!

ewry day' Fairness in International Climate Change

For Nikhil, whose laughter and joy brightcns my
Law and Policy
I
I

I FRIEDRICH SOLTAU

qts CAMBRIDGE
EIJ.E
UNIVERSITY PRESS

I
CAMARIDGE UNTVERSITY PREsS
Canbrids., Ncv YorI' Mclbournt, Mrdrid Crpc Town'
Sinr.por., Sro P.ulo, D.lhi, Tok1o, Mcxico Cirv
Contents
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wvw.qlnbrid8c.ort
lDformrrion oo thk titlc: *ww.smbridgc.or8/gzSuoz+or6+l

@ Fricdrich Solreu rooe

List of Abbreiations and Actoflyms pqgetx
Thn publicadon i5 in coPyright. Subiat to statutorv crccpuon
rnd ro thc proririoru ofrclcvrnr collcctivc liccnring agi"mcn's'
Acknowledgments xlll
no rcproduction of.ny P.n m.y tal. Pl.cc wirhout th' writtcn
pcrmirsion of Cembridgc Univ.Bitv Prcss' Fairness in International Climate Law and Polic), I
r.l Introduction I
Fi6r publi3hcd 2oo9
Firsr papcrbrck cdiion zotl r.2 Why Fairness? 3
r.3 International Political Context of Fairness 5
A .rtrhp. r.@dfo, tbi' Pbli&tio, i, d"ailabL f'on tb' Blitnh I ibh'r]
r.4 Changing Nature ll
Library ofCoay." Ca,alogui,t in Plbli tk" lntz r.5 The Importance ofEconon[cs r4
1.6 Outline of the Book r5
Sotiu, F.i.drich, t971-
F.im.sr in int rn.donrl climatc changc la* end policv / Fricdricb Soltau'
2 The Science of Climate Change and the Energy Challenge 2t
Includa bibliogrephical rcfcrcnce. 2.r The Science of Climate Change 2l
rsrN 978-0-t1I-IIrot-9 (hardbtl) 2.2 Emission Trends 2t
,. Cf"i *..i.g - L* lcgirletion. Clih'tic ch'nsca -
and R'scarch - rrw rnd
'1 ofthe Intergovernmental Panel on Climate
lcgirlation. 1. Eovironmcnnl l.r', Lrr.rndioml r' Titl'' 2.3 IGy Findings
KX9r.S668 1oo9 Change (IPCC) 25
,a1.o1'6r1r. - d,.2a rco9oo89,tl
2.4 Climate lmpacts 27

tslN 97t-o-t2r-Ilo8-9 Hrrdbrck 2.5 Uncertainties and Feedbacks 33

rrBN 978-r-ro7-4o254-t P+.6.c1
2,6 The Science and the IPCC in Context 34
C:mbridgc Univcrciry Pr.'r har no rcrponsrbilitv for th< p.ls'tcn'c 2.6.1 Stabiiization Targets
or 39
Urr, fo. o,crod or third-perrv intcrncr wcbsncs rcfcrrcd to rn 2.6.2 The Energy Challenge 40
thn publicrdon, eod doc, oor 8u.!.nr.. th.t uy.ont'Dt on su'h wcbsit's t'
"..r'""y-of
2.7 Conclusion 48
or will rcmein, eccuratc or rPProPrirtc.

