (EU ETS) implicitly allows for trade of national Kyoto obligations to occur between participating countries.{{sfn|Carbon Trust|2009|p=24}} The Carbon Trust found that other than the trading that occurs as part of the EU ETS, no intergovernmental emissions trading had taken place.{{sfn|Carbon Trust|2009|pp=24–25}}

One of the environmental problems with IET is the large surplus of allowances that are available. Russia, Ukraine, and the new EU-12 member states (the Kyoto Parties Annex I Economies-in-Transition, abbreviated "EIT": Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, and Ukraine)<ref>{{citation
|title=Development and Climate Change: A Strategic Framework for the World Bank Group: Technical Report
|year=2008
|author=World Bank
|url=http://beta.worldbank.org/overview/strategic-framework-development-and-climate-change
|publisher=The International Bank for Reconstruction and Development / The World Bank.
|location=Washington, DC, USA
|access-date=3 April 2010
|archive-date=24 December 2009
|archive-url=https://web.archive.org/web/20091224213652/http://beta.worldbank.org/overview/strategic-framework-development-and-climate-change
|url-status=dead
}}</ref>{{Rp|59|date=November 2012}} have a surplus of allowances, while many [[OECD]] countries have a deficit.{{sfn|Carbon Trust|2009|p=24}} Some of the EITs with a surplus regard it as potential compensation for the trauma of their economic restructuring.{{sfn|Carbon Trust|2009|p=25}} When the Kyoto treaty was negotiated, it was recognized that emissions targets for the EITs might lead to them having an excess number of allowances.<ref>
{{cite book
 |year            = 2001
 |contribution    = 8.3.1.1 "Where Flexibility"
 |title           = 8. Global, Regional, and National Costs and Ancillary Benefits of Mitigation
 |page            = 538
 |series          = Climate Change 2001: Mitigation. A Contribution of Working Group III to the Third Assessment Report of the Intergovernmental Panel on Climate Change
 |editor          = B. Metz
 |display-editors = etal
 |publisher       = Cambridge University Press
 |last1           = Hourcade
 |first1          = J.-C.
 |url             = http://www.grida.no/climate/ipcc_tar/wg3/341.htm
 |display-authors = etal
 |url-status         = dead
 |archive-url      = https://web.archive.org/web/20120111150919/http://www.grida.no/climate/ipcc_tar/wg3/341.htm
 |archive-date     = 11 January 2012
 |df              = dmy-all
}}
</ref> This excess of allowances were viewed by the EITs as "headroom" to grow their economies.<ref>{{citation
 | year=2003
 | title=Green Investment Schemes: Options and Issues
 | last1=Blyth
 | first1=W.
 | first2=R.
 | last2=Baron
 | page=11
 | publisher=Organization for Economic Cooperation and Development (OECD) Environment Directorate and International Energy Agency (IEA)
 | location=Paris, France
 | url=http://www.oecd.org/dataoecd/48/54/19842798.pdf
 | access-date=16 December 2011
 | archive-date=22 December 2011
 | archive-url=https://web.archive.org/web/20111222054248/http://www.oecd.org/dataoecd/48/54/19842798.pdf
 | url-status=live
 }} OECD reference: COM/ENV/EPOC/IEA/SLT(2003)9</ref> The surplus has, however, also been referred to by some as "hot air", a term which Russia (a country with an estimated surplus of 3.1 billion tonnes of carbon dioxide equivalent allowances) views as "quite offensive".<ref>
{{citation
 |date      = 30 June 2008
 |title     = Energy and Climate Change in Russia (note requested by the European Parliament's temporary committee on Climate Change, Policy Department Economy and Science, DG Internal Policies, European Parliament)
 |last1     = Chiavari
 |first1    = J.
 |first2    = M.
 |last2     = Pallemaerts
 |page      = 11
 |publisher = Institute for European Environmental Policy
 |location  = Brussels, Belgium
 |url       = http://www.ieep.eu/assets/433/ecc_russia.pdf
|archive-url = https://web.archive.org/web/20111222054254/http://www.ieep.eu/assets/433/ecc_russia.pdf
|url-status  = dead
|archive-date = 22 December 2011
}}
</ref>

OECD countries with a deficit could meet their Kyoto commitments by buying allowances from transition countries with a surplus. Unless other commitments were made to reduce the total surplus in allowances, such trade would not actually result in emissions being reduced{{sfn|Carbon Trust|2009|p=25}} (see also the section below on the [[Kyoto Protocol#Green Investment Scheme|Green Investment Scheme]]).