Article 4: Provisions which allow industrialised countries to form a bubble
This article states that any two or more countries belonging to Annex I can meet their QUELROS defined under Article 3 jointly. They can set out their own individual targets as long as the countries which set out to form a ‘bubble’ meet their targets in aggregate. This agreement will apply only to the first commitment period of 2008 to 2012. The countries forming the bubble only have to inform the FCCC secretariat about the details of their agreement. In case countries which form a bubble fail to achieve their "total combined level of emission reduction", each party to that agreement will be responsible only for that level of emissions which have been set out in the agreement.

With respect to nations which are part of a regional economic integration organisation (like the European Union), changes in the composition of the organisation that take place after the adoption of the KP will not affect their existing emissions reduction commitments under the KP. Any alteration in the composition of the organisation shall only apply to those emissions reductions commitments that are adopted subsequent to that alteration. But in case the regional economic integration organisation is itself a party to KP (like the European Union), then in the event of failure of all the nations which are members of that organisation to meet their emissions reduction targets collectively, then each member-nation will be individually responsible only for that level of emissions that was notified in its agreement with the organisation.

This simply means that if the European Union collectively fails to reduce its emissions by, say, 8 per cent, as notified to the secretariat, then, for instance, Portugal, a member of the EU, would only be held responsible for, say, no reduction or even a 10 per cent increase in its emissions which was agreed by it with the EU. This article allows a number of industrialised countries to protect themselves from any legal implications arising out of non-compliance with the KP.

Article 5: National Systems and Methodologies for estimating emissions and Global Warming Potential of different gases
This article states that all Annex I nations must have in place, no later than one year prior to the start of the first commitment period, namely, by 2007, a national accounting system for estimation of emissions of greenhouse gases and their absorption by sinks. The methodology for these estimations will be developed by the Intergovernmental Panel on Climate Change and agreed by COP-3 which was held in Kyoto in December 1997. MOP-I will build upon these methodologies to develop guidelines for the national accounting systems. Where such methodologies are not used, appropriate adjustments to these methodologies can be agreed upon by MOP-I. The MOPs will take advice of IPCC, SUBSTA and other bodies to regularly review and, where necessary, revise these methodologies. But any revision or adjustment to a methodology will be used for compliance with emissions reductions in a commitment period that is adopted subsequent to that revision.

The procedure outlined above with respect to methodologies used to estimate emissions will also apply to ‘global warming potentials’ — that is, numbers which help to establish the equivalence of different greenhouse gases like carbon dioxide and methane in causing global warming. The global warming potentials adopted by COP-3 have been indicated in Annex A of the KP.

The COP-3 took the following decisions with respect to the methodologies for estimating greenhouse gas emissions:

1. Countries will use the Revised 1996 Guidelines for National Greenhouse Gas Inventories prepared by the IPCC.

2. Countries should make every effort to develop data sources to estimate emissions of HFCs, perfluorocarbons and sulphur hexafluoride.

3. Countries will use global warming potentials calculated by the IPCC in its Second Assessment Report (1995 IPCC GWP values) which are based on the effects of greenhouse gases over a 100-year time horizon. Countries can use other time horizons provided in the second assessment report of IPCC but this data will be provided only for informational purposes.

4. SUBSTA will elaborate on how emissions based on fuels sold to aircraft and ships for international transport can be included in the emissions of individual countries. The 1996 IPCC guidelines mentioned above simply say that these emissions should be reported separately and not added to national totals.

5. If there are any emissions which result from multilateral operations which have been undertaken pursuant to the Charter of the United Nations (for example, peacekeeping activities), then these emissions will not be included in national totals but reported separately. Other emissions, however, will be included in the national totals of one or more nations involved.

This article deals with highly technical and scientific issues. It is very important for developing countries to participate actively in the discussions related to these issues because they will ultimately determine the baseline of emissions of developing countries when their QUELROS are set in the future. India and China, for example, had serious differences with the IPCC in its early estimations of methane emissions from livestock and paddy fields.

Article 6: Rules for Joint Implementation between industrialised countries
This article is about Joint Implementation within Annex 1 nations only. Joint Implementation means transfer of emissions reduction at the project level.

Annex I parties can transfer to or acquire from other Annex I parties emission reduction units (ERUs) resulting from projects aimed at reducing emissions by sources or enhancing removal by sinks.

But the following four conditions have been put for these transfers:

1. The JI project must be approved by the nations involved.

2. It must be proved that the reduction by sources and/or enhancement by sinks provided by the project is additional to any change that would occur without the project.

3. No country can receive ERUs unless it has set up a national system for estimating emissions (see Article 5) and sent its national communication (see Article 7).

4. Acquisition of ERUs will be supplemental to domestic action.

In other words, no country can meet its entire commitment only by acquiring ERUs. But the KP does not specify the ratio between acquisition of ERUs and domestic action in meeting emissions reduction commitments.

The article further states that:

1. MOP-I or subsequent MOPs can further elaborate guidelines for implementation of Article 6, including concerns like verification and reporting.

2. A nation can authorise a legal entity, for example, a company to generate, transfer or acquire ERUs but the activities of that entity will be undertaken under the government’s responsibility.
   
   This would allow companies to trade directly. Therefore, one company or utility can invest into a project of another company in a different country and then take the credit for the ERUs.

3. In case a doubt or a complaint arises and this doubt or complaint is identified and raised keeping in mind the provisions of Article 8 of KP (which deals with expert reviews of national communications), then the ERUs can continue to be traded but the country cannot use these ERUs to meet its emissions reduction commitments until the issue of compliance has been resolved.