3 Development ofthe International Climate Change Regime 5o

3.r Introduction: United Nations Framework Convention on

Climate Change (UNFCCC) 5o
 3.r, Intrcduction 5r

3 According to the author of the leading commentary, the Conventior

proved disappointing to many.3 Efforts to include binding stabilization
Development of the International Climate Change Regime tar8ts, not to mention reductions, were watered down, leaving the Con-
vention onlywith vague commitments with respect to stabilization.a Other
shortcomings mentioned included a hilure to include an insurance fund
and technology transfer mechanism (sought by the developing countries),
the absence of market mechanisms such as emissions credits, and the
limited-obligations imposed on developing countries. Nonetheless, given
the diverging intrests of the parties concerned, th Convention was a
3.I. INTRODUCTION: UNITED NATIONS FRAMEWORK CONVENTION remarkable achievement. It unambiguously recogniz:s climate change as
ON CLIMATE CHANGE ( a thrat and sts the long-term objective to stabilize greenhouse gas (GHG)
UNFCCC)
emissions "at a level that \vould prevent dangrous anthropogenic interfer-
By the end of the r98os, the threat of climate change had entered the policy
ence with the climat system.", The process ofconvening regular conferences
arena. The basic scientific conclusions about the causes and dimensions
of of the parties (COPs) is one ofthe Convention's l<ey features, as it has led to
the potential human impact on the climate were suffcient to bring presure
improvements in tl'.e collection of information concerning emisions, the
to bear to take action at the international level., Momentum had begun reduction of uncertainties, and the work towald international standards.
to build with the release ofthe 6rst report of the Intergovemmental panel
Similarly, it was soon recognized that the Convention needed to be fleshed
on Climate Change (IPCC) and the holding ofthe Second World Climate
out, leading to the negotiation ofth Kyoto Protocol, under the auspices of
Conference in Geneva in November r99o. In December of that year, the
the COPs ofthe Convention, which in effect served as preparatory commit-
United Nations (UN) General Assembly established the Intergou.-..naji'
tees for the Protocol.
Negotiating Committee (INC), tasked with negotiating the Conyention.
This chapter provides a briefaccount ofthe genesis ofthe Convention and
The INC met in five formal sessions, working within a tight deadline to
an ovcrviewofits key provisions. The second sction traces the development
complete a text for adoption before the UN Conference on Enyironment
ofthe Kyoto Protocol and briefly outlines some of its key provisions.
and Development, cam monly known as the Earth Summit. The text ofwhat
was called the bN Framework Convention on Climate Change (IINFCCC)
was 3dopted on May 9, r99:, and opened for signature a month later at the 3.r.r. Geaub of the Convention: Negotiating History
summit.'
The international scientilic effort to study climate change was taken up
at the intergovernmental level with the formation of the IPCC in r9et,
rThc
<volving scicnrific undarsl.Ddint .nd early pL,lky responss ar. aov.rcd in Chro_
under the auspices of the World Meteorological Organization (WMO) and
tcr l. Tha dcvalopmanls prior to tha Convntion are (omprehcnsivcb, cotcrcd by Orniil
Bod.nsry, Irr. Uri.r' Na tiont hon.yotk Conve,iion ot Ctimate Chaagc A Co-^ the UN Environment Programme (UNEP).6 And while the discussions on
ury,
18 Y^rs JouBN^r o, INnTNATToN^L Law 4rr, 458_zr (rqq:) (hcrcinaftGr rcfcrrcd to as an international policy response to the emerging threat of climate change
bD^Nsry, Comm.fltary), 5e. ato Daniel Bodansky, pftlogue to rha Climorr Chong. Con-
grnriorr, in NEcorrATrNG CLTMATI CHINGD: Tx were at an arly stage, the UN General Assembly resolution endorsing the
Ixsrne Sionv or rxs fuo Co"";".r""
.t5, a6-{o (lrvirg L Minz.r & r. Anbr t onard eds., 1994) (hcreinafrcr rcfct d to as
BoD^Nsry, Prologur). This and tha following section draw on thesa two sourcas. 'Sa Boorxsr-t, Commcnury, zt qy..
" Ri.hrrd A. lcrr, U. S Bit t Gr.,]nhoul/- Bullt onl Gag!, Itr ScrBNcr 868 (r99r)i Ros.
'Unitcd Nations Framcwork Convcnrion on Clirndte Lhrnge. adopted on May t99g
An. '&r
Glutcl
rr UNTS 164,3r ILM 8rr (hcr.inafter referrea 1,, n, UNFCLC].
9, Climat Chang, Poct b R.ahd W u3 Nations - Tno, Begins Inititl Atta.k on
JG)'
Global Wdtmin8w ,ourN^L May rr, r99r, at 47.
t
&r uNFccc An. 2.^LLSrRsEr
5O 6s,.ch"pt.r r.
