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Resources for the Future - [Bonn 6/98 Key Documents] -- [Climate Change]
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Resources for the Future - [Bonn 6/98 Key Documents] -- [Climate Change]
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FOIA Number: 2017-1095-F
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This is not a textual record. This is used as an
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Resources for the Future--[Bonn 6/98 Key Documents]--[Climate Change]
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Bonn 6/98
key documents
RESOURCES
FOR THE FUTURE
PHOTOCOPY
PRESERVATION
RE
PHOTOCOPY
PRESERVATION
aper menational Emissions itading
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weathervane
REFERENCE DOCUMENT
Non-Paper on Principles, Modalities,
Rules and Guidelines for an International
Emissions Trading Regime
(in particular for verification, reporting
and accountability)
Australia, Canada, Iceland, Japan, New Zealand, Norway,
Russian Federation and the United States of America
June 3, 1998
Note: Footnotes in the original are not
included in this version.
1. PURPOSE
1. This paper sets out the preliminary views of Australia, Canada,
Iceland, Japan, New Zealand, Norway, Russian Federation and
the United States of America on the principles, modalities, rules
and guidelines which provide the framework for international
emissions trading. It is intended to facilitate on-going discussion
on the development of an open international emissions trading
system. Participation in the international trading system would be
entirely voluntary.
2. The focus of the paper is on key technical design features
which are necessary to provide for an effective and efficient
trading system. The key objectives of the design features are to
keep the system as simple and transparent as possible and
minimise the transaction costs of trading while at the same time
remaining consistent with the Protocol's environmental objective
of achieving at least a 5% overall reduction below 1990 levels of
greenhouse gas emissions by 2008-2012 for Annex B Parties.
3. A summary of the international emissions trading system
proposed in this paper is contained in Appendix A.
2. INTRODUCTION
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4. In December 1997, the Kyoto Protocol established emission
targets for Annex B Parties. International trading is established in
Article 17 of the Protocol. The Conference of the Parties is
authorised to decide on principles, rules, modalities and
guidelines, in particular for verification, reporting and
accountability.
5. Domestic measures associated with international emissions
trading are for individual Parties to determine and, as such, are
not addressed in this paper (beyond the need for national
recording systems). However, an important consideration in
designing an international emissions trading system is not to
restrict the right of each Party to put in place the domestic
measures it chooses. Issues such as whether and how trading is
devolved to legal entities and how revenue from trading might be
treated have not been addressed as these are matters for
individual Parties to decide.
3. WHAT IS EMISSIONS TRADING?
6. Emissions trading is a market based approach which enables
participants to cooperatively minimise the costs of achieving an
environmental objective. In the case of the Kyoto Protocol, an
environmental objective has been established as the aggregate
total of all individual quantified emission limitation and reduction
commitments. as set out in Annex B of the Protocol for the first
commitment period (2008-2012).
7. Through emissions, a market price for emissions abatement
will emerge which reflects the marginal cost of emissions
abatement across all market participants. When participants have
exhausted the opportunities available for domestic emission
reductions, or sink enhancement as per Article 3(3), at a cost
below the international market price, they can elect to purchase
the requisite `assigned amounts' from other Parties (or entities). In
this way, the environmental benefits are achieved irrespective of
where the reductions take place, and at a lower cost than if
trading was not available.
8. Since emissions trading is entirely voluntary. each trade will be
to the mutual benefit of both participants to the trade.
Cooperation between countries in this manner will lower the
aggregate cost of emission abatement to below that which would
be incurred by countries acting alone. Thus, the incentives
provided by trading will facilitate the achievement of the
Protocol's environmental objective; and at a lower cost than
would be incurred without trading.
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4. DESIGN FEATURES
9. In developing a framework for international emissions trading,
several simple design features need to be considered to enhance
the integrity of the trading system and increase the level of
certainty under which it operates. These design features should
facilitate the efficient operation of a competitive market which
will enhance the achievement of the environmental objective.
10. Parties could trade directly and/or choose to devolve trading
responsibility to legal entities. Devolving the ability to trade
would be likely to increase the number of trades, thus enhancing
competition in the market. Private sector legal entities would
have direct knowledge of their abatement opportunities and costs
and would likely be better placed to make decisions based on this
information than would governments.
11. To enhance the efficiency of the market, the unit of trade
should be clearly denominated and freely transferable amongst
trading participants. Rules which encourage transparency and
information disclosure and provide appropriate incentives for
compliance can also aid the efficient operation of the market.
Comprehensively specified and certain rules assist in minimising
the transaction, administration and compliance costs of trading. In
order to be accountable and certain, the rules (including
monitoring and enforcement mechanisms) would apply to all
participating Parties. Rules should maintain enough flexibility to
accommodate changes to the system in the future (e.g. new
entrants).
5. WHAT IS THE TRADABLE UNIT?
12. Assigned amount units (AAUs) would be the standardised
unit of trade. AAUs would represent a tradable form of an Annex
B Party's assigned amount'. Parties who wished to trade would
issue tradable AAUs from its `assigned amount'. Parties would be
required to identify the AAUs that they issued with a unique
serial number which identified the country of origin and the
relevant commitment period. This would ensue that each AAU is
unique internationally.
13. `Assigned amounts' can be traded, whether they derive from,
for example, Articles 3(7), 3(3), 6 and/or 12. there would be no
differentiation of AAUs on the basis of data certainty for gases or
sources.
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5.1 Specification of AAUs
14. Consistent with Article 3(1), AAUs would be denominated in
'CO2 equivalent'. Consistent with Article 5(3), Global Warming
Potentials (GWPs) would be used as the appropriate conversion
factors to convert non-CO2 gases into CO₂ equivalent terms and
would be fixed for a commitment period. For the first
commitment period, Parties should use the revised 1996
Guidelines for National Greenhouse Gas Inventories of the IPCC.
GWPs used by Parties should be those provided by the IPCC in
its Second Assessment Report based on the effects of the
greenhouse gases over a 100 year time horizon, taking into
account the inherent and complicated uncertainties involved in
global warming potential estimates.
15. An AAU would express one metric tonne of CO₂ equivalent
emissions. All AAUs would be valid for the commitment period
in which they are issued and indefinitely thereafter until used. An
AAU could only be used once to offset emissions equal to the
CO₂ equivalent value (i.e. AAUs are a consumable commodity).
6. WHO CAN PARTICIPATE IN THE
TRADING REGIME?
16. The participants in the international trading regime could be
Parties (i.e. governments) and/or legal entities authorised by that
Party to trade. Legal entities could include private individuals,
companies, societies (which could include environmental and
other non-governmental organisations), industry groups and
brokers.
17. Devolution of the right to trade to legal entities would be at
the discretion of each participating Party. However, responsibility
for the Kyoto Protocol commitments would always remain with
the Government as Party to the Protocol.
7. CONDITIONS TO TRADE 'ASSIGNED AMOUNTS'
INTERNATIONALLY
18. Each Annex B Party will need to meet conditions to ensure
the integrity of the systems. These conditions are:
(a) Parties must comply with Articles 5 & 7 of the Kyoto
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Protocol.
(b) Parties must establish and maintain a national system for
recording their `assigned amount' and accounting and tracking
AAUs held or traded by the Party and/or its legal entities.
19. Compliance with the conditions would be assumed to
continue unless a breach of the conditions was established under
the Protocol. Failure to maintain compliance with the conditions
could result in suspension of the right for the Party and its legal
entities to transfer AAUs internationally. However, the Party or
its legal entities would not be precluded from acquiring AAUS.
8. HOW MUCH CAN BE TRADED?
20. Article 17 provides that trading is to be supplemental to
domestic actions but does not quantity that term or authorise the
Conference of the Parties to quantify it.
21. International emissions trading will be more effective in
achieving emissions reduction at lowest cost if there are no
restrictions on the quantity of AAUs able to be transferred or
acquired to contribute to compliance with a Party's assigned
amount'. The ability to trade without quantitative restriction
would encourage ratification of the Protocol; encourage earlier
emission reductions and minimise the overall cost of achieving
the collective Annex B environmental objective.
