The international climate change regime

1. The international climate change regime International Environmental Law – JUR5520 28.03/11.04 2008 Catherine Banet, Phd Research fellow Scandinavian Institute of Maritime Law – Petroleum and Energy Department catherine.banet@jus.uio.no

2. Overview • Climate change: factual background • Towards an international agreement • The UN Framework Convention on Climate Change • The Kyoto Protocol • Implementation issues under the Kyoto Protocol • Post-2012 perspective and international negotiations

3. 1. Climate change: factual background Changes in temperatures, sea level and snow cover between 1850 and 2010 (source: IPCC Climate Change 2007): Greenhouse warming effect (source:www.combatclimatechange.ie)

4. Effect of climate change: The example of the Tuvalu Islands. The carbon cycle

5. International Panel on Climate Change (IPPC) (http://www.ipcc.ch/) • Fourth Assessment Report, 2007: • ”Global greenhouse gas (GHG) emissions have grown since pre-industrial times, with an increase of 70% between 1970 and 2004.” • ”The largest growth in global GHG emissions between 1970 and 2004 has come from the energy supply sector (an increase of 145%).” • ”A range of policies, including those on climate change, energy security, and sustainable development, have been effective in reducing GHG emissions in different sectors and many countries.” • ”With current climate change mitigation policies and related sustainable development practices, global GHG emissions will continue to grow over the next few decades.”

6. 2. Towards an international agreement – Climate change and international air pollution regulation • 1979: First World Climate Conference. • 1987: Montreal Protocol on substances that deplete the ozone layer. • 1987: Brundtland Rapport ”Our Common Future” (World Commission on Environmenta and Development). • 1988: General Assembly resolution. Climate as the “common concern of mankind”. • 1988: General Assembly resolution on climate change Res. 43/53. • 1988: Establishment of the IPCC. • 1990: Establishment of the Intergovernmental Negotiating Committee (ICE) for a Framework Convention on Climate Change. • 1990: IPCC first assessment report. Second World Climate Conference. • 1992: UN Conference on Environment and Development (UNCED), Rio de Janeiro. Time Magazine cover, 1988.

7. 3. The UN Framework Convention on Climate Change • United Nations Framework Convention on Climate Change (UNFCCC) (www.unfccc.int). • The general character of the Convention. • Entry into force: 21 March 1994. 192 parties (22 August 2007) • ”Ultimate objective” (Art. 2): “The ultimate objective of this Convention and any related legal instruments that the Conference of the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.” • Guiding principles to be found in the UNFCCC: common concern of mankind, intra- and inter-generational equity, precautionary principle, differentiated responsibilities, sustainable development, cooperation. • Imply different categories of Parties. • UNFCCC addresses both mitigation and adaptation.

8. Institutional framework: • Conference of the Parties (COP) (Art. 7): ”supreme body of the Convention”. • Secretariat (Bonn) (Art. 8) • 2 subsidiary bodies: • The Subsidiary Body for Scientific and Technological Advice (SBTA) • The Subsidiary Body for Implementation (SBI) • 3 expert groups: • Consultative Group of Experts • Expert Group on Technology Transfer • Least Developed Countries Expert Group • Negotiating groups: Group of 77, Alliance of Small Island States (AOSIS), Least Developed Countries, UE, Umbrella Group (evolved from JUSSCANNZ), Environmental Integrity Group, CACAM, etc. • Financial resources: specific provisions on transfers of financial resources to less industrialised countries (Art. 4.3). Proper mechanism (Art. 11), operated by the Global Environmental Facility (GEF).

9. Dispute resolution (Art. 13-14). Sanctions? • State liability issue. • On the way towards the Kyoto Protocol: • The Berlin Mandate • The Buenos Aires Plan of Action • The Hague • Marrakech Accords

10. 4. The Kyoto Protocol • Adopted in Kyoto, at COP3, on 11 December 1997. • Entry into force: 16. February 2005, after ratification by Russia. (Rule of Art. 25: 55 Parties to the UNFCCC, 55% industrialised countries’ CO2 emissions in 1990). Current number of parties: 177 (15.01.2008). • Scope of application: 6 GHG gases; sector/source categories (Annex A). See recent developments for implementation of Art. 2.2 (aviation and marine bunker fuels). • Objectives.

11. Commitments - 3 categories of Parties with differentiated commitments: • Parties included in Annex B of the KP; • All Parties; • Parties included in Annex II UNFCCC. • Implementation of the KP: • Marrakesh Accords (2001, COP.7); • the “rule book” of Montreal (2005, COP.11, COP/MOP.1); • Bali Action Plan (See Section 6 below). • Compliance tools including 3 flexible mechanisms, i.e. Clean Development Mechanism (CDM), Joint Implementation (JI) and emissions trading (see below). • KP institutional framework: • Meeting of the Parties to the Kyoto Protocol • Bureau • Constituted bodies under the Kyoto Protocol: • CDM Executive Board • JI Implementation Supervisory Committee • Compliance Committee

12. A legally binding requirement. Consequences of non-compliance? • Compliance regime under the Kyoto Protocol: • Art. 18-19 KP. • Body responsible for ensuring compliance: Compliance Committee, composed of 2 branches, the Facilitative Branch and the Enforcement Branch.