 52 Detelopnent of the Intefiatiotul Clilite Change Regime
establishment ofthe IPCC made reference to .,the identification and possi-
ble strengthening ofrelevant existing inrernational legal instruments having
a bearing on climate. . . [and] elements for inclusion in a possible future
international convention on climate."T yet this was far from a definitive call
to action. The year 1989 saw support for a convention mount, with a large
group of industrialized countries calling for negotiations, in the process,
increasing presure on the United States to chenge course and support such
an initiative.E When the United States changed its position, it was not
afterward tlut the UNEP Governing Council
adopted a resolution man-
dating UNEP to commence preparations for the negotiations. However, as
momentum for a treaty grew, so, too, did the view that such nelotiations
should take place under the broader umbrella of the Gerleral Assembly,
rather than the technical structures of UNEp and the WMO, in recognition
that climate change had implications beyond the environment.e Earlier,
developing countries had raised concerns that the IpCC process was dom-
inated by developed countries, whose cxperts wcre in the majority on the
panel.ro
Discussions a.lso took place on the form a convention might take, with
some favoring a general framework agreentent modeled on the UN Law of
the Sa Convention, supplemented by scparate protocols covering partic(-
lar atmospheric issues, such as climate change and ozone depletion.r Even
before the onset of formal discussions, however, the alternative approach
of a dedicated framework convention on climate change emerged as the
preferred option. lp a resolution adopteci in December 1989, the UN Gen-
eral Asxmbly'expressed support for the initiative to begin preparations for
negotiations on a framework convention on climate and called on states
to 'prepare, as a matter of urgency, a framework conyention on climate
aDd associated protocols containing concrete commitments in the litht of
priorities that may be authoritatively identilied on the basis of sound sci-
entific knowledge, and taling into accounr rhe specific development needs
7CA ttes.5j,
UN GAOR, Fo(y-Third Ses!., UN Doc. A/RES/41/'J (r9s6),
'S..BoD^Nsry, Prclogra, rt 54.
eDrlphirE Eorionc &
,.en Npen, E zftiing Cotin t bu! Difl.ftn.iar.d R.sponsibitity, in
Nlcortarrxc CLTxAT! CHANGE: Tx! INsTDF Srory or rxr Rro CoxviNtrox
.-(Irving L. Minz.r & I. Amber konard cds., roe4r.
'oS,.GA Re!.2o7. UN GAOR, Fony-Founh Ssr., UN t)^c. A/RES/4{/2oz
prrr.9 and op. para. 9.
rtSa
&ro^Nsxv, Prololrle, at J3.
3t. Introduaion t3
ofdeveloping countries."" This resolution also foreshadowed some of the
themes that would feature in the subsequent negotiation of the Conven-
tion and beyond, including the historical responsibility of industrialized
countries for antlropogenic climate change and developing countries' need
for financial support as well accss to, and transfer of, environmentally
sound technologies,'r A year later, the General Assembly established the
INC and mandated it to pursue "a single intergovemmental negotiating
lont process under tle auspices ofthe General Assembly," tasked with ngotiat-
ing a convention incorporating'appropriate commitments,"rr
A number of dtermining positions stood out and were instrumental
in shaping the Convention. First, throughout the negotiations, the United
States remained firmly opposed to binding targcts for emission stabiliza-
tion and reduction, which, in various forms, were advocated by the member
states ofwhat is now the European Union (EU). Although it favored a pared-
down treaty along the lines ofthe Vienna Convention for the Protection of
the Ozone layer, the United States came to accept a more detailed Climate
Convention. The question of targets and timetables bedeviled the proces,
until before the yery last session of the INC, just prior to which it was
resolved by means of a compromise crafted by the United Kingdom and
the United States, giving ris to what is now Article 4(z) of the Conven-
tion, which addresses the mitigation obligations of developed countries."
