The Kyoto Protocol is mostly concerned with the distribution of carbon within the biosphere. The biosphere is defined as everything which is above ground. Fossil fuels that have not been mined or pumped out of the ground are not part of the biosphere.
Carbon sinks, credits, allowances, exemptions, trees, incineration of plastics across the whole world are all to be managed by an elite team of technocrats and carbon traders. Whatever the merits of this system are, it can surely sum up its performance at the end of each year and set a target limit for the quantity of fossil fuels that can be introduced into the biosphere during the following year. After all, if the sinks and tree planting policy actually works, this can be reflected in a higher carbon extraction quota during the next time period. If it doesn't succeed, and the atmospheric carbon concentrations do inexorably climb, then there would at least be this secondary mechanism to prevent matters being made worse by further carbon extraction. We will be forced to work with what's already there.
In the first place, it would be an assessment the effectiveness of the Kyoto protocol. Those who have faith in the system have nothing to fear. It should be as fair and open as the national balance of payments statistics by which we measure our government's economic performance. They are not allowed to meddle with the results.
In the second place, it would give concrete numbers for the technocrats to act upon, and to decide whether, in fact, the fossil fuel industry requires policing. This has been true of the ocean fishing industry where years of monitoring proved beyond doubt that fish stocks were declining, and that it was over-fishing that was at fault, not, for example, dolphin predation.
Unlike the managing of distribution of carbon within the biosphere, which requires superhuman perception and control, controlling coal, oil and gas extraction is technically simple since these installations are large, immobile and small in number. They measure their outputs precisely (unlike the carbon uptake of a forest) and can turn it off and on at liberty. These installations are sufficiently valuable and labour intensive that the mere threat of force against them, backed by the political will, will cause them to cease production. A coal mine that is in violation in its terms of production (easy to prove even if they try to fiddle their books because a ten thousand tonnes of coal is not pretty visible in the way that a kilo of heroin is not) will not be able to hire workers if it is made known to them that the pit-head is subject to the risk of aerial demolition.
So, the call is for carbon extraction quotas to be set annually and distributed among the existing mining installations by some system. The system in particular is not important, fair or unfair. There are many detailed schemes that have been used to allocate and trade fishing quotas. The important thing is that each oil well or coal mine knows, at the beginning of the year, exactly how much it is allowed to take out. There are no exemptions. This does not need to lead to ridiculous situations where coal is trucked unnecessary distances from the few pits that have surplus quotas. If it is more cost effective to take coal from a mine locally which does not have a quota then the it can purchase a small quota from the other mine and take out its own coal.
This has some important benefits, not least of which is to make the extraction operations (oil drilling) far safer and more efficient. At the moment they tend to be managed under what could be described as the "go-for-broke" style. Certainly, the offshore oil platforms take the view that they must extract the maximum possible output and sell it at whatever price they can get. Any downtime on the rig is said to cost many thousands of dollars per day, so it must be avoided even if there is a pipeline leak or fire which is not sufficiently serious to force a break in the production. That's the attitude. Also, it is not important today if the extraction is very energy intensive and much of the gas has to be burnt on site either as inconvenient waste or to power the generators and drive the pumping. The money has to be made now, in a hurry. Under a quota system this gas would count as part of the quota. The fact that it doesn't get landed is irrelevant because it is entering the biosphere through the atmosphere.
In the ideal case, the oil well owners would be able to plan and manage their operations years in advance and not need to work them round the clock due to this blindingly inefficient economic logic. The less productive and more energy intensive wells would be closed down and further exploration would not be encouraged if the known reserves were already sufficient and not too expensive to work. It might even make economic sense to power offshore oil rigs with wind turbines since only oil that is landed can be sold and they can make more money that way.
The effect on the oil companies themselves and their relations with the consumers would be positive. It is likely that the fossil carbon extraction quotas would be gifted to them at the start of the scheme (in the way that the entire atmosphere has been gifted to the northern polluting countries by the Kyoto protocol), but that's not necessarily wrong. It simply formalizes the power distribution as it is now since only oil companies have the technology to extract oil, and any time a country has a reserve of oil underneath its land it always calls in one of the big oil companies to drill it for them. Such a country still owns the oil under its land, to be sure, but unless it gets allocated or it buys an extraction quota from the market, it has no right to extract it. The same has been the case of the coal reserves in England which was all owned by the coal board, even the stuff that is under your land.
Today, the oil companies are the only ones who can extract oil in practice. Tomorrow, they would be gifted the right to extract a controlled amount of oil. There would be no sudden upheaval in their operation, but their plans for the future would be very different.
A positive effect comes from the fact that the oil companies would all have this steady stream of guaranteed income (for as long as people want oil and the quotas are not set too low), and they would be rich, as they already have been. After squeezing out as much efficiency from their oil extraction operation by technological investment, what more could they do? At the moment, all they seem to do is spend their money on further oil exploration, and on buying the US government and the promotion of war. This would not be cost effective. The quotas would limit expansion in that sphere. They would be forced to spend their enormous wealth on other forms of energy. They may, for example, work on electric or hydrogen cars. They may develop and refine biodiesel using their know-how with petrochemicals. These products would be sold at their service stations alongside their petroleum products. In fact, the more non-petroleum products they sold the more money they would make because the petroleum supply is limited and is probably going to sell itself. The fossil fuel profits would be channelled into development and promotion of the alternatives, as the futurologists promised, because it certainly does not happen today. Right now all we get is more and more of the same. The more power they get, the less change happens. Quite the reverse of what we were promised.
This scheme should be favoured by the climate change technocrats because they would be empowered to audit and control something big and real, like the oil industry. They would get to push these industrialists around and make new things happen. This, I reckon, is a more exciting job than counting insects in reports about theoretical eucalyptus plantations that are going to be illegally cut down anyway as everybody knows. It should be favoured by the oil companies because it consolidates their power and puts them in a legal cartel. It should be favoured by the scientists because it would work. And it should be favoured by the public because climate change would be tamed and they would be given the chance to experience other saner technologies than fossil fuel burning automobiles at some point in their lives.
Trading pollution is no solution. Property rights belong on minerals, not on air. This extraction quota scheme should be at the core of the climate change treaty rather than today's focus on "emissions".