Daily Report from Bonn III: Tuesday, 3 August 2010

Yesterday morning, the AWG-KP launched an in-session workshop on “numbers,” or “the scale of emission reductions to be achieved by Annex I Parties in aggregate and the contribution of Annex I Parties, individually or jointly to this scale.” To better understand these discussions, it will be important to answer the following background questions:

  • What is the “carbon market”/emissions trading?
  • What is Land-Use Change and Forestry (LULUCF)?
  • What are quantified emission reduction obligations (QUELROs) and Assigned Amount Units (AAUs)?
  • How should an aggregate goal for emissions reductions be set for developed countries?

The “carbon market”/emissions trading (also known as “cap and trade”), is a market mechanism for controlling pollution caused by emissions. In brief, each country has a limited number of emissions that it can sell or allocate to national firms. Higher-emitting firms can buy emissions (also known as “permits” or “credits”) from lower-emitting firms. This constitutes a trade, since the buyer is paying a charge for pollution, and the seller is being rewarded for having reduced emissions. However, the country’s total, or aggregate, amount of emissions cannot be exceeded.

LULUCF is a way of offsetting emissions by increasing the removal of GHGs from the atmosphere (by planting trees or managing forests), or by reducing emissions (e.g. curbing deforestation). Though it is relatively cost-effective, LULUCF activities remain hard to estimate or measure. The exclusion or inclusion of LULUCF in setting emission reduction targets for CP 2 has been fiercely contested in the AWG-KP. Developing countries have identified major loopholes in LULUCF accounting rules and are not in favor of their inclusion in emission reduction targets.

QUELROs are promises made by countries to reduce greenhouse gas emissions by a set amount. AAUs are a way of counting national emissions created by the KP. Currently, the debate is whether excess or surplus AAUs from CP 1 can be carried over into CP 2. The KP allows for countries that cut their emissions by more than their defined amount to sell excess AAUs to those that missed their Kyoto target, thereby saving the latter from having to pay a penalty. Developing countries largely condemn carry over of surplus AAUs.

There are two major opposing views to how an aggregate emissions target should be set. The first is for individual national pledges to be made by Annex I Parties; this reflects the Copenhagen Accord approach. The second involves a pre-determined aggregate goal, in which each Annex I Party must have an individual target that when added up not exceed the aggregate goal; this is the top-down approach, and is how the KP currently has it set up.

In the AWG-KP workshop, remarks made by Japan and Grenada clearly captured the division between developed and developing countries on this issue. Japan found the top-down approach not politically viable for Annex I Parties. As for the general aim to limit temperature increase below 2°C by 2020, he asserted that there are multiple options towards achieving this goal and that 2020 is scientifically arbitrary. He furthermore stressed that discussions of emissions reductions should include all major emitters (e.g. the US) and that these discussions are better suited for the AWG-LCA. By contrast, Grenada for AOSIS presented options for improving the aggregate level of ambition, including removing the surplus built into 2020 pledges and excluding LULUCF credits exceeding “business as usual” (BAU); removing AAU carry over from CP 1 and CP 2; removing LULUCF crediting; and agreeing to move to the top of parties pledged ranges. The Third World Network, among others, also highlighted loopholes related to LULUCF, emissions trading, projects-based mechanisms, and surplus AAUs. She stated that these will lead to Annex I Parties’ pledges exceeding rather than reducing emissions relative to 1990 levels (the base year for CP 1).

Regardless of how, it is apparent to everyone that the needed level of ambition to protect the world’s most vulnerable countries has yet to emerge. More remains to be seen as the AWG-KP breaks into contact groups on “numbers,” LULUCF, and other issues. However, our worst and very possible fear is that little progress from June will be made. Tomorrow, I cover the discussions occurring in the AWG-LCA, while also defining its core issue areas.

Your reporter in Bonn,
Jessica Chen, Program Coordinator