22. Internationally mandated limits on the quantity available to be
traded, by substantially reducing the benefits available from
trading, would increase the cost of emission reductions;
discourage ratification of the Protocol; and ultimately, in the long
term, reduce the quantity of reductions that can be achieved, thus
delivering less environmental benefit.
9. INSTITUTIONAL REQUIREMENTS
23. Markets play a central role in the efficient exchange of
"goods" such as commodities, shares. bonds and financial
instruments. Existing international markets have a number of
well-established practices for contracting, delivery and
settlement. An issue for international emissions trading is
whether it is necessary to establish a new official institution to
facilitate trades. Given the large number of existing commercial
market institutions that handle international transactions (both
financial and commodity), there seems no benefit in establishing
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a new international forum/institution to cater for trades of AAUs.
The only additional function. over and above those required in the
absence of trading, is a system to record ownership and transfers
of AAUs at the national level. This system is discussed below.
9.1 National Recording System
24. The national recording system of a Party would record AAUs
issued by the Party and transfers and acquisitions of AAUs by the
Party, including those AAUs devolved to legal entities, and
subsequent transactions by those entities. The national recording
system would also be required to provide verification of
ownership of AAUs. A Party could choose to maintain a list of all
legal entities it authorises to trade.
25. By recording every change of legal ownership, the national
recording system would protect against the possibility of
counterfeit AAUs being generated and questions regarding legal
ownership of legitimate AAUs.
26. Each Party would be required to report annually on trading
activity to a designated authority approved by the FCCC COP.
This report would identify the aggregate quantity of international
trades and any changes to the Party's assigned amount pursuant
to Articles 3(3), 3(1), 3(11) and 3(12). This would enable the
designated authority to produce a syntheses report of each Party's
assigned amount', including AAU holdings by each Party and
transfers to, and acquisitions from, other Parties.
27. The synthesis report would confirm, at an aggregate level,
that correct double-entry book keeping between Parties had
occurred. In the event of discrepancies in the reports submitted by
Parties, the designated authority would request that those Parties
investigate and correct such discrepancies.
28. Two or more Parties could voluntarily consolidate their
national recording systems into one system, provided that each
individual Party's account was reflected. This might simplify
tracking of AAU transfers and preparation of synthesis reports as
well as reduce he possibility of discrepancies between Parties'
reports on trading activity.
9.2 Tracking AAU holdings
29. One way to tack AAU trades by the Party and its legal entities
would be for the national recording system to operate an account
for the Party and accounts for all legal entities authorised to trade.
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30. All trades of AAUs would result in a debit and credit to the
relevant accounts (i.e. a simple double-entry accounting system).
For international trades, the `seller' would request that its national
recording system remove the AAUs in question from its account
and authorise the national recording system of the `buyer' to
credit the buyer's account with those AAUs. For domestic trades
(i.e. those that did not cross national borders) only the national
recording system in that county would need to be involved.
31. National recording systems would only be required to track
the account from which AAUs are to be transferred from (or to)
and the quantity of AAUs to be transferred (including the serial
numbers for the purpose of verifying ownership). Contractual
information beyond the number of AAUs transferred between
participants would not have to be divulged. Participant could
choose not to divulge price details of individual trades to protect
commercially sensitive information.
32. The trading rules should provide appropriate compliance and
enforcement mechanisms relevant to the trading system. Other
compliance issues could be addressed under Article 18.
33. One enforcement mechanism under the trading rules could be
to deny (or restrict) the right of a Party (and its legal entities) to
transfer AAUs if they are found to be in breach of the trading
rules and/or are no longer in compliance with the conditions for
issuing AAUs (e.g. in breach of conditions to trade AAUs
internationally).
10. ESTABLISHING COMPLIANCE
34. Each Party will be assessed for compliance at the end of the
commitment period. For a Party to be found in compliance with
Article 3. its emissions must be no more than its `assigned
amount'.
35. At the end of the commitment period and following
finalisation of emission inventories, each Party would be required
to submit a report to the designated authority 11. This report
would include emissions for the commitment period and
aggregate information on the number of acquisitions and transfers
of AAUs and any changes to a Party's assigned amount' pursuant
to Articles 3(3), 3(10), 3(11) and 3(12) (i.e. a compilation of
annual emission inventories and information on trading activity).
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Based on this information, the Party could ascertain whether it
had exceeded its `assigned amount'.
36. The report would also indicate the serial numbers of AAUs
used by the Party for the purposes of contributing to compliance.
AAUs used by the Party to contribute to compliance would no
longer be valid and would be required to be removed from the
Party's national recording system (i.e. AAUs are a consumable
commodity). At a Party's request, any AAUs not used to offset
emissions or the remaining portion of its `assigned amount' would
be banked forward into the next commitment period pursuant to
Article 3(13).
37. A Party that had exceeded its `assigned amount' would be
able to come into compliance during a short grace period (c.g.
three months). To meet the short fall. After the completion of the
grace period, Parties would re-submit a (modified) report. Parties
who were non-complying could face non-compliance
consequences developed under Article 18.
11. FURTHER WORK
38. Some rules or a process to deal with instances of
anti-competitive behaviour may be necessary. Issues regarding
allocation of risk need to be further explored.
APPENDIX A
1. International trading is established in Article 17 of the Kyoto
Protocol.
2. Parties could elect to participate in the trading system.
3. The tradable unit would be assigned amount units (AAUs) i.e.
AAUs are the tradable form of assigned amounts'.
4. AAUs would be denominated in CO₂ equivalent The unit of
trade would be one metric tonne. GWPs used to calculate CO₂
equivalent would be fixed for a commitment period.
5. Each Annex B Party could issue serialised AAUs from its
`assigned amount'.
6. Each AAU would have a unique serial number which
identified the country of origin and the commitment period in
which the AAUs were issued.
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7. AAUs would be valid until used to offset emissions for the
purposes of contributing to compliance (i.e. once used to offset
emissions, AAUs would be removed from the trading system).
8. AAUs acquired by a Party with an `assigned amount' would be
added to the Party's assigned amount'. Similarly, AAUs
transferred by a Party would be subtracted from its `assigned
amount'.
9. Assigned amounts' can be traded, whether they derive from,
for example, Articles 3(7), 3(3), 6 and/or 12.
10. Parties could authorise legal entities to acquire and/or transfer
AAUs. Issues such as whether and how trading is devolved to
legal entities and how revenue from trading might be treated are
matters for individual parties to decide.
11. Governments, as parties to the Kyoto Protocol, would remain
responsible for compliance with their `assigned amount'.
12. Each Annex B Party who wanted to trade its AAUs
internationally (and/or allow their legal entities to do so) will
need to meet the following conditions:
(a) Parties must comply with Articles 5 & 7 of the Kyoto
Protocol.
(b) Parties must establish and maintain a national system for
recording their `assigned' amount' and accounting and tracking
AAUs held, transferred or acquired by a Party and/or its legal
entities.
13. The national recording system of a Party would be required
to:
(a) record AAUs issued by the Party;
(b) record transfers and acquisitions of AAUs by the Party
(including those AAUs transferred by the Party to legal entities,
and subsequent transactions by those entities);
(c) provide verification that a legal entity transfer ring AAUs was
the registered owner of the AAUs in question: and
(d) retire AAUs used to offset emissions.
14. Each Party would be required to report annually on trading
activity to an authority designated by the COP identifying the
quantity of international trades and any changes to its `assigned
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amount' pursuant to Articles 3(3), 3(10), 3(11) and/or 3(12).
15. Each Party will be assessed for compliance at the end of the
commitment period. For a Party to be found in compliance with
Article 3, its emissions must be no more than its `assigned
amount'. To assess compliance at the end of the commitment
period (and following finalisation of emission inventories), each
Party would be required to submit a report to the designated
authority on emissions for the period and aggregate information
on the number of acquisitions and transfers of AAUs and any
changes to a Party's assigned amount' pursuant to Articles 3(3).
3(10), 3(11) and 3(12) (i.e. a compilation of annual emission
inven tories and information on trading activity).