Targts and timetables were replaced with language, according to which
indusrializrd countries would report regularly on policies and measures to
reduce emissions, with the aim ofreturning emisions to their r99o levels.'6
Arguing that they lacked resourcs and nedd to ac{ord priority to achiev-
ing economic growth, developing countries called for access to financial
resources and technology to bring about a fair and equitable sharing ofthe
burden of environmental protection.
By and large, the industrialized countries, quite possibly aware ofthe cost
that mitigation efforts would exact from their economies, were unwilling
to agree to either specific mitigation targets for themselves or new and
t'Szpraootcro, et op. perr. rz.
'lSca i4 prcoblc prrr. 7 .nd op. p.r.s. {-r5.
ai+r ''GA R6. 2l1 uN GAOR, Forty-Fifth S.ts., UN Doc. ,VRES/ltrrz (rgso). Sec aiso Ahmcd
Djogblalf, T'hc Begi,//.ingt of an Intefiationd Clirnote Lar, i, MTNZER & LEoN^f,D, Jt/Pra
(r989),arpr..mbl nota 9, at ro2-
tt
Sza Dooexsxr, Conrrzr ntaryt zt agt.
'6uurCCC.,rn. r(rt(b).
 54 Development of the Intefiationol Clindte Change Regime
additional resource flows to developing countries. Discussion centered
around the role of the Global Environment Facility (GEF), with indus_
trialized countries insisting on designating ir as the funding mechanism,
while developing countries argued for thc creation of a dedicated financial
mechanism for the C,onvention.,T In the vjew ofdeveloping countries, the
Sovernance structure of the GEF meant thirt it was under the sway of the
developed countries, Third, among the dcveloping countries, who under-
scored the industrialized countries' historical responsibility for emissions,
there was generally little support for strong commitments or mechanisms
for implementation, with the exception ofisland and small low-lying states,
which banded together under the umbrclla of the Alliance of Small Island
States (AOSIS). Given their particular and immediate concern with the
effects of climate change, this group ofstates advocated positions consid-
erably more stringent than the bloc ofdevcloping countries known as the
G-77 and China.'8
3.r.2. Key Provisions ofthc UNFCCC
Bodansky concludes that the Convention falls somewhere between a Iiame-
work and a substantive convention, establishing more compref,.rri*
gations than the bare-bones form ofa treaty such as the Vienna Convention "iff
for the Protection ofthe Ozone Layer, yct hlling short ofthe detailed com-
mitments contained in the Moritreal Protocol to the Vienna Conyention.re
Fuuctionally, the provisions of the Convention can be roughly grouped
under four headings: introductory provisions, commitments and associated
provisions, institutions established by thc Convention, and final or boiler-
plate provisions relatiDgto amendments, entry inro force, and the like. Thus
the introductory part consists ofthe preamble, definitions, the objective of
the Crnvention (Article z), and principles guiding the implementation of
'7see Elizrbth Dowdeswel & Richard J. Kinle),, Ci,,Jrrudnd D atnage to the Statu, euo,
in MTNZER & LEoN^RD, supr4 note 9, at trj, r2,t-:5. Initially designated as th frnancial
mcchanism on an interim basis only, a later decis;on ofthe COp confirmed thc status of
the GEf as th Anencial mechanism of the Conrcntion. The srablishment and function
-ofthe
r6The
t
GEF covrd in more detail in Chapter 5.
G-7 and China, so called for its original number of members, but today a group
representing l32 developing countries in various LJN fora. including the climate changi
negotiations. Th chairmanship ofthe G-77 rotaies on a six,month basis. For a selection
recent statements made on behalf of C-zz, sr. http://wwwg77.org/.
.^of
'' See Booersxr, &rnm entary, al 496.
