Policy Update #12
On the Road to Doha: Will the Bell Toll for the Kyoto Protocol?
The last round of climate change talks before the 18th session of the Conference of the Parties (COP 18) to be held in Doha, Qatar, concluded in Bangkok, Thailand, on 5 September. Delegates are now back in their capitals, reflecting whether discussions throughout this year were productive enough to lead to a successful outcome in Doha.
At COP 17 in Durban in 2011, countries adopted a series of landmark decisions that were welcomed by many as a “balanced package.” These decisions addressed, among other things, the establishment of a workplan for developing “a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties” to be implemented from 2020. There are, however, still a number of pending tasks that parties need to address in Doha in order to shape the regime that will govern during the period prior to 2020. In particular, parties will have to address issues relating to the adoption of a second commitment period under the Kyoto Protocol.
In Durban, COP/MOP 7 agreed to “decide that the second commitment period under the Kyoto Protocol shall begin on 1 January 2013.” However, to “really” adopt the second commitment period, parties still have to decide on “how” the second commitment period will be established, including its key rules and features, such as its length and the rules that will deal with excess units and the Protocol's flexibility mechanisms, as well as the presentation of the quantified emission limitation and reduction objectives (QELROs) that participating Annex I parties will commit to. With the first commitment period under the Kyoto Protocol concluding on 31 December 2012, adoption of a second commitment period cannot be postponed if continuity of the regime is to be ensured.
This policy update addresses the reasons why many parties want to “really” adopt a “robust” second commitment period in Doha and presents an overview of the main elements that need to be agreed at COP 18 to configure the second commitment period's main features and rules.
Why Should it Live on?
For many parties, particularly those interested in giving continuity to legally-binding targets by developed countries and the flexibility mechanisms generated by the Kyoto Protocol, the Protocol is a comprehensive framework and is worthy of preservation as it provided the grounds for a rich set of rules. It also represents the continuation of a top-down, centralized model, whereby legally-binding emission reduction commitments are allocated among Annex I parties to achieve emission reduction objectives.
In terms of emission reductions, the Durban outcome invited Annex I Parties to submit information on their mitigation commitments or QELROs by 1 May 2012, in order to enable the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP) to “deliver the results of its work on QELROs” in Doha. At present, only some Annex I countries, including the EU, Switzerland and Norway, have expressed their intention to participate in taking mitigation commitments and presented information on their “provisional” QELROs. These QELROs, however, have the same level of mitigation ambition as pledges submitted under the Convention after the Cophenaghen Climate Change Conference.
The diagnosis with regards to other developed countries' is not very optimistic. Some countries that are not parties to the Kyoto Protocol are not likely to take part of a second commitment period, such as Canada, whose withdrawal from the Protocol will enter into effect in December 2012, as well as the US. Other countries that are parties to the Protocol, such as Japan and the Russian Federation, have expressed their intention to not participate in a second commitment period; and few others, such as Australia, New Zealand and some economies in transition, seem to still be considering whether they will participate, pending some domestic processes. Keeping in mind the fact that “big” developing countries are exempted from legally-binding targets under the Kyoto Protocol, some have calculated that parties currently willing to take commitments under the Protocol amount to less than 15% of the global emissions.
On the other hand, regardless of the fate of the second commitment period in Doha, the emission reduction pledges presented by over 85 developing and developed countries under the Convention since the Copenhagen Climate Change Conference will still apply in the post-2012 period. These pledges represent a broad participation of all global emitters. However, as AOSIS highlighted, many of these pledges are unclear, contain targets to be achieved with basis on conditionalities and wide ranges of possible reductions proposed by parties. Moreover, according to the UN Environemnt Programme (UNEP), these pledges, which are voluntary in nature, in aggregate are insufficient to limit temperature rise to 2ºC, the target agreed upon in the Cancun Climate Change Conference. To raise mitigation ambition, a workplan on ambition was launched under the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP). However, many developing countries feel that developed countries should show more commitment and point to a study of the Stockholm Environment Institute indicating that currently, developing country pledges amount to more mitigation than developed country pledges.
Even if adopting a second commitment period does not seem to be the solution to increasing the overall level of ambition of emission reductions, many countries still argue for “putting it on life support” pointing to the preservation of the rich set of accounting rules developed under its framework. The Protocol's accounting is based on quantified emissions allowance units (Assigned Amount Units, AAUs) for Annex I Parties with Kyoto Protocol emissions commitments. These units are held in national Kyoto registries, which are linked to one another through the International Transaction Log (ITL), a database that records the movements of all greenhouse gas units. The Kyoto Protocol's accounting system is also designed to link with national unit registry systems for domestic emissions trading schemes, such as the European Union Emissions Trading System (EU ETS).