16. Parties would inform the designated authority which AAUs
(identified by serial number) were used to offset emissions. Such
AAUs would no longer be valid for use in a subsequent
commitment period.
17. A Party that had exceeded its `assigned amount' would be
able to come into compliance during a short grace period (e.g 3
months). To meet the shortfall, the Party could either acquire
AAUs within the grace period and/or utilise other options to meet
the shortfall.
18. After the completion of the grace period, Parties would
re-submit a modified report. Parties who were non-complying
could face non-compliance conse quences developed under
Article 18.
19. Any AAUs not used to offset emissions or remain ing
portions of a Party's assigned amount' not used could be banked
forward into the following commit ment period at the request of a
Party (including on behalf of legal entities).
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REFERENCE DOCUMENT
Non-Paper on Principles, Modalities, Rules and
Guidelines for an International Emissions
Trading Regime
Paper No. 2:
United Kingdom of Great Britain
and Northern Ireland
(on behalf of the European Community and its member
States and Czech Republic, Slovakia, Croatia, Latvia,
Switzerland, Slovenia, Poland and Bulgaria)
June 8, 1998
Purpose
1. This paper sets out the preliminary views of the European
Community, Austria, Germany, Finland, Portugal, France,
Sweden, Belgium, Spain, Denmark, Greece, Italy, Ireland, The
Netherlands, Luxembourg, United Kingdom, Czech Republic,
Slovakia, Croatia, Latvia, Switzerland, Slovenia, Poland and
Bulgaria on the principles, modalities, rules and guidelines which
should provide the framework for international emissions trading.
The above Parties believe that trading, CDM and JI should be
developed in parallel and the frameworks for them should be
consistent with each other. However, this paper refers to
international emissions trading. It is intended as a basis for the
on-going discussion on the development of an open international
emissions trading system.
2. This paper includes some key technical elements that can be
already presented as potential rules, modalities and guidelines and
others which are also necessary to provide for an effective and
efficient trading system but have to be further developed.
Summary of the draft international
emissions trading system
Principles
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3. Recalling the principles and objectives of the United Nations
Framework Convention on Climate Change, and the Kyoto
Protocol, the international emissions trading system shall be
designed to contribute to the achievement of real, cost-effective
and verifiable environmental benefits whilst ensuring that:
(i) trading of "hot air" should not lead to overall
reductions being lower than would otherwise be the
case;
(ii) trading is supplemental to domestic action for the
purposes of meeting commitments under Article 3*
(in accordance with Article 17); and
(iii) the emissions trading system is transparent,
accessible and verifiable, functions in a
non-discriminatory manner, and does not lead to
distortions of competition.
4. The above Parties believe that the rules, modalities and
guidelines need to be defined before international emissions
trading can begin.
Implementation of principles governing the
international trading system
Supplementarity:
5. We believe that domestic actions should provide the main
means of meetings commitments under Article 3. This is
consistent with the ultimate objective of the Convention. In this
context a "concrete ceiling" on the use of all the flexible
mechanisms has to be defined. In addition, Article 17 states that
international emissions trading shall be supplemental to
domestic actions for the purpose of meeting quantified emission
limitation and reduction commitments The rules governing
the international emissions trading system should reflect this
principle.
6. We have not yet come to a firm view on as to how the ceiling
should be defined and welcomes discussion with other
delegations. The ceiling could be defined in relation to a number
of variables, including: the assigned amount, 1990 emission
levels, or required efforts by a Party.
Environmental effectiveness:
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7. The above Parties believe that international emissions trading
should ensure that real emissions reductions are delivered at
lower cost, and that the trading of 'hot air' should not lead to
overall reductions being lower than would otherwise be the case.
This could require that:
Net transfers by a Party shall not be greater than the amount of
emissions reduced by that Party as a result of domestic action.
A Party's compliance with this rule shall be the subject of expert
review under Article 8.
Emissions trading market
8. We believe that there should be an open and transparent
emissions trading market subject to the modalities, rules and
guidelines as set out below.
Modalities, rules and guidelines
Eligibility
9. Parties with commitments listed in Annex B of the Kyoto
Protocol shall be eligible to transfer or acquire parts of assigned
amounts if they:
(a) are in compliance with Articles 5 and
7** ;
(b) have adopted and ratified a
compliance regime under Article 18;
(c) have a national system for tracking
transfers and acquisitions of parts of
assigned amount by the Party itself, and
by any legal entities it may choose to
authorize (consistent with paragraphs
10, 15 and 16 below);
(d) can demonstrate their compliance
with the rules of the emissions trading
system, as set out in the paragraphs
below.
Parties implementation of the requirements of this paragraph shall
be the subject of expert review under Article 8.
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Unit of transfer/acquisition
10. The tradable unit would be parts of assigned amounts, (as
defined under Article 3) which this paper will refer to as PAA
units. Transfers and acquisitions of PAA units shall be
denominated in metric tons of C02 equivalent, calculated using
the global warming potentials defined by decisions 2/CP.3 or as
subsequently revised in accordance with Article 5.3. One PAA
unit would be equal to one metric tonne of C02 equivalent
emissions.
11. All PAA units shall have a unique serial number that reflects
the country of origin and the commitment period for which the
assigned amount was first established. PAA units would be valid
until used to offset emissions for the purposes of contributing to
compliance (i.e. once used to offset emissions, PAA units would
be retired from the trading system). PAA units acquired by a
Party would be added to the Party's assigned amount unless the
PAA units are subsequently invalidated as set-out in paragraph 22
below. Similarly, PAA units transferred by a Party would be
subtracted from its assigned amount.
12. A Party whose emissions are in excess of its assigned amount
in any commitment period may acquire, but may not transfer,
PAAs.
Entitlement to trade
13. All eligible Parties can trade.
14. The Protocol is silent on the subject of whether legal entities
can participate in the international trading system under Article
17. However, the participation of legal entities has several
economic advantages. If authorized legal entities are permitted to
participate in international emissions trading, the Party, and not
its authorized legal entities, will remain responsible for
compliance with its commitments under the Protocol.
15. If legal entities were permitted to trade internationally, it
would be essential to govern the monitoring, verification,
accountability and compliance of sub-national legal entities. In
addition, the manner in which Parties allocate PAA units to their
legal entities should not contravene Article 3.5 of the Convention
and, therefore, should avoid arbitrary or unjustifiable
discrimination or a disguised restriction on international trade.
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Recording and reporting of trades
16. The UNFCCC Secretariat shall make information on the
Parties that are eligible to participate in international trade
publicly available. Each Party shall maintain a record of names
and contact details of authorized legal entities within its
jurisdiction that it authorizes to trade, and such information shall
be made available both to the UNFCCC Secretariat and to the
public.
17. Parties shall track and record information on all transfers of
PAA units by authorized legal entities within their jurisdiction.
This information should include the amount and serial numbers
of the PAA units transferred, and identify the entities and their
authorizing Parties between which the transaction has taken
place.
18. Parties shall report, at least annually, to the UNFCCC
secretariat (or an authority designated by the COP) the amount
and serial numbers of the PAA units and the counterparts of all
transfers and acquisitions that result in changes to their assigned
amounts, including those involving legal entities. Parties shall
verify to the UNFCCC Secretariat (or an authority designated by
the COP) that a legal entity transferring PAA units was the
registered owner of the PAA units in question.
19. The UNFCCC secretariat (or an authority designated by the
COP) shall produce, on an annual basis, a tabulation of the
adjustments to assigned amounts required under Articles 3.10 and
3.11 for each Party that has carried out transfers or acquisitions of
PAA units.
Market mechanisms and information:
20. There are a number of ways in which the emissions trading
market could be organized. The following sets out the main
options (these provisions could also apply to legal entities):
(a) Auction. Any transfer or acquisitions by a Party shall be
carried out through open, competitive bidding accessible to all
Parties.
(b) Prior notification. Parties shall notify the UNFCCC of their
intention to transfer or acquire PAA units prior to any
transfer/acquisition, and the UNFCCC Secretariat shall make
such information available to all other eligible Parties. This could
be limited to transfers/acquisitions above a specified amount.