3t. Introduaion 55
the Convention (Article 3). Principles listed include the principle of the
protection ofthe climate system for the benefit ofpresent and future gener-
ations ofhumankind, the principle ofequitp the principle ofcommon but
differentiated responsibilities, and the precautionary principle. With respect
to the latter, it is evident how carefully the provision is balanced - it affirms
that lack of full scientific certainty should not be used as a reason to post-
pone mitigation measures; at the same time, such measures must be cost-
effectiv to ensur global benefits at the lowest possible cost. The principle
of the right to sustainable development is included. The linkage between
climate change and sustainable development is an important one, under-
pinning, as it does, so many debates between north and south on the con-
ceptualization of global problems, including climate change. Considered
overall, the phrasing of the principles reveals several, sometimes oppos-
ing, strands, For example, phrases emphasizing environmental integrity are
linked with a reference to cost-effectiveness ofmeasures, Similarly, mitiga-
tion measuresshould notcome atthe cost ofdevelopment for the developing
countries, and mitigation rneasures should not constitute an unjustifiable
restriction on international trade.'o The legal statusofthe principles isdiffi-
cult to define with certainty. Nonetheless, and despite efforts to dilute their
legal implications, the principles stand clearly as interpretive aids to the
Convention."
- The ultimate ob.iective ofthe Convention is clearly stated in Article z as
"the stabilization ofgreenhouse gas concentrations ata leyel that would pre-
vent dangerous anthropogenic interference with the climate system." This
level "should be achieved within a time-frame sufficient to allow ecosys-
tems to adapt naturally to climate change, to ensure that food production
is not threatened and to enable economic development to proceed in a sus-
tainable manner." The recognition ofthe need to stabilize GHG emissions
underlines the serious nature of climate change. The exact legal status of the
objective is, however, not entirely clear." While the objective is not phrased
obligation, it can convincingly be argued that it is akin to a collective
as an
commitment, as it encapsulates the rationale ofthe Convention as a whole.
'oSee, in reletion to trade, UNFCCC, Art. j(5).
" See Booexsxr, Cammertarl, at ,or (noting that the United States inserted the word gl1ide
and replaced the v/ord Stat r with Partiei to undercut the argument that the prin(ipls
were part of customary intemational law binding on al1 parties).
2:see
Boper,rsxr, Corrrn entatl, et 5oo,
s6 Deeelopneflt of the Inteflational Clhtate Ch|fige Regine
Various stabilization targets have been proposed, based on the avoidance of
major, irreversible events, and at the same time consideringwhat is techno-
logically and economicatly feasible. The objective cannot be understood as
an obligation to meet any such specific target, but rather as a commitment
to strive, in good faith, to stabilize GHG concentrations, including through
the implementation of the C,onvention and subsequent protocols. ln the
f,nal analysis, although the objective is explicit, it retains a Delphic quality.
Who is to say precisely what constitutes "dangerous" interference wilh the
climat system, and for whom?'13
The principle of "common but differentiated responsibilities" finds its
most explicit expression in the Convention.'a The principle is nota newone
in international lalr,, finding expression in, among othervehicles, provisions
ofthe General Agreement on Tariffs and Trade and the UN Convention on
the law ofthe Sea.'5 In tle context ofthe ncgotiations, the principle served
to bridge the positions of most developed countries, which sought some
form oftargets for stabilization and reduction, and the developingcountries,
which generally contended that it would be unfair to them to assume such
commitmnts. In the Convntion, the PrinciPle frnds expression in the
differentiation in commitments between Annex I, or developed country
parties, and non-Annex I parties. Differentiation exists with resPect to
Annex I parties' nonbinding goal to return their emissions to 1990 leYels
by zooo; more stringent and frequent reporting obligations of Annex I
parties; and provisions concerning the granting ofassistance, which also fall
within the an6it ofdifferential treatment, as articulated by the principle of
common but differentiated responsibilities.'6 The Convention provides that
a subset ofAnnexl parties - ssentially the members ofthe Organisation for
Economic C,o-operation and Development (OECD) in 1992,listed in Annex
II to theConvention - have a special responsibility to assist developing
countdesin meetingtheircommitments. Thus Article 4(3) states that Parties
2l
For a rcnt scientific contribution ad&essinS this issue, ,e?AvotDING DANGaious Cu_
urre Cxrxcr (lians Joechim Schellnhuber et al. eds., 2006).
aS., UNFCCC, Art.3(l) and Art. +G). The principle is further an.llzed in ChaPtcr 5. For
a detaild .nalysis ofthc principle in the climate change regime, Jet L^v^NrA R^raMANI,
DrrrsnENrr^r TRE^TMENT N INTPRNATIoN^L ENvTRoNMENT^L law 176-149 (2()06)
l
:tYoshiro Matiur, Some Arpcr of the kincipb of "Con lton b t Difrercatiat R.tpotltibili'
,iaq' 2 INrsrN flon^L ENVIRoNMENTAL AcRPMeNrs: Por-rrIcs, Llw exD EcoroMlcs
rtr, r5r-t: (zooz).