Parties favoring a second commitment period also highlight the Protocol's valuable robust measuring, review and verification (MRV) rules for keeping track of emissions data and accounting for transactions under the three Protocol's flexibility mechanisms (Emissions Trading, Clean Development Mechanism and Joint Implementation); the rules developed for using the flexibility mechanisms; and the compliance procedures established to enforce the Protocol's rules. Some countries, like the EU, see the Protocol's second commitment period as a way to ensure the continuity of an effective multilateral rules-based system, including its flexibility mechanisms, and as part of a transition to a wider single global and comprehensive legally-binding agreement.
Regardless of whether the Protocol's rules are given continuity, the decisions and rules developed under the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA) will still apply. However, these rules, which were developed for governing the review of voluntary pledges under the Convention, mainly focus on reporting these actions through, inter alia, national communications, national inventory reports and biennial reports, according to COP 16 decisions. For ensuring environmental integrity without a common allowance unit, some believe that international coordination and transparency of accounting would be required, in order to avoid losing the benefits of using international tradable emissions units. From AOSIS' perspective, establishing -at least- common base years, common methodologies and common accounting rules is key to track progress toward global goals, assess comparability of efforts among Annex I parties, and ensure robust international carbon markets. Others, however, prefer a more country-driven system that provides increased flexibility for countries to develop baselines and objectives that fit within their national circumstances.
Overall, the fear of many developing countries about the possible burial of the Kyoto Protocol, is that the rules developed by the AWG-LCA's would not be strong enough to ensure “effective” action against climate change.
What is Required for Adoption of a Second Commitment Period under the Protocol?
In Durban, COP/MOP 7 mandated some specific work for narrowing down technical aspects required for adopting a second commitment period under the Kyoto Protocol in Doha. However, while discussions during 2012 made some progress, many technical and political issues remain unresolved.
Political issues at stake include interactions with the other elements under negotiation, particularly the post-2020 regime under the ADP. Many developing countries, especially those with medium sized economies and large emerging markets, strongly favor the Protocol's continuation. One reason for this is that the Kyoto Protocol has a strong basis on the principle of common but differentiated responsibilities, whereby a heavier burden on legally-binding emission reductions and provision of technology, capacity building and finance is placed on developed countries. On the other hand, many developed countries prefer to focus the work on the regime for the post-2020, which will be applicable “to all parties.” Balanced progress under the different elements under negotiation will therefore be crucial in Doha.
Concerning the technical issues, parties in Bangkok in September, held a detailed exchange of views on the options for each of the key issues to be addressed. These options were reflected in two informal documents: a AWG-KP Vice-Chair's non-paper on possible elements for a Doha decision adopting the Kyoto Protocol amendments, and a co-facilitator's non-paper on proposed amendments to the Kyoto Protocol. Many of the issues that need to be agreed upon are reflected in these documents. These issues include: the submission of QELROs; provisions for ensuring a smooth continuity between commitment periods; and rules for the use of excess units and the Protocol's flexibility mechanisms.
Submitting the final targets or QELROs
While some developed countries submitted their “provisional” QELROs, the final number, as many submissions explain, will be determined once all the outstanding issues regarding the second commitment period have been resolved. One of the determinant issues for QELRO definition is the length of the second commitment period. There are currently two main views on this issue. AOSIS, the Least Developed Countries (LDCs) and the African Group maintain that a five-year long commitment period would avoid locking-in the level of ambition and facilitate the updating of mitigation commitments on the basis of the fifth IPCC assessment report. On the other hand, the EU supports an eight-year commitment period with a mid-term review of QELROs, which would enable convergence with the post-2020 climate regime and avoid locking-in ambition.
How to ensure the continuation of the Kyoto rules in a second commitment period?
Ensuring the legal, technical and operational continuity between the first and second commitment periods is a critical issue to be addressed in Doha. To ensure legal continuity, QELROs or commitments from industrialized countries presented in a second commitment period have to be legally-binding as of 1 January 2013, when the second commitment period is due to begin. Adopting an amendment to the Kyoto Protocol could give these commitments the required legal force. However, if an amendment is adopted in Doha in December 2012, it will require ratification by parties through their - usually lengthy- domestic processes. A legal gap, therefore, seems inevitable at this time, as parties did not agree on an amendment early enough to allow for sufficient time for ratification.