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http://www.weatnervane.rif.org/retdocs/bonn_nonpaper2.htm
(c) Use of available market mechanisms. Transfers and
acquisitions by Parties may be carried out directly or through any
mechanisms to facilitate transfers such as brokers, exchanges, or
auctions.
Sharing of risks on non-compliance under the international
emissions trading system:
21. Rules about risk-sharing and legal liability will need to
elaborated, in order, inter alia, to provide compliance incentives
and to improve the quality of Parties' monitoring systems. This
section sets out the main parameters.
22. Party which is found to be in non-compliance with its
obligations under Article 3 will face compliance procedures
under Article 18. If such a Party has transferred PAA units to any
other Party. the units transferred should be invalidated in part. or
in full, for the purposes of meeting the commitments of the
acquiring Parties under the Protocol. Otherwise, Parties could
have no incentive not to buy PAA units from Parties they
expected to be in eventual non-compliance. Modalities for
invalidation of PAA units transferred under these circumstances
will need to be further explored. However, if a Party finds itself
in non-compliance due to the full or partial invalidation of
acquired PAA units, it may be appropriate for that Party to face
less stringent penalties than the seller Party.
Compliance with trading rules
23. If a question of compliance by a Party included in Annex B of
the rules of the trading system as set out in the paragraphs above
is identified, transfers and acquisitions of assigned emission units
may continue to be made after the question has been identified,
provided that any such units may not be used by a Party to meet
its commitments under Article 3 until any issue of compliance is
resolved.
Changes (i.e. participants, trading rules etc.):
24. Any rules, modalities and guidelines for emission trading
shall be open to review by the Parties and may be modified as
appropriate by a COP.
25. Changes in trading principles, modalities, rules, and
guidelines shall only take effect in commitment periods
subsequent to that of their adoption. Changes in Parties' eligibility
to trade or changes pertaining to new entrants that meet the
eligibility criteria may occur during the current commitment
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SUBSIDIARY BODY FOR SCIENTIFIC AND TECHNOLOGICAL ADVICE
Eighth session
Bonn, 2-12 June 1998
Agenda item 8
SUBSIDIARY BODY FOR IMPLEMENTATION
Eighth session
Bonn, 2-12 June*1998
Agenda item 8
FCCC/SB/1998/CRP.2
12 June 1998
ENGLISH ONLY
MECHANISMS
Draft conclusions by the Chairmen
1.
The Subsidiary Body for Scientific and Technological Advice (SBSTA) and the
Subsidiary Body for Implementation (SBI) recalled decision 1/CP.3, in particular paragraph
5(b), (c) and (e) on guidance to the secretariat on preparatory work needed for consideration
by the fourth session of the Conference of the Parties.
2.
The SBSTA and the SBI further recalled paragraph 6 of the same decision concerning
the allocation of preparatory work for the first session of the Conference of the Parties
serving as the meeting of the Parties to the Kyoto Protocol.
3.
The SBSTA and the SBI took note of documents FCCC/SB/1998/2,
FCCC/SB/1998/MISC.1 and Add.1, Add.1/Rev.1, Add.3, Add.3/Rev.1, Add.5 and Add.6,
and FCCC/SB/1998/MISC.2.
4.
The SBSTA and the SBI further took note of the Suggested Elements for a Work
Programme on Mechanisms of the Kyoto Protocol attached hereto.
5.
The SBSTA and the SBI invited Parties to submit views on the mechanisms referred
to in decision 1/CP.3, paragraph 5(b), (c) and (e).
BNJ. 98-134
- 2 -
Suggested Elements for a Work Programme on Mechanisms of the Kyoto Protocol
This list is compiled on the basis of the Proposed Work Programme on Mechanisms of the
Kyoto Protocol submitted by the G-77 and China, suggestions by other Parties during the
contact group meetings and further proposals submitted by Canada et. al." and United
Kingdom of Great Britain and Northern Ireland (on behalf of the European Community
and its Member States) on Friday 12 June. This list is not negotiated.
Article 12 - clean development mechanism
Methodological /Technical Work
1.
Purpose of cdm projects
2.
Supplementarity to domestic action
3.
Part of Annexe I commitments
4.
Additionality criteria in funding
5
Criteria for real, measurable and long-term benefits related to climate change
6.
Compatibility with sustainable development priorities/strategies
7.
Criteria for project eligibility
8.
Criteria for certification
9.
Criteria for project baseline
10.
Definition of the concept of certified emission reductions
11.
Acquisition and transfer of certified emission reduction
12.
Systems for independent auditing and verification of project activities
13.
Format for reporting
14.
Identification/ determination of share of proceeds
15.
Adaptation
16.
Implication of Article 12.10 of the Kyoto Protocol
17.
Outcome of methodological work on Articles 3.3 and 3.4 of the Protocol
Suggestions forwarded during the contact group
18.
Determination of "part of" and its relationship to supplementarity
19.
Concept of voluntary participation
20.
Categorization of projects
21.
Approaches to project identification and development
22.
Guidelines related to the inclusion of LUCF activities
23.
Additionality criteria
24.
Guidelines for certification
25.
Analysis of implications of Article 12.10 of the Kyoto Protocol
26.
Articles 3.3 and 3.4 of the Protocol
Proposals submitted on Friday 12 June 1998
27.
supplementarity, by means of a concrete ceiling for the three mechanisms;
28.
to ensure that projects provide real measurable and long-term benefits;
29.
Additionality of emissions reductions (Article 12.5c);
- 3 -
30.
determination of "part of" (Article 12.3b);
31.
elaboration of modalities and procedures with the objective of ensuring transparency,
efficiency and accountability through independent auditing and verification of project
activities;
32.
clarification of project types and categories;
33.
defining "share" of proceeds, including:
*
share to cover administrative expenses;
modalities and level of share "to assist developing country Parties that are
particularly vulnerable to the adverse effects of climate change to meet the costs
of adaptation".
34.
interpretation of "to assist in arranging funding for certified project activities as
necessary";
35.
implications of Article 12.10.
36.
Project eligibility
Additionality
Project baselines/benchmarks
*
Criteria for real, measurable, and long-term benefits
37.
Certification
38.
Auditing, verification and monitoring
39.
Sinks
40.
Reporting
Institutional Issues
1.
Authority and guidance of the COP
2.
Executive Board - Constitution, Composition, and Functions
3.
Accountability of the Executive Board to the COP/moP
4.
Functions/ provision of guidance
5.
Procedure
6.
Identification and designation of operational entities
7.
Monitoring and auditing of operational entities
Suggestions forwarded during contact group
8.
Overall institutional framework
9.
Technical and operational support for Executive Board
10.
Monitoring and verification of project activities
11.
Authority and guidance of the COP/MOP
12.
Functions/ provision of guidance / supervision
13.
Rules of procedure
Proposals submitted on Friday 12 June 1998
14.
institutional issues (Executive Board, operational entities, etc).
15.
Same as items 1-13
- 4 -
Participation in projects
1.
Private and/ or public entities
2.
Responsibility of Parties
3.
Guidance to be provided by the executive board
Proposals submitted on Friday 12 June 1998
4.
criteria for voluntary participation of Parties, public and/or private entities, etc.
5.
Same as items 1-3
Process
1.
Approval by both Parties
2.
Procedure to attain certification of project activities
3.
Certification of emission reductions
4
Acquisition and transfer of certified emission reduction
5.
Assistance in arranging funding for projects assistance
6.
Rules to guarantee transparency, non-discrimination and to prevent distortion of
competition
Suggestions forwarded during contact group
7.
Cdm shall assist in arranging funding of certified project activities as necessary (12.6)
8.
Certification
9.
Reporting, auditing and verification
10.
Accessibility
11.
Adaptation (project process)
12.
Transparency, non-discrimination and prevention of distortion of competition
13.
Approval by each Party involved
14.
Assistance in arranging funding for adaptation projects
Proposals submitted on Friday 12 June 1998
15.
adoption of a framework for operation of the cdm.
16.
Voluntary participation
17.
Acquisition and transfer of certified emission reductions
18.
Assistance in arranging funding for projects
19.
