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The Unfinished Business: Forest in the Context of the UNFCCC

The Unfinished Business: Forest in the Context of the UNFCCC. Budapest 21 May 2007 Charlotte Streck c.streck@climatefocus.com. LULUCF in the Kyoto Protocol. For the last decade, LULUCF has been at the margin of the negotiation of the major climate change related regulatory frameworks.

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The Unfinished Business: Forest in the Context of the UNFCCC

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  1. The Unfinished Business: Forest in the Context of the UNFCCC Budapest 21 May 2007 Charlotte Streck c.streck@climatefocus.com

  2. LULUCF in the Kyoto Protocol • For the last decade, LULUCF has been at the margin of the negotiation of the major climate change related regulatory frameworks. • There is a recognition of the LULUCF sector • As large source of GHG emissions (mainly through deforestation) • As mitigation opportunity through the uptake of CO2 from the atmosphere (sinks) • However the focus of the Kyoto Protocol as well as the EU ETS is on the reduction of fossil fuel based and industrial emissions, LULUCF is mainly seen as • Increasing the flexibility to meet negotiated or assigned targets (pro-sinks perspective) • Diverting the attention from the main goals of the regulatory instruments (anti-sinks perspective)

  3. The Intl’ Framework • UNFCCC: Refers repeatedly to emissions by sources and removals by sinks. LULUCF and industrial emissions regarded of equal importance. Call to promote sustainable management, conservation and enhancement of sinks. • Kyoto Protocol: Instrument to reduce combustion related emissions. • Accounting for LULUCF (after a lot of controversy) for A/R/D based on “gross-net” approach with the limitation that activities need to be human induced and take place after 1990 [Art. 3.3]. • Accounting for other LULUCF activities optional in the first CP [Art. 3.4] • JI includes LULUCF; under CDM only A/R activities are eligible • z The KP deals with LULUCF only partially by including some parts while leaving others out. This leads hardly to a satisfactory system of accounting for LULUCF emissions.

  4. Post-Kyoto negotiations Any post-Kyoto system needs to take full account of the impact of land-use change on GHG emissions and create incentives that rewards reduction as well as sequestration measures. There is a need for comprehensive system that rewards • Decreasing deforestation • Sustainable forest management • Restoring forests • Sustainable production and use of biomass • Soil carbon management in agriculture

  5. Avoided deforestation: Why is it excluded from the Kyoto Protocol • Scary scale • Uncertainty: methodological issues, leakage, permanence etc • Sovereignty issues and country specific circumstances • NGO opposition • Environmental, social and socio-economic effects

  6. The negotiation context has changed Differences compared to 1997 when the KP was negotiated: • Scientific basis more robust • Political will incl from developing countries to address the problem of GHG emissions from deforestation • Acknowledgement of the opportunity provided by the carbon market • Active discussion on various proposals, sufficient time for negotiating and compromising

  7. LULUCF in a future regime • Creation of an incentive mechanism to reward the reduction of emissions from deforestation and land degradation. Currently under negotiation. Options: • Fund based vs project based • National vs project baselines • Historical vs emissions projected for the future • Reform of the LULUCF CDM. Not yet on the agenda. • Correcting wrong incentives in LULUCF JI. Under discussion.

  8. LULUCF in Annex I countries • JI LULUCF projects follow the same rules as JI mitigation projects, no UNFCCC restrictions • The EU however has excluded JI from the EU ETS, effectively eliminating private demand for LULUCF ERUs • Further limitations through the ITL Rules • Short crediting period left (2008-12) • Insecurity because of missing post-Kyoto rules • Prices: the limited private sector demand means that prices for JI LULUCF credits remain low • Green Investment Schemes offer an opportunity, but so far countries are slow establishing such schemes • Credits for national forest projects (3.3/3.4 KP): RMUs Negligible Demand

  9. Link to the EU ETS • Link to KP established. CERs and ERUs eligible for meeting commitments. • However, LULUCF credits are left out (uncertainty, technological problems, concerns about “flood” of credits, env concerns). • Currently discussion of a revision of the EU ETS. Intention to consider LULUCF credits only in a context of the discussion of a post-Kyoto framework. Growing support for inclusion of LULUCF credits into the EU ETS: • Can help to achieve the objectives of the EU ETS by adding additional flexibility to the system • Allows to partly overcome the problem of the short allocation periods (5 years) • Replacement burden should be with the operator using temporary credits. Operator is in the best position to assess and mitigate the permanence risk and assume the replacement obligation.

  10. Questions? Charlotte Streck Phone +31 10 217 59 94 Mobile + 31 6 464 264 81 c.streck@climatefocus.com

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