Modalities for the accounting of assigned amounts under Article 7.4 of the Kyoto Protocol

Transcription

1 Modalities for the accounting of assigned amounts under Article 7.4 of the Kyoto Protocol Workshop on issues related to Articles 5, 7 and 8 on the Kyoto Protocol Bonn, 4-6 October 2001 Andrew Howard UNFCCC secretariat ahoward@unfccc.int

2 Scope of presentation I. Elaboration of assigned amount II. Registry requirements III. Compilation and accounting of emission inventories and assigned amounts This presentation is based on the: Annex II of the draft decision on Article 7 ( CNT ) in FCCC/CP/2001/2/Add.4, pages Para numbers in this presentation refer to this document. COP6.5 draft decision on the CDM, including on the CDM registry, in FCCC/CP/2001/CRP.11, pages

3 I. Elaboration of assigned amount The Article 3.1 commitment of an Annex I Party -8% x 5 Articles 3.3 and 3.4 Articles 6, 12 and 17 Compliance assessment < = > Base year emissions AA pursuant to Articles 3.7/8 Additions and subtractions CO 2 equivalent emissions during the commitment period 3

4 I. Elaboration of assigned amount Assigned amount pursuant to Articles 3.7 and 3.8 Assigned amount pursuant to Article 3.7/8 of a Party: Annex B percentage x base year CO 2 equivalent emissions from Annex A sources x 5 For bubble Parties (under Article 4), replace the Annex B percentage with the bubble agreement percentage. For Parties qualifying under the 2 nd sentence of Article 3.7, include net sources from deforestation activities. (para 1) 4

5 Establishing assigned amount pursuant to Article 3.7/8 Report for the establishment of the assigned amount to include: (submitted by Parties by 1 January 2007 at the latest) emission inventories, including base year selection LULUCF information assigned amount calculation national system description national registry description Review, 12 months Assigned amount pursuant to Articles 3.7 and 3.8 recorded and fixed for the commitment period (paras 2 and 3) 5

6 From establishment to compliance After establishment of assigned amount pursuant to Article 3.7/8: Additions (para 4) to assigned amount through: JI and CDM projects and emissions trading (Articles 3.10 and 3.12) net sinks from LULUCF activities (Articles 3.3 and 3.4) Subtractions (para 5) from assigned amount through: JI projects and emissions trading (Article 3.11) net sources from LULUCF activities (Articles 3.3 and 3.4) Retirement to demonstrate compliance with target (para 6) Assessment of compliance with target (para 7) (Article 3.1) Carry-over (paras 8 and 9) to the next commitment period (Article 3.13) 6

7 II. Registry requirements Units for accounting (para 10) AAU Assigned amount unit (AAU) assigned amount pursuant to Articles 3.7/8 issued into a Party s registry further AAUs can be issued/cancelled (Article 3.3/4) ERU CER Emission reduction unit (ERU) converted from AAUs as a result of JI projects Certified emission reduction (CER) issued as a result of CDM projects All units: one tonne of CO 2 equivalent 7

8 The need for system integrity Units can move between Parties and legal entities X Possible discrepancies: units are transferred that do not exist units are transferred twice transfers are made by non-eligible Parties The solution: an accounting system similar to the banking system for the flow of money 8

9 A usual bank account system Bank X Bank Y Bank Z etc Accounts for customers Customers Bank Transactions Savings account Cash account Loan account... Each unit is held in only one account at a time 9

10 The registry system under the Kyoto Protocol Transactions ERU Transaction log (operated by the secretariat) AAU CER Poland Germany Canada National registries (operated by Annex I Parties) Iceland CDM registry (operated by the executive board) A registry is a standardized electronic database for recording and tracking of units (ERUs, CERs and AAUs) (para 12) 10

11 Basic registry functions Issuance of AAUs into a Party s registry (para 16) GHG inventory of the base year Review Issuance of AAUs AAU AAU Canadian national registry Holding account of the Party Holding account of a legal entity Assigned amount pursuant to Articles 3.7/8 11

12 Basic registry functions Transfers and acquisitions under emissions trading (para 20) Poland Party account Legal entity A Legal entity B AAU CER ERU Iceland Party account Legal entity A Legal entity B 12

13 Basic registry functions Retirement and carry-overs Retirement (para 22) AAU CER ERU Units in retirement accounts not transferable Canada Party account Legal entity A Legal entity B Retirement a/c Compliance assessment Units in retirement account Unused units carried-over in holding accounts to the next commitment period (paras 24-25) > = < Emissions 2008 to

14 Further registry functions Issuance and cancellation of AAUs for Article 3.3 and 3.4 Net carbon sequestration ( ) adds to assigned amount (para 18) Issuance (subject to LULUCF caps) AAU AAU Cancellation AAU AAU Germany Party account Legal entity A Legal entity B Retirement a/c Net carbon emission ( ) subtracted from assigned amount (para 21a) Cancellation a/c 14