Adaptation
Linkage
1.
with contribution to compliance with part of commitments under Art. 3 of Annex I
Parties
2.
with contribution to meet the costs of adaptation
3.
with Article 6 projects
- 5 -
4.
CERs and ERUs accruing from projects
5.
Work related to Article 18 of the Kyoto Protocol
Suggestions forwarded during contact group
6.
With Article 17
Proposals submitted on Friday 12 June 1998
7.
supplementarity, by means of a concrete ceiling for the three mechanisms;
8.
compliance (need to adopt and ratify Article 18);
9.
Articles 3, 5, 6, 7, 8 and 17.
10.
Fungibility with AAUs and ERUs
11.
AIJ
Article 6 projects
Methodological/Technical Work
1.
Supplementarity to domestic action
2.
Criteria for Article 6 projects
3.
Criteria for project baselines
4.
Acquisition and transfer of emission reduction units
5.
Compliance with Article 5 and 7 of the Kyoto Protocol
6.
Verification
7.
Reporting
8.
Non-compliance
9.
Outcome of methodological work on Article 3.3 and 3.4
Suggestions forwarded during contact group
10.
Methodological work associated with Art. 6.1 (b)
11.
Guidelines on review of implementation by expert review team (Art. 8.4)
12.
Guidelines on eligibility of projects initiated under AIJ for generation of ERU under Art.
6.
13.
Additionality criteria
14.
Certification and monitoring
15.
Guidelines for projects and project baselines
16.
Verification and monitoring particulary Article 6.4
17.
Non-compliance (Article 18)
Proposals submitted on Friday 12 June 1998
18.
supplementarity, by means of a concrete ceiling for the three mechanisms;
19.
to ensure that projects provide real measurable and long-term benefits;
20.
additionality of emissions reductions (determination of project baselines and actual
emissions or removals, Article 6.1 b);
- 6
21.
common methodologies for certification, project monitoring and verification of actual
reductions from sources and enhancement of removals by sinks
22.
Project eligibility
+
Additionality
Project baselines
23.
Verification and monitoring
24. Sinks
25. Reporting
Proposals submitted on Friday 12 June 1998
(Submissions proposing a new heading under Article 6)
Participation in projects
1.
approval of projects;
2.
to determine that Parties, and their authorised legal entities can account for, certify,
document and verify emissions reductions and removals by sinks from JI projects.
3.
Responsibility of Parties
4.
Private and/or public entities
Process
1.
Approval by Parties of projects
2.
Assessment of additionality
3.
Compliance with Article 5 and 7
4.
Acquisition and transfer of emission reduction units
Suggestions forwarded during contact group
5.
Private and/ or public entities
6.
Responsibility of Parties
7.
Accessibility
8.
Transparency, non-discrimination and prevention of distortion of competition
Proposals submitted on Friday 12 June 1998
9.
Voluntary participation
10.
Acquisition and transfer of ERUs
11.
Compliance
Institutional
1.
Role of COP/moP, SBSTA and SBI
2.
Work on non-compliance
3.
Elaboration of guidelines as per Article 6.2
- 7 -
4.
Involvement of legal entities operating under the responsibility of a Party
5.
Definition of institutional authority
Suggestions forwarded during contact group
6.
Involvement of legal entities operating under the responsibility of a Party as referred to
in 6.3
7.
Reporting
8.
Non-compliance
Proposals submitted on Friday 12 June 1998
9.
determination of guidelines for accounting, certification, documentation and verification
of JI projects;
10.
procedures for recording and reporting transfers and acquisitions of emission reduction
units.
11.
Role of COP/MoP
Linkage
1.
With Article 5
2.
With Article 7
3.
With Article 8
4.
With Article 18
5.
With Article 12, in particular Article 12.8
6.
With Article 17
Proposals submitted on Friday 12 June 1998
7.
supplementarity, by means of a concrete ceiling for the three mechanisms;
8.
compliance (need to adopt and ratify Article 18);
9.
Articles 3.3, 3.4, 5. 7, 8, 12, 17 and 18
10.
Fungibility with AAUs and CERs
11.
AIJ
Activities Implemented Jointly
Activities Implemented Jointly (AIJ) cannot be part of this work programme. AIJ will be
governed by COP decisions, namely, 5/CP.1, 8/CP.2 and 10/CP.3. According to decision 5/CP.1,
the COP shall take into consideration the need for a comprehensive
review of the pilot phase in order to take a conclusive decision on the pilot phase and the
progression beyond that, no later than the end of the present decade. The secretariat should
prepare an update on information about the pilot phase of AIJ.
* 8 -
Article 17 - emissions trading between Annex I Parties
Issues for Work Programme
1.
Basis of rights and entitlements of Annex I Parties for trading emissions
2.
Determination and creation of such rights and entitlements
3.
Supplementarity to domestic action for the purpose of meeting quantified emission
limitation and reduction commitments under Article 3
4.
Conformity with the principle of equity in the Convention
5.
Real and verifiable reduction of GHG emissions
6.
Elements of principles, modalities, rules and guidelines for any trading in
emissions
7.
Elaboration of principles, modalities, rules and guidelines, including the funding of
adaptation
8.
Matters relating to verification, reporting and accountability
9.
Whether any commonality with other mechanisms_
Suggestions forwarded during contact group
12.
Scope of participation of legal entities
13.
Accessibility
14.
Rights, entitlements and equity
15.
Verification
16.
Reporting
17.
Accountability
18.
Adaptation
19.
Scope of participation in market mechanisms
20.
Definition of relevant principles, modalities, rules and guidelines for verification,
reporting and accountability
Proposals submitted on Friday 12 June 1998
21.
Risk of transferees on transfers the transferor was not entitled to make under the Protocol.
22.
Refusals of Annex I Parties to participate in emissions trading under Article 17.
Proposals submitted on Friday 12 June 1998
(Submissions proposing headings under Article 17)
Methodological/technical Work
1.
determination of principles, rules, modalities and guidelines:
*
in particular for verification, reporting and accountability;
*
to ensure that emissions trading provides real, cost-effective and verifiable
environmental benefits, and that trading of 'hot air' does not lead to emissions
reductions being lower than would otherwise be the case;
# to define supplementarity, by means of a concrete ceiling for the three
mechanisms;
- 9 -
*
to ensure that the emissions trading system is transparent, accessible and
verifiable, functions in a non-discriminatory manner, and does not lead to
distortions of competition;
* to establish responsibility in the event of non-compliance.
2.
Principles, modalities, rules, and guidelines, for verification, reporting, and
accountability
3.
Environmental effectiveness and economic efficiency
4.
Tradeable assigned amount unit
5.
Participation, including Parties and legal entities
6.
Eligibility
7.
Institutional requirements
8.
Recording and reporting
9.
Verification and accountability
10.
Liability
11.
Competitive markets
12.
Transparency
13.
Compliance
Participation in trading
1.
eligibility of Parties;
2.
eligibility of other entities under the responsibility and within the jurisdiction of a Party.
Institutional issues
I.
determination of principles, rules, modalities and guidelines:
for procedures for recording and reporting transfers and acquisitions of parts
of assigned amounts;
*
for a national system for tracking and recording information on all trades by
authorised legal entities.
Linkage
1.
supplementarity, by means of a concrete ceiling for the three mechanisms;
2.
compliance (need to adopt and ratify Article 18);
3.
Articles 3, 5, 6, 7, 8, 12 and 18.
4.
Fungibility with CERs and ERUs
Additional proposals are contained in documents FCCC/SB/1998/2, FCCC/SB/1998/MISC.1
and Add.1, Add.1 Rev.1, Add.3, Add.3/Rev.1, Add.5 and Add.6, and FCCC/SB/1998/MISC.2.
1) Canada et. al. includes Australia, Canada, Iceland, Japan, New Zealand, Norway, Russian
Federation, Ukraine, and United States of America
(10 June; 2 pm)
Initial list of issues on Mechanisms of the Kyoto Protocol
Group of 77 and China
The following is an initial list of issues from the Group of 77 & China on
"mechanisms". The issues are listed as: (1) General, (2) Article 6 projects, (3) Article 12 -
clean development mechanism, (4) Article 17 - emissions trading between developed
country Parties. These issues need to be properly addressed to enable progress.