'6R^,e"^xr, srpra nore 14, I9r,
"t
jt Introd.uction 57
included in Annex II "shall provide new and additional financial resources
to meet the agreed full costs incurred by developing country Parties" in
compllng with their reporting obligations. Partiesincluded in Annex II are,
among other things, also required ("shall") to take all practicable measures
to promote and finance the transfer ofenvironmentallysound technologies,
particularly to developing countries.'!T The notion here is that in theabsence
of such measures, it would not be fair to expect developing countries to
shoulder their share ofthe mitigation burden.
The commitments contained in Article 4 form the core of the C,ooven-
tion, setting out obligations common to all parties as well as those applicable
only to industrialized or Annex I parties. In terms of Afticle 4(1), all parties
must prepare national inventories of anthropogenic emissions by sources
and removals by sinks and implement programs containing measures to
mitigate climate change as well as measures to facilitate adaptation. The
parties ale also required to promote sustainable management, conserva-
tion, and enhancement of sinks and reservoirs ofGHGs, including forests
and oceans. Under Article 4(z), the Annex I parties commit themselves to
adopting national policies and tfing corresponding measures on the miti-
gation ofclinrate change by limiting anthropogenic emissions ofGHGs and
protecting sinks. The Annex I parties are also required to report periodically
on the preceding policies undertaken by them, "with the aim ofreturning
individually orjointly to their r99o levels these anthropogenic emissions of
carbon dioxide and other greenhouse gases."a To the extent that this is a
binding legal obligation, it is a rather weak and diluted one.'e As the record
shows, where this obligation was met, it was, byand large, due to economic
factors and unrelated to mitigation raeasures.s
Article u, on reporting ("communication of information") of inventories
and applicable methodologies, reinforces, and is closely linked to, Article
4. While all parties must communicate their inventories and describe steps
taken to implement the Convention, Annex I countries must also include
in their communications detailed descriptions of policies and measures to
mitigate climate cha'nge. However, the reporting obligation is differentiated
':7uNFccc, Art.4(5).
'uNrccc, ,r.t. r("Xb).
29see
Boorrsrr, C.omm.ntary, zt 5t6 (exprcssing doubt as to whether they were legally
binding and c.llinS thcm a "quasi-target and quasitimetable").
thc cconomic collapsc in strtes of thc former Soviet Union and shuttering of
'oPrimarily
inemcient industrics in centril and Eastern Euro!rc and the runified Germany.
 iE Deyelopment of the Interuotionol Clitnt. Change Regine
for developing countries, which shall submit their first national commu-
nication within three years ofthe entry into force ofthe Conyention or of
the availability offinancial resources in accordance with Article
4(r). Least
developed countries (LDCs), a subset ofdeveloping countries classified by
the UN largely on the basis of very low per capita gross domestic prod_
uct (GDP), can submit national communications at their discretion.r The
provision relating to reporting forms a [undamental part of the Conven-
tion reporting and monitoring are vital to measuring progress. They also
as
facilitate the development of common stand.rrds and build trust amoog the
parties. Reporting and monitoring is a mainstay of multilateral environ-
mental agreements, as is true of treaties in other spheres such as human
rights. And while the Convention does not explicitly empower any of its
institutions to review compliance with its provisions, the COp has elab-
orated a process of in-depth expert reviews of Annex I parties, national
communications.r'1 Finally, as they serve to facilitate rporting, the provi-
sions covering coopration on research and observation and education and
training should alrc be mentioned here.i
A third key part of the Conyention consists of the articles relating to
the institutional arrangements, namely, the COp and its subsidiary organs_
for scientific and technological advice and implementation as well as thi
financial mechanism. The COP, as the supreme body ofthe Convention, is
empowered to make decisions to promote the effective implementation of
the Convention, including to "eiercise such other functions as are required
for the achievement ofthe objective of the Convention." Thus, aside from
the enulnratd functions, the COP is enrrusted with such open-ended
powers ncessary to implement the Convention, It is also provided that
the COP shall agree on and adopt by consensus rules ofprocedure.rs This
stipulation had the result that parties who did not support the ob.jectives
of the Convention could block consensus on the adoption of the rules
of procedure, which was the case at rhe first COB with the result that
the rules of procedure have, at every meeting, been applied, without ever
IUNFCCC, An. D(r).