15 Further registry functions Article 6 joint implementation projects (para 19) Russia Party account Legal entity A Legal entity B Retirement a/c Cancellation a/c AAU JI project (conversion of AAUs to ERUs) ERU Japan Party account Legal entity A Legal entity B Retirement a/c Cancellation a/c Verification by host Party (track 1) or independent procedure (track 2) 15

16 Further registry functions CDM projects (Article 12) Distribution agreement CER CER CER CER CDM project CDM registry Pending account Share of proceeds (adapt. & admin.) CER CER CER CER France Party account Legal entity A Legal entity B Senegal Retirement a/c Certification of emission reductions by an operational entity Bolivia Cancellation a/c 16

17 Further registry functions Cancellation of units to strengthen targets (para 21b) Canada What: Cancelled units are removed from the system and cannot be used for compliance Who: schools, NGOs, individuals, etc Units in cancellation accounts may not be transferred or retired AAU CER ERU Party account Legal entity A Legal entity B Retirement a/c Cancellation a/c 17

18 Maintaining integrity and transparency Design features serial numbers > to keep track of the units account numbers > to identify the accounts the transaction log -----> to ensure the integrity of transactions accessible information > to maintain transparency 18

19 Maintaining integrity and transparency Serial numbers for units (para 17) Each unit has a unique serial number to allow recording and tracking of the unit AAU 01 CH ERU 01 PL CER 01 BO Commitment period Party of origin Unit type Consecutive number unique for commitment period and Party Number of the project 19

20 Maintaining integrity and transparency Serial numbers for units Serial numbers are consecutive AAU ERU CER 01 CH PL BO BO BO Commitment period Party of origin Unit type Consecutive number unique for commitment period and Party Number of the project 20

21 Maintaining integrity and transparency Account numbers (para 15) Canada Party account Legal entity A Legal entity B Retirement a/c Cancellation a/c CN 001 CN 002 CN 003 CN 485 CN 486 Party Unique number 21

22 Maintaining integrity and transparency Transfer example with the transaction log (paras 26-30) 1 Notification to initiate transfer Account in registry of Denmark 3 Transfer Account in registry of Iceland 1 Notification of discrepancy or no discrepancy Notification to initiate transfer Notification of completion or termination Transaction log (automated checks) Notification of discrepancy or no discrepancy 1 Transaction record, identified by transaction number: 01 DK transaction type serial numbers account numbers 22

23 Maintaining integrity and transparency Issuance example (paras 26-30) Denmark Party account Legal entity A 3 Issuance (eg. of AAUs) 1 Notification to initiate issuance 2 Notification of discrepancy or no discrepancy 4 Notification of completion or termination Transaction log (automated checks) 1 Transaction record, identified by transaction number: 01 DK transaction type serial numbers account numbers 23

24 Maintaining integrity and transparency Potential discrepancies (para 29b) The transaction log conducts automated checks for: units previously retired/cancelled duplicated units units not carried over from previous commitment periods eligibility of Parties / legal entities infringements on the commitment period reserve The transaction log ensures the integrity of all transactions Each unit is held in one account at a time 24

25 Maintaining integrity and transparency Publicly accessible information (paras 31-35) Account information (account type, holder, representative, etc) JI and CDM project information (on national registries and the CDM registry respectively) - name - location - reports / documentation Information on holdings and transactions, including on cancellations and retirements List of legal entities authorized by the Party (national registries) 25

26 III. Compilation and accounting of emission inventories and assigned amounts Party submits report at end of the true-up period (para 36) complements Article 7.1 reporting information on holdings and transactions for the grace period retirement amount of ERUs, CERs and AAUs added to other emission and assigned amount information in Database for compilation and accounting information for full commitment period facilitates comparison of emissions and assigned amount maintained by the secretariat (paras 37-40) 26

27 III. Compilation and accounting Reports forwarded to the compliance committee Annual report (para 42) (updates yearly balance of the retirement amount and emissions) Reports forwarded to the compliance committee enforcement branch, the COP/MOP and the Party Final report (para 43) facilitates the compliance assessment Units in retirement account > = < Emissions 2008 to 2012 If excess retired units, report indicates quantity for carry-over If excess emissions, report indicates level of excess emissions (percent of retirement amount) 27

28 Looking forwards Registries development beyond COP7 Technical standards on the exchange of data between national registries, the CDM registry and the transaction log through inter-sessional work? completed by COP8? Establishment of national registries by Annex I Parties Establishment of the CDM registry and the transaction log completed by COP8 by COP9? 28

29 Modalities for the accounting of assigned amounts under Article 7.4 of the Kyoto Protocol Andrew Howard UNFCCC secretariat 29