General
1.
What are the points of difference and points of similarity among the three
mechanisms provided for in the Kyoto Protocol to the Convention.
2.
How to ensure that domestic actions by developed countries are their primary
mcans of GHG limitation and reduction, and that the overseas mechanisms remain
supplemental to such domestic actions by developed countries for the purpose of meeting
their quantified emission limitation and reduction commitments.
3.
How can it be ensured that these mechanisms lead to real and verifiable limitation
and reduction of GHG emissions by developed countries.
4.
How to ensure that the COP or COP/moP will maintain the responsibility for
every stage of defining, developing, structuring and institutionalizing the mechanisms.
5.
What are the specific roles of the SBSTA and the SBI with regard to these
mechanisms.
6.
What will be the systems for ensuring independent auditing, verification and
accountability of the working of these mechanisms
Article 6 projects
1.
What will be the elements of the guidelines for projects under Article 6, in
particular, for ensuring transparency, accountability, reporting and verification.
2.
What will be the criteria for deciding the baseline of projects.
3.
How can compliance with Articles 5 and 7 of the Protocol be ensured, and how is
this related to the work to be accomplished under Article 18.
4.
What will be the procedure for transferring or acquiring emission reduction units
resulting from projects under Article 6.
5.
What will be the system for auditing and verifying projects under Article 6.
6.
How will "legal entities", to be involved in these projects, be defined, and how
will ensured. the responsibility of the Party over "legal cntities" for the purpose of the projects be
7.
How will the benefits of a project under Article 6 be equitably shared between the
participating Parties.
8.
What will be the reporting critcria of a project under Article 6 to the COP/moP.
Article 12 - Clean Development Mechanism
1.
What will be the criteria for ensuring a balance wherein each CDM project attains
the objective of assisting developing country Parties in achieving sustainable
development in accordance with their national priorities and strategy, and assisting
developed country Parties in achieving compliance with their commitments under Article
3.
2.
How to ensure that the CDM shall be subject to the authority and guidance of the
Conference of the Parties serving as the meeting of the Parties to the Protocol.
3.
How to ensure that the executive board of the CDM shall function under the
authority and guidance of the Conference of the Parties serving as the mccting of the
Parties to the Protocol.
4.
What will be the constitution, character and functions of the executive board of
the CDM.
5.
How will the emission reductions of a CDM project be certified? What will be the
certification procedure, and by whom will this be done.
6.
How to define and quantify "part" in " part of quantified emission limitation and
reduction commitments", in Article 12.3 (b) of the Protocol.
7.
How to ensure the responsibility and role of governments at each stage of the
CDM projects.
2
8.
How will it bc ensured that the operational entity of the CDM, as designated by
the COP, functions under the authority of the COP, and that its governance is separate
from those of existing institutions.
9.
How will Article 12.6 of the Protocol be implemented? What will be the criteria
and processes for the CDM for aranging due funding.
activities. 10. How to ensure the independent auditing and verification of CDM project
11.
What will be the oriteria for deciding the baseline of projects.
12. When should the benefits of CDM projects accrue to the participating developed
country Parties.
13.
CDM criteria.
What will be the action for non-compliance if a CDM project goes against the
14.
How to define: "a share of the proceeds". and how will this share be apportioned
for administrative expenses and adaptation.
15.
How will the responsibility of a Party be ensured over the private/ public entities
authorized by the Party to be involved in CDM projects.
16.
How to ensure that CDM projects are equally distributed so as to benefit all
developing country parties, in particular the least developed country parties, and that
the imbalances. distribution of projects does not exacerbate existing regional / sub regional
17. How will it be ensured that the financing for CDM projects shall be additional to
ODA and other international funding, additional to and separate from the financial
obligations under GEF and additional to the financial obligation of the Parties as
provided in the Convention and the Protocol.
,
18.
How will the additional economic benefits, if any, of a CDM project be shared
equitably between the participating Parties.
19.
How will the participating Partics report their CDM projects to the COP/mop.
20.
What are the implications of Article 12.10 of the Protocol.
(200)
3
Article 17 - Emissions Trading between developed country Parties
1.
How will the emission rights and entitlements of developed country Parties be
determined and created for trading emissions? Will this be consistent with the principle
of equity keeping in view the historical and current responsibility of developed countries
to climate change and the ultimate objective of the Convention.
2.
How to ensure that any emissions trading between the developed country Parties
shall be supplemental to domestic actions for the purpose of meeting their quantified
emission limitation and reduction commitments.
$
3.
How to ensure that emissions trading between developed country Parties will lead
to real and verifiable limitation and reduction of GHG emissions for meeting the
objective of the Convention and contributing to the protection of the environment.
4.
What will be the environmental or economic impacts in any(area due to emissions
é
trading between developed country Parties.
5.
How to ensure that any emissions trading between developed country Parties fully ]?
reflects the principle of equity between developed and developing countries.
6.
How to ensure that emissions trading between developed country Parties shall
conform to the principles, modalities, rules and guidelines including any compliance
procedure to be defined by the COP.
4
RFF cony. on "Annex I Frig."
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E. Eu. & Suitz. Pos. reacins. from orher
- supplementanty to PROTECT margin B/ d'unatic polices
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claimed has aiv.
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as early as 2008.
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J. Pershing u.s. Anizle 17 says iny. Mady. "synlemental."
Even if don't "gree on mles, Tradg. is allowed.
countries, concerns:
Umbrella COMMES
Eu
G77
- COST miligin
- supplementy TO
undersing of proces
- private lector focus
domestic actur
"Rights & entitlemts."
- credibility of system
- "hot air" [Pejorative assignat amis.] "Equity"
- operatul. rules
- compliance/ liablem
Transfer ufoblig.s to LDCs
buyer liab
"Real" reductns.
(10 June; 2 pm)
Initial list of issues on Mechanisms of the Kyoto Protocol
Group of 77 and China
The following is an initial list of issues from the Group of 77 & China on
"mechanisms". The issues are listed as: (1) General, (2) Article 6 projects, (3) Article 12 -
clean development mechanism, (4) Article 17 - emissions trading between developed
country Parties. These issues need to be properly addressed to enable progress.
General
1.
What are the points of difference and points of similarity among the three
mechanisms provided for in the Kyoto Protocol to the Convention.
2.
How to ensure that domestic actions by developed countries are their primary
mcans of GHG limitation and reduction, and that the overseas mechanisms remain
supplemental to such domestic actions by developed countries for the purpose of meeting
their quantified emission limitation and reduction commitments.
3.
How can it be ensured that these mechanisms lead to real and verifiable limitation
and reduction of GHG emissions by developed countries.
4.
How to ensure that the COP or COP/moP will maintain the responsibility for
every stage of defining, developing, structuring and institutionalizing the mechanisms.
5.
What are the specific roles of the SBSTA and the SBI with regard to these
mechanisms.
6.
What will be the systems for cnsuring independent auditing, verification and
accountability of the working of these mechanisms.
Article 6 projects
1.
What will be the elements of the guidelines for projects under Article 6, in
particular, for ensuring transparency, accountability, reporting and verification.
2.
What will be the criteria for deciding the baseline of projects.
3.
How can compliance with Articles 5 and 7 of the Protocol be ensured, and how is
this related to the work to be accomplished under Article 18.
4.
What will be the procedure for transferring or acquiring emission reduction units
resulting from projects under Article 6.
5.
What will be the system for auditing and verifying projects under Article 6.
6.
How will "legal entities", to be involved in these projects, be defined, and how
will the responsibility of the Party over "legal cntities" for the purpose of the projects be
ensured.
7.
How will the benefits of a project under Article 6 be equitably shared between the
participating Parties.
8.
What will be the reporting critcria of a project under Article 6 to the COP/moP.
Article 12 - Clean Development Mechanism
1.
What will be the criteria for ensuring a balance wherein each CDM project attains
the objective of assisting developing country Parties in achieving sustainable
development in accordance with their national prioritics and strategy, and assisting
developed country Parties in achieving compliance with their commitments under Article
3.
2.