rrSca Wcrkmau, hmpliancc and the Kyoto protorolt Building a Backbon into o
Jacob
Fhxiblc Rcgim.,Yz r-toox op IxaERNArroN r ENVTRoNMENT^! L^w, vol 9, 4s,6j-{6
(funr Bruan& & Ellcn Hay Gds., 1999).
nSr. UNFCCC, Art. j and Art,6.
rSa UNrCCC,,Lrt. 712;1m;.
rtUNFCCC, Art.
7(2)(k).
j.a. The Kyom kotoal 59
having been formally adopted.{ Exponents of delay and obfuscation were
thus handed a veto becaux - in the absence of voting rules - the rule of
consensus applies. Creatiye accommodation and skilful chairmanship have
thus proved key to overcoming this impediment. The Conyentiont unhappy
status quo concerning the rules of procedure was also imported into the
Kyoto Protocol.rT
3.2. THE KYOTO PROTOCOL
Adopted in 1997, the Kyoto Protoc,)l had existed in something ofa state of
limbo after the decision ofthe United States not to ratiry the instrument.rE
A significant new chapter in the field of climate, environment, and energy
was opened with the decision, in zoo4, ofthe Russian Federation to ratify
the Protocol. With Russia's rati6cation, the Protocol cleared its 6nal hurdle,
ntering into force on February 16, 2oo5.Y It buil& on the UNFCCC by
setting binding emision targets for Annex I countries to limit or reduce
their GHG emissions. Overall, tle Annex I countries that have ratified the
Protocol are required to reduce tleir emissions by 5.2 percent relative to r99o
emissions, Parties must meet thir targets at the end of the commitment
period, from zooS io zorz.
The Protocol contains a number ofinnovations. ln terms ofinstitutional
design, the mechanisnr for monitoring and enforcing compliance is unique
sscb.sti.n Ob.rilur & Hcrlnan E. Ott, fB! Kyoro ProrocoL: INTETN^rroN^LCr-rM Ts
Poucy ror rxr 2rsr Crl{rury ,p, ,t6 (1999). Art. 17, concamittg protocol5 to lhc con.
vcntion, docs llot slrcciry pro<cdur6 for tfu .doption of such instrum.nrs, which mc.nt
that partias wcrc rcfcrcd brck to thc rulcs ofproccdurc ".pplicd" but not "adoptcd. " This
.ff..-tiv.ly cxtcnd.d thc v.to to thc dccision on thc adoption of thc Kloto Protocol. For
thc tcxt ofthc draft ruL! ofprocldur!, rar Orc,{Ntz^Tror^! M^rrErs, ADoprloN oi rltE
RULIS op PnocEDUrE, NorE By rB! SEcrEranrar, FCCC7CP 996/2 (1996).
TTUNFCCC, Art. ll(t), st t6 th.t "thc rulcs of proccdurc of thc par,
Conferencc of th.
ti.s. . . shall ba .ppliad mutati. mutandiJ undar this P.otocol, cxc.pt .s may ba oth.rwijr
dccidcd bv conrcnsur."
$Kloto Proto@l to thc United N.tioni Fremcwo.k CoN.nrion on Climer. Chang.,
Dc..mb.r rr, r97, 2303 UNTS r48,37 ILM 22" t xt .yriLbL at hnpy'/u c&.int/kyoto_
protocouitcmJ2aro.php (harainaftar rcfcrrcd to rs tha Protocol).