13. Kyoto flexibility mechanisms: • Clean Development Mechanism (CDM) • Definition: Article 12 of the Kyoto Protocol. • Objective behind CDM: ”2. The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.” • CDM in practice: ”3. Under the clean development mechanism: (a) Parties not included in Annex I will benefit from project activities resulting in certified emission reductions; and (b) Parties included in Annex I may use the certified emission reductions accuring from such project activities to contribute to compliance with part of their quantified emission limitation and reduction commitments under Article 3, as determined by the Conference of the Parties serving as the meeting of the Parties to this Protocol.” Invests in CDM project, transfer of technology, … Annex I Party Non-Annex I Party CERs

14. CDM project cycle: Parties involved in CDM: CDM Executive Board (EB) Designated National Authorities (DNA) Designated operating Entities (DOE) + Parties to CDM contracts Sellers Project Entity / Project owners Project developer Buyers Host country (MoU eventually) + Possible intermediary organs: brokers + others NGOs Conclusion: Multiple legal relationships between parties. Requires complex contractual architecture, in addition to technical requirements.

15. Eligible projects: http://unfccc.int/files/meetings/cop_13/application/pdf/cmp_guid_cdm.pdf • Regulatory framework: Decision 17/CP.7 ”Modalities and procedures for a CDM”, additionality, etc. • Included (based on pre-established or specially designed guidelines approved by CDM EB): afforestation and reforestation projects (Decision 17/CP.7), small scale, non-small scales, etc… • Excluded: f. ex. Nuclear. Issues related to large hydro. • Examples: energy sector (RES, cogeneration, methane leakages), industrial activities, energy efficiency, transport, agriculture. Some restrictions for forestry projects and land occupation. • http://www.cdmbazaar.net • http://cdm.unfccc.int/Projects/MapApp/index.html • Result: CERs • Definition: abatement of one tonne of CO2 equivalent. • Some figures: • Registered projects: 988; Issued CERs: 135,126,744. (As of April 2008) • Expected CERs (from registered projects until the end of 2012): > 1,190,000,000. • Main locations: Asia, South America. Unbalanced situation? • Legal issues related to CDM projects: CDM contracts, CERs trading, dispute settlement. • Complementary information: See CDM website of UNFCCC.

16. 2. Joint Implementation (JI) • Definition: Article 6 KP. Also project-based mechanism, as CDM. • Objective: ”1. For the purpose of meeting its commitments under Article 3, any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases in any sector of the economy, […]” • Requirements: See JI Guidelines §21 ”a Party included in Annex I with a commitment incribed in Annex B is eligible to transfer and/or acquire ERUs issued in accordance with the relevant provisions, if it is in compliance with the following eligibility requirements…” • JI in practice: • Location: Economies in transition, in particular Russia, Ukraine, Bulgaria (60% in 2006). • Results: Emission Reduction Units (ERUs).

17. 3. International emissions trading • Definition: Article 17 KP. ”The Conference of the Parties shall define the relevant principles, modalities, rules and guidelines, in particular for verification, reporting and accountability for emissions trading. The Parties included in Annex B may participate in emissions trading for the purposes of fulfilling their commitments under Article 3. Any such trading shall be supplemental to domestic actions for the purposes of meeting quantified emission limitation commitments under that Article.” • Objective: trading of emissions among Annex I Parties to the KP with commitments inscribed in Annex B. Marginal-abatement costs. • Regulatory framework: see Marrakesh Accords, Decicions 18/CP.7 ”Modalities, rules and guidelines for emissions trading”, ”commitment period reserve”, • Emissions trading in practice: • Who trades? Although formation different than for CDM and JI, open to legal entites other than Parties. • What is traded? Difference between quotas and permits, international and national trading, project-based and allowance-based transcations. Parts of Assigned Amounts, CERs, ERUs and removal units (RMUs) • Trading modalities? • bilateral (over-the-counter); • through market places: • Registry system: national registries + CDM registry, all under supervision of International Transaction Log (see next slide). • Legal issues: linking registries

19. 5. The EU Emissions Trading System • Joint fulfillment of obligations under the KP – the case of the EU • Joint commitment under the Kyoto Protocol; • The EU case. • Directive 2003/87/EC of 13 October 2003. • Operational since 1. January 2005. • Analysis Directive provisions.

20. 6. Post-2012 perspective and recent legal developments • Why are we talking about post-2012? End of KP commitments. • The modalities for negotiating a post-2012 regime: COP11/CMP.1 Montréal: decision to launch two negotiation processes: • Ad hoc Working Group on Further Commitments for Annex I Parties under the KP (AWG-4) • Dialogue on long-term cooperative action to address climate change by enhancing implementation of the Convention (The Dialogue). • Analysis of the Bali Action Plan. • Towards 2009: • 4 “building blocks” for negotiations: mitigation, adaptation, technology and finance. • A new “ad hoc working group on long-term cooperative action”. • Bali Action Plan + all the other decisions from the convention and the KP define a “2 negotiation tracks” process: the Convention track + the KP track. • Bali Action Plan lists themes to be discusses, structured around a common long-term objective (although no figure adopted), a common negotiation forum for all States (AWG), a rhythm for negotiations, a deadline (2009, Copenhagen).

21. Thank you for your attention!