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. Last Updated: 07/27/2016

First Trade Deal Under Kyoto Protocol Signed

NEW YORK -- The Kyoto Protocol on controlling global warming is not yet a reality. But the first deal on greenhouse gases within the framework of the pact has been signed and sealed.

Slovakia has sold greenhouse gas emissions credits to a Japanese trading house under one of the Kyoto pact's market-based mechanisms, the broker of the deal, New York-based Evolution Markets, said Friday.

The value of the deal and the identity of the buyer were not disclosed, but Slovakia sold 200,000 metric tons of carbon dioxide equivalent under the international emissions trading program, a Kyoto market mechanism. That amount is now worth roughly $1 million in emissions trading markets outside of the pact.

The Kyoto agreement seeks to reduce emissions of gases such as carbon dioxide and methane that scientists say cause global warming by trapping the sun's heat in the atmosphere. It calls for developed nations to reduce emissions by 5 percent below 1990 emissions levels. The first target period for reaching those emissions is 2008 through 2012.

U.S. President George W. Bush rejected the pact last year, saying it would harm the economy and give unfair advantage to developing nations. But Kyoto will pass if nations representing 55 percent of global greenhouse emissions sign on.

If Russia, which accounts for 17.4 percent of emissions, signs on, Kyoto will pass.

Canada's parliament will hold a symbolic vote on Kyoto on Monday, and Prime Minister Jean Chretien has vowed to sign the pact by year-end.

Industries such as utilities, oil refiners and cement makers seeking to limit their liability to future greenhouse gas restrictions have already started to trade in emissions markets, particularly in Denmark and Britain.

In greenhouse gas trading, industries that cannot reduce their emissions below levels set by Kyoto or local limits buy credits from industries that have, or from green projects such as solar and wind farms or reforestation that cut emissions.

In a report last year, Deutsche Bank said if Kyoto passes, the greenhouse gas market could reach $60 billion per year.

Evolution links worldwide buyers and sellers of emissions credits but Central Europe, which has a supply of heavy industry emitters that can be made more green with investment, is one of their main supply pools.

In Slovakia, Menert LLS, an engineering company, is helping to create the country's supply of credits in the deal to the Japan trading house by switching from coal to natural gas at its operations and by using co-generation technologies at industrial plants that use waste heat to produce electricity.

"By tapping the international carbon market, this innovative transaction allows us to pursue green investments," Laszlo Miklos, Slovakia's environment minister, said in a statement.