A series of options could be employed to ensure legal continuity, including reaching agreement to apply the amendment provisionally, a solution used in the past in other regimes – for example, the 1947 General Agreement on Tariffs and Trade was applied provisionally for nearly 50 years until the establishment of the World Trade Organization, in 1995. However, some countries have domestic difficulties with carrying forward the provisional application. Other options, such as unilateral declarations, are also under discussion. The challenge is to provide legal certainty while taking into consideration national frameworks. However, in this case, many think that it is primarily a matter of political will.
Who could use the flexibility mechanisms in the second commitment period?
The Kyoto Protocol's three flexibility mechanisms are aimed at enabling Parties to access cost-effective opportunities to reduce emissions as additional to domestic efforts. To participate in these mechanisms, Annex I parties must meet some eligibility requirements, including having ratified the Protocol, calculated their AAUs, have a national system for estimation of emissions and removals and have in place a national registry. When adopting a second commitment period, parties will need to take a decision on these eligibility criteria.
A relevant issue concerning eligibility to use the flexible mechanisms is whether countries that are still party to the Kyoto Protocol but do not intend to sign up to a second commitment period- such as Japan- could use the flexible mechanisms. If there is agreement not to allow non-second commitment period Parties to access the flexibility mechanisms, their domestic companies could risk losing direct access to emission units generated under these mechanisms. This limitation could be a powerful reason for some developed countries to participate in the second commitment period. However, it is not so clear how this could work for the case of linking markets. This question becomes relevant particularly in light of the recent announcement that the Australian Government and the EU agreed to work towards linking both their carbon markets: the new Australian emission trading scheme and the EU ETS in 2015.
Carrying over units between commitment periods
The Durban outcome requests the AWG-KP to assess the implications of the carry-over of AAUs to the second commitment period and recommend appropriate action.
The carry-over of AAUs refers to a situation where a country, having reduced its emissions beyond its target during the first commitment period, can then carry-over or bank these surplus emission units, and sell or use them domestically to meet future mitigation commitments. It seems that some countries such as the Russian Federation, Ukraine and Poland, have large amounts of surplus units. UNEP estimates that up to 13 billion tons of surplus AAUs could be carried over to the next commitment period, which some estimate as three times the EU's annual emissions. If no restrictions are placed on the carry over of surplus AAUs, this could lead to no emission reductions compared to business-as-usual emission projections by 2020, unless the parties' targets are significantly raised to compensate for the excess in supply of AAUs. Parties have been discussing proposals for limiting the use of carry-over of AAUs.
Getting Ready for Doha
Doha promises to be a meeting with highly relevant tasks that will likely determine the shape of the regime that will apply for the 2012-2020 period. However, several weeks before the meeting opens, views remain divided regarding how to address a “robust” second commitment period under the Protocol and if providing a smooth continuation of its valuable rules is key for ensuring a strong climate regime. While the pending technical aspects that need to be answered for adopting a second commitment period seem to be clearly framed in the lead-up to Doha, as UNFCCC Executive Secretary, Christiana Figueres, said in Bangkok, “there are still some tough political decisions ahead,” but negotiations are undergoing “a greater sense of convergence that will (…) set a faster pace of work once this year's conference begins.” Consensus does exist on the fact that with only two weeks of negotiations scheduled and seven bodies meeting at the same time, a faster pace of work will be crucial for managing time and addressing all the pending tasks for “really” adopting a Protocol's second commitment period in Doha.
 Sivan Karthe and Peter Erickson, Comparison of Annex I and non Annex I pledges under the Cancun Agreements, Working Paper WP-US-1107, Stockholm Environment Institute, June 2011, available at http://sei-international.org/mediamanager/documents/Publications/Climate/sei-workingpaperus-1107.pdf, accesed on 21 September 2012.
 Analysis and technical papers were presented on options for addressing the surplus and carry-over of Kyoto units, QELROs expressed as percentage of base year and absolute emission levels, and implications of the implementation of decisions 2/CMP.7 to 5/CMP.7 on the previous decisions on methodological issues related to the Kyoto Protocol, available at: http://unfccc.int/meetings/bangkok_aug_2012/session/6957txt.php, last accessed on 3 October 2012.
 Available at: http://unfccc.int/files/meetings/ad_hoc_working_groups/kp/application/pdf/draft_elements_with_text__2012.09.05_at_16.30.pdf, accessed on 3 October 2012.
 Available at: http://unfccc.int/files/meetings/ad_hoc_working_groups/kp/application/pdf/awgkp_cofacil_nonpaper_19092012.pdf, last accessed on 3 October 2012.