How to ensure that the CDM shall be subject to the authority and guidance of the
Conference of the Parties serving as the meeting of the Parties to the Protocol.
3.
How to ensure that the executive board of the CDM shall function under the
authority and guidance of the Conference of the Parties serving as the mccting of the
Parties to the Protocol.
4.
What will be the constitution, character and functions of the executive board of
the CDM.
5.
How will the emission reductions of a CDM project be certified? What will be the
certification procedure, and by whom will this be done.
6.
How to define and quantify "part" in " part of quantified emission limitation and
reduction commitments", in Article 12.3 (b) of the Protocol.
7.
How to ensure the responsibility and role of governments at each stage of the
CDM projects.
2
8.
How will it bc ensured that the operational entity of the CDM, as designated by
the COP, functions under the authority of the COP, and that its governance is separate
from those of existing institutions.
9.
How will Article 12.6 of the Protocol be implemented? What will be the criteria
and processes for the CDM for aranging due funding.
activities. 10. How to ensure the independent auditing and verification of CDM project
11.
What will be the criteria for deciding the baseline of projects.
12. When should the benefits of CDM projects accrue to the participating developed
country Parties.
13. What will be the action for non-compliance if a CDM project goes against the
CDM criteria.
14.
How to define: "a share of the procceds". and how will this share be apportioned
for administrative expenses and adaptation.
15. How will the responsibility of a Party be ensured over the private/ public entities
authorized by the Party to be involved in CDM projects.
16.
How to ensure that CDM projects are equally distributed so as to benefit all
developing country parties, in particular the least developed country parties, and that
imbalances. the distribution of projects does not exacerbate existing regional / sub regional
17.
How will it be ensured that the financing for CDM projects shall be additional to
ODA and other international funding, additional to and separate from the financial
obligations under GEF and additional to the financial obligation of the Parties as
provided in the Convention and the Protocol.
,
18.
How will the additional economic benefits, if any, of a CDM project be shared
equitably between the participating Parties.
19.
How will the participating Partics report their CDM projects to the COP/mop.
20. What are the implications of Article 12.10 of the Protocol. (200)
3
Article 17 - Emissions Trading between developed country Parties
1.
How will the emission rights and entitlements of developed country Parties be
determined and created for trading emissions? Will this be consistent with the principle
of equity keeping in view the historical and current responsibility of developed countries
to climate change and the ultimate objective of the Convention.
2.
How to ensure that any emissions trading between the developed country Parties
shall be supplemental to domestic actions for the purpose of meeting their quantified
emission limitation and reduction commitments.
$
3.
How to ensure that emissions trading between developed country Parties will lead
to real and verifiable limitation and reduction of GHG emissions for meeting the
objective of the Convention and contributing to the protection of the environment.
4.
What will be the environmental or economic impacts in any/area due to emissions
é
trading between developed country Parties.
5.
How to ensure that any emissions trading between developed country Parties fully
]
reflects the principle of equity between developed and developing countries.
6.
How to ensure that emissions trading between developed country Parties shall
conform to the principles, modalities, rules and guidelines including any compliance
procedure to be defined by the COP.
4
Schedule of Events
(NOTE: Speaker identifications are tentative):
June 18
At the Governor's House:
8.00-10.00PM: Informal cocktail and buffet dinner
June 19
At Brookings Institution:
7.30-8.15
Breakfast
8.15-8.30
Conference opening and welcome (Hourcade, Toman)
8.30-10.00
Session 1 (Delbeke, Pershing)
10.00-10.30
Break, coffee
10.30-12.00
Session 2 (Jones, Tietenberg)
12.00-1.30
Lunch
1.30-3.00
Session 3 (Hahn)
3.00-3.30
Break, refreshments
3.30-5.00
Session 4 (Hourcade, Toman)
5.00-5.30
Synthesis of discussions, plans for Saturday continuation
At the Governor's House:
6.30-9.00:
Informal cocktail and buffet dinner
June 20
At the Governor's House:
8.30-9.00
Breakfast
9.00-11.30
Continuation of discussions among remaining experts, plenary or breakout groups
(with coffee break in mid-session)
11.30-12.00
Plenary: synthesis of lessons learned, discussion of possible academic initiatives
12.00-1.00
Conference adjournment, lunch
United States, Canada, and other Annex I Nations:
John Drexhage, Canada
Eric Haites, Margaree Consultants Inc. , Canada
Jonathan Pershing, Department of State, USA
Robert Hahn, American Enterprise Institute, USA
Thomas Teitenberg, Colby College, USA
David Wilcox, Department of the Treasury, USA
Ray Squitieri, Department of the Treasury, USA
Abraham Haspel, Department of Energy, USA
Peter Karpoff, Department of Energy, USA
Mark Friedrichs, Department of Energy, USA
Al McGartland, Environmental Protection Agency, USA
Paul Stolpman, Environmental Protection Agency, USA
Mike Shelby, Environmental Protection Agency, USA
David Sandalow, National Security Council, USA
Jeffrey Frankel, Council of Economic Advisors, USA
Toshiro Okada, Ministry of International Trade and Industry, Japan
Toru Miyamoto, Ministry of International Trade and Industry, Japan
Mike Toman, Resources for the Future (RFF), USA
Dick Morgenstern, RFF, USA
Ray Kopp, RFF, USA
Ron Lile, RFF, USA
Suzi Kerr, RFF, USA
Heather Ross, RFF, USA
Phil Haberkern, RFF, USA
MINISTERE DE L'ENSEIGNEMENT SUPERIEUR
ET DE LA RECHERCHE
CIRED
CENTRE INTERNATIONAL DE RECHERCHE SUR
RESOURCES FOR THE FUTURE
L'ENVIRONNEMENT ET LE DEVELOPPEMENT
EHESS - U.A. CNRS n° 940
Annex I Trading: Understanding Different Views
Participants In the Discussion
Europe :
Jim Skea, Sussex University, United Kingdom
Josef Janssen, Venice University, Italy
Franz Josef Schafhausen, Ministry of the Environment, Germany
Henri Fragman, Cabinet of the Ministry of Environment, France
Michel Mousel, MIES Chairman, France
Jean-Charles Hourcade, Centre International de Recherche sur L'Environnement et le
Developpement (CIRED), France
Thierry Le Pesant, CIRED, France
Jos Delbeke, DGXI, European Union
Peter Zapfel, DGII, European Union
Tom Jones, Environment Department, OECD
Stefan Schleicher, Council on Climate Change/University of Graz Economics
Department, Austria
Dennis Tirpak, FCCC
1
RFF Issue Briefs on
Climate Change
Climate issue briefs are short reports produced as part of RFF's Climate Economics
and Policy Program to provide topical, timely information and analysis to a broad,
RESOURCES
nontechnical audience. The preparation of RFF's climate briefs is funded in part by
FOR THE FUTURE
The G. Unger Vetlesen Foundation.
Impacts of Climate Change on Forests
Experts generally agree that increased concentrations of greenhouse gases in the atmosphere will
result in changes in the Earth's climate. However, there is much less agreement about how such
climate change could affect the world's forests. In their issue brief, RFF's Roger Sedjo and Ohio
State's Brent Sohngen identify potential sources of forest damage from climate change and
evaluate the possible socioeconomic consequences. April 1998.
Climate Policy and the Economics of Technical Advance:
Drawing on Inventive Activity
As support among policymakers grows for climate change policies that can reduce emissions of
greenhouse gases at low cost through the use of advanced technology, RFF's Raymond Kopp
addresses a number of questions about designing such a policy and assessing its cost-reducing
potential. In his issue brief, Kopp discusses the promises and pitfalls of policies that appeal to
advanced technology in response to global climate change. January 1998.
The Benefits of Reduced Air Pollutants in the U.S.
From Greenhouse Gas Mitigation Policies
A climate change policy to reduce emissions of greenhouse gases may also reap additional, or
"ancillary," environmental benefits by reducing emissions of other conventional air pollutants. In
their issue brief, RFF's Dallas Burtraw and Michael Toman investigate how reduced fossil fuel
use in the U.S. electric utility industry could also reduce other "criteria" air pollutants by reviewing
and evaluating various estimates of ancillary benefits. October 1997.
