Iceland to Buy Emission Allowances to Meet Kyoto Commitments

Minister Guðlaugur Þór Þórðarsson.

The Ministry of Environment, Energy, and Climate has decided to buy emission allowances from other nations in order to meet its commitments to the Kyoto Protocol, an international environmental treaty to reduce greenhouse gas emissions.

It has been clear for some time that Iceland has fallen significantly behind meeting it climate goals, far exceeding its original allotment of carbon credits in the quota system established by the Kyoto Protocol. By the time the figures are settled in the middle of this year, Iceland will need to buy emission credits for the equivalent of 3.4 million tonnes of carbon dioxide, according to the Environment Agency of Iceland.

Read More: Energy Credit Market Means Only 13% of Icelandic Energy is Renewable

Notably, Iceland has up until now refrained from buying emission allowances. In a recent memo by Minister Guðlaugur Þór Þórðarson, however, buying emission credits will become key to Iceland meeting its environmental commitments.

According the results of a working group commissioned in 2020, Iceland could best make use of AAU and CER credits. AAU credits, or Assigned Amount Units, correspond to the original emission allowance given to nations under the Kyoto Protocol. Nations with unused emission credits can sell these on the market to other nations exceeding their allotment. CER credits, or Certified Emission Reduction, are given to nations engaged in climate-friendly development projects in under-developed nations.

Vísir reports that no decision has yet been taken on which credit is to purchased by government.

Current estimates indicate that some 800 million ISK [$5.7 million; €5.3 million] will be needed to purchased the required credits. The decision to buy credits is still under consideration, so the funds are not currently allocated. Such an expenditure would require a budget authorisation to finalise.

Critics Say Emission Allowance Leads to No Change

Some critics have vocally opposed Iceland’s intention to “greenwash” through accounting. One particularly outspoken critics has been Pirate representative Andrés Ingi Jónsson.

In a statement to Vísir, Andrés Ingi said: “Iceland will get away with not having implemented real, systematic changes for environmental issues. It will instead be able to resort to accounting tricks and paying fines, actions which have no actual affect on improving the climate.”

According to Andrés Ingi, flaws in the Kyoto system have led to an oversupply of emission credits, meaning that Iceland is allowed to buy these credits at a significant discount. At current market prices, Iceland will be able to buy off each tonne of carbon dioxide produced with around 235 ISK [1.$67; €1.57].



Iceland Could Owe Billions Due to Unfulfilled Commitments to Kyoto Protocol

Guðmundur Ingi Guðbrandsson

Iceland faces possible expenditures of billions ISK (1,000,000,00 ISK – 7,190,623$, 6,117,330€) for not having fulfilled its commitments to the Kyoto protocol, RÚV reports. According to Minister for the Environment and Natural Resources Guðmundur Ingi Guðbrandsson, a team is working on estimating what Iceland’s exact debt is when the commitment period is up at the end of this year.

The 1997 Kyoto Protocol is an international treaty meant to decrease the emission of greenhouse gasses and counteract climate change. Despite getting a special provision which allowed increased emission from large scale industry, Iceland hasn’t fulfilled its commitments. The Kyoto Protocol commitment period is up by the end of the year and it will be time to settle the debt.

“It’s not clear how much it will be. It’s being looked into. There are a few possible ways to respond to this. A team is currently working on it,” Guðmundur said after the Government meeting today. “But I am making it very clear that this is what happens when climate issues aren’t taken seriously. Our current government is taking them seriously and has a credible plan for 2030 to uphold the Paris Agreement. We expect no less than we’ll do our duty there.”

Is not paying an option for Iceland? “We’ll fulfil our commitments, that’s clear. It’s left to see how much it is and in what way this will be done,” replied Guðmundur Ingi.

Guðmundur Ingi is not willing to censure earlier governments but says: “I would have liked to see this differently, that’s for sure. The main thing is that we’re now dealing with climate issues. We have a credible plan to fulfil our commitment for 2030.”

Little Change in GHG Emissions between 2017 and 2018


Almost no change in greenhouse gas (GHG) emissions was observed in Iceland between 2017 and 2018 (a decrease of 0.1%), according to a new report by the Environment Agency of Iceland. In a brief press release introducing the report’s findings, authors of the report state that GHG emissions in Iceland reached an all-time high in 2007. A considerable decline in emissions followed the 2008 economic crisis, but since 2011, emissions have been relatively fixed.

A negligible decrease in emissions

In a press release on April 15, the Environment Agency of Iceland referenced its National Inventory Report (NIR), which was published on the same day, and submitted per Iceland’s obligations towards the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. These commitments require that parties report annually on their GHG emissions by sources and removals by sinks.

Annual GHG emissions in Iceland, from sectors that the government has committed to reducing (in accordance with the abovementioned obligations), are shown on the below graph (taken from the EAI’s website). Since 2005, which serves as the benchmark year for Iceland’s obligations to the EU, GHG emissions have declined by 6.3%. However, as the graph indicates, emissions have been relatively stable since 2012.

(Blue: Energy, Orange: Industry, Grey: Agriculture, Yellow: Waste)

The primary sources of emissions that fall under the government’s responsibility are road transport (33%), fuel consumption by fishing vessels (18%), agricultural soil (8%), refrigerant emissions or F-gases (6%) and emissions from landfills (7%). The proportion of emissions can be seen on the below picture (sources for emissions that account for less than 4% were omitted from the graph).

The National Inventory Report

Further information about Iceland’s greenhouse gas emissions can be found in the aforementioned National Inventory Report. The report, submitted under the United Nations Framework Convention on Climate Change and the Kyoto Protocol, contains information about the evolution of greenhouse gas emissions in Iceland between 1990 and 2018. The report also describes the methodology used to appraise the emissions; contains data about emissions and removals calculations from the Land Use, Land Use Change, and Forestry (LULUCF) sector; and data about emissions from international air and maritime traffic (not a part of the government’s obligations).