'UNFCCC, Art.25G), stipdatas tb.t cntr), into forca is condition.l on retifrc:tion of
,t countri.i .nd r.prc.cntinS .t lc..t ,t Frc.nt ofcor cmi.,sions in r99o, thc basc ycar for
lha trc.t),. Aa ofoctobar 15, ioo8, r82 countri6 and onc ragiond intgretion orgenization
had ratfi.d or .cacdad to tha Protoaol. Austr.lia dapositad its initrumcnt of.ccassion at
thc Thirtccnth Confcrcncc ofthc Parties in Brli in zoo7, lcaving th. United Statcs th. sole
industriali2.d country not to havc r.tfi.d th. Protocol.
6o Detelopment ol the Internatiokal Clinate Change Regime
among multilateral environmental agreentcnts. To a significant degree, the
Protocol itslfconsists ofan outline so that considerable time and effort was
required to finalizethe rule book necessary to implement its provisions. That
process is essentially complete. Under provisions for a ,,prompt start,,'key
aspectsofthe Protocol, such asthe CIean Development Mechanism (CDM),
began to operate before its entryinto force. A key innovation ofthe protocol
is the establishment of the so-called flexibility mechanisms, which consist
ofemisions trading between Annex I countries, joint implementation (rt)
between developed countries, and the CDM, which links carbon reduction
efforts with developing countries by making it possible to earn credits for
projects implemented in developing countries. Importantly, the CDM is
uot designed solely to accomplish carbon reductions, but is also intended
to help developing countries achieve sustainable development.ao The next
section provides a briefaccount ofthe Protocol's negotiating history.
3.2.t. Negotitttitg Histoty
The Protocol isthe resultofmore than two years ofpreparatory negotiations,
culminating in a down-to-the-wire final negotiating session.4' The seeds fog
the Protocol were sown by the Convenriorr.
.fnui
UIrJfCCC Anicle +(uj
provides that the COP shall, at its first mecting, reyiew the adequacy of
the aim to return GHGs to r99o levels by the year uooo and to consider
next steps. Pro.iections indicatid rhar it was very unlikely that Annex I
parties were gqing to meet that goal.41 It $'as also evident that commitments
with a horizon of zooo were rlot suflicient to combat climate change in
a meaningful manner. Given the work of the IPCC, policy makers were
also cognizant that stabilizing GHG concentrations would require more
aggressive mitigation action. Thus, when the first COP (COp-r) met in
Berlin in April 1995, therewas realization that further commitments would
a 'JSeaGnunr er el., GurDs ^ND AssEssMENT, at 46.
be required, a conclusion that was opposed by oil- producing and -exporting
countries and some powerful interest groups such as the U.S. industrial
@
Prot*ol, Art. 12(2).
'tT\,vo wtll-known books on thc Kyoro Prolocol are OsERrBtn & Orr, r,.rpra not. j6
(hcrcinaftcr rcferred to asOBErrHlir & Orr,lNrr:RN^rroN^LCLTMATE PoLrcr);Mrcx^El
Gnuar pr ru, Txr Kyoro PRorocol: A Gurr)r AssEssMsNr (1999) (hcreinafter
rcfarrcd to as Gnusr rr eL., CutDr ^ND
AssEssMENr),
4'frrsr Rsvrew or lxroa,MATroN CoMMUNI.Al
^ND
rD By EACH PARTy INCLUDED rN ANNEX I
ro THE CoNvENrroN, LrN Doc. A/AC.2J7l8r (r99a).
3.2. 1'he Kyoto Ptotocol 6l
lobby.'r Nonetheles, at COP-r, pa ies reached an agrement coined the
Berlin Mandate, which set in motion a process to reinforce the Convention's
commitmentsbymeans ofa protocol or other instrument, with the objective
ofelaborating policies and measures and setting quantified limitation and
reduction ob.jectives ("targets") within specifred post-zooo time frames.{ It
was also decided that