Designing Markets for International
Greenhouse Gas Control
As policymakers increasing consider emissions trading as a policy option in the U.S. and abroad
for combating climate change, Duke University's Jonathan Wiener suggests that such a market-
based approach to reducing global emissions of greenhouse gases offers great promise for lowering
costs, enhancing the spread of cleaner technologies, and broadening participation in an
international climate treaty. But emissions trading also faces important economic and political
challenges, he says. October 1997.
more
1616 P Street, NW
Washington, DC 20036
All RFF climate issue briefs can be downloaded on the
internet at http://www.rff.org/issue_briefs/index.htm.
Tel 202-328-5000
Fax 202-939-3460
To order issue briefs in hard-copy, call (202) 328-5000.
The Economics of Technology Diffusion:
Implications for Greenhouse Gas Mitigation
in Developing Countries
A wide variety of policy options - including eliminating energy subsidies, improving information, and investing
in energy infrastructure - are likely to speed the diffusion of climate-friendly technologies (CFTs) in developing
countries, according to RFF's Allen Blackman. In his issue brief, he reviews the current state of knowledge on
the diffusion of new technologies; describes the various policy options that are available to influence the speed of
CFT diffusion in developing countries; and offers his own prescriptions for successful technology-based climate
change policy. October 1997.
Impacts of Climate Change on Agriculture
While global warming may make the achievement of sustainable agricultural production more difficult,
especially in developing countries, a bigger threat may come from more immediate concerns, such as lags in the
spending on agricultural research needed for development of new technology, according to RFF's Pierre
Crosson. In his issue brief, Crosson reviews the various estimates of climate change impacts on agriculture from
the 1996 report by the Intergovernmental Panel on Climate Change (IPCC); looks at possible impacts to
agriculture in the United States; and discusses related policy issues as they relate to global agricultural
development. June 1997.
Water Resources and Climate Change
While climate change may have a wide range of adverse impacts on global water resources, a bigger threat to the
future availability and use of water may come from other factors, such as population growth, technology, and
economic, social and political conditions, according to RFF's Kenneth Frederick. In his issue brief, Frederick
reviews the most recent scientific assessment by the Intergovernmental Panel on Climate Change (IPCC);
outlines the possible impacts of climate change on water supplies and demands, including its implications for
regional uncertainties, sea levels, and carbon dioxide effects. He concludes by discussing possible socioeconomic
impacts and related implications for public policy. June 1997.
Revenue Recycling and the Costs of
Reducing Carbon Emissions
Climate change polices that seek to reduce emissions of greenhouse gases are likely to aggravate distortions in
the economy created by the tax system. However, most of this added cost can be offset if the policy raises
revenue for the government and the revenues are then used to cut other taxes, according to RFF's Ian Parry. In
his issue brief, Parry discusses the "double dividend" hypothesis -- that carbon taxes can reduce carbon emissions
and reduce the overall costs of the tax system at the same time. He further explains why he thinks the hypothesis
is invalid. June 1997.
Climate Change Risks and Policies:
An Overview
In his issue brief, RFF's Michael Toman discusses a "decision framework" -- a way of organizing and
evaluating information. He outlines key policy lessons and touches on the "U.S. Draft Protocol Framework."
Issued by the Clinton Administration in January 1997, the draft protocol embraces a number of policy ideas that,
if implemented, could significantly enhance the cost-effectiveness with which any emissions reduction targets
are achieved. March 1997.
Recent Articles from RFF's Weathervane
Listed below are feature articles on issues related to climate change that were written
by Resources for the Future (RFF) researchers and staff for Weathervane, RFF's
internet forum dedicated to the discussion and debate of global climate policy.
RESOURCES
Weathervane's URL is http://www.weathervane.rff.org.
FOR THE FUTURE
Estimating the Costs of Kyoto:
How Plausible Are the Clinton Administration's Figures?
In light of Dr. Janet Yellen's recent testimony before Congress, RFF's Raymond Kopp and J.W.
Anderson argue that the White House's cost estimates have a respectable analytical base. But they
say turning them into economic reality will require satisfactory answers to many outstanding
questions, many of which are political. March 12, 1998.
Cheap Emission Reductions:
Use 'em or Lose 'em
RFF's Raymond J. Kopp, Richard Morgenstern, William Pizer, and Michael Toman argue
that early emission banking offers an efficient and straightforward mechanism to encourage
immediate domestic reductions in developed countries in order to meet the requirements under the
Kyoto Protocol. February 23, 1998
A Post-Kyoto 'Crash Course' in
Climate Change Policy
A revised and expanded version of J.W. Anderson's report on climate change policy includes a
review of the scientific evidence on global warming and an outline of the political history of
climate change. It now contains a description of the key issues both resolved and unresolved at the
December 1997 UN climate meeting in Kyoto, Japan. This is a recommended "must read" for
anyone who needs to get caught up to speed on climate change policy -- where it's been, where it is
now, and where it's heading. January 16, 1998.
The Kyoto Protocol:
The Realities of Implementation
RFF's Raymond Kopp, Richard Morgenstern and Michael Toman examine the costs and
benefits of the Kyoto Protocol while emphasizing the importance of using incentive-based policies
to achieve reduced emissions of greenhouse gases in the U.S. January 15, 1998.
The Kyoto Protocol:
Unresolved Issues
The climate change agreement reached in Kyoto signals a new level of international attention to
limiting "greenhouse gas" emissions. However, according to RFF's Raymond Kopp, Richard
Morgenstern and Michael Toman, many important issues remain to be resolved before the U.S.
Senate would ratify the agreement. January 8, 1998.
over
1616 P Street, NW
Washington, DC 20036
Tel 202-328-5000
Fax 202-939-3460
All articles are posted to Weathervane's archives at
http://www.weathervane.rff.org/archives/index.html.
An Analysis of Clinton's Proposal for Reducing
Greenhouse Gas Emissions
In light of President Clinton's announcement of targets and timetables for the U.S. to reduce its
emissions of greenhouse gases, RFF's Raymond Kopp and William Pizer review the key
elements and outline several issues raised by the proposal. October 22, 1997.
The Role of Science in Climate Change Policy
RFF Journalist-in-Residence J.W. Anderson reviews the recent range of scientific claims about
climate change and discusses how scientists and policymakers diverge in their perceptions of risk
and uncertainty. September 9, 1997.
The History of Climate Change
as a Political Issue
RFF Journalist-in-Residence J.W. Anderson traces the political hot-button origins of climate
change back to the International Geophysical Year 1957-58 when scientists showed for the first
time that CO2 levels in the atmosphere were rising steadily. Anderson further tracks through the
1970s and 1980s to present day to detail the key events and meetings that have explored the
implications of global warming. August 12, 1997.
How Tough Will It Be For the U.S. To Meet a
Climate Target By 2010?
In the final part of a three-part series on energy data, RFF's Raymond Kopp considers
hypothetical policies and examines the different ways in which the U.S. could meet a 2010
stabilization goal. He looks specifically at each of the energy consuming sectors (households,
commercial establishments, industrial facilities, transportation and electricity generation) and at a
range of possible responses to the policy. September 2, 1997.
Targets and Timetables:
Getting Out the Carbon
In the second of a three-part series on energy data, RFF's Raymond Kopp explains one set of
targets and timetables that has received considerable attention a policy that would bind
industrialized nations to stabilize their within-country emissions of greenhouse gases, most notably
carbon dioxide (CO2), to the level of their own country's 1990 emissions by the year 2010. He
discusses what such a policy would mean for U.S. CO2 emissions and energy consumption, and
looks at what the U.S. would have to do to abide by such an agreement. August 12, 1997.
How to Interpret Energy Data and
Understand Its Role in Policy
In the first part of a three-part series on energy data, RFF's Raymond Kopp explains that global
climate policy is really global energy policy and strives to foster a better understanding of how
climate policy necessitates an understanding of the world's dependence on and use of energy.
July 15, 1997.
All articles are posted to Weathervane's archives at
http://www.weathervane.rfforg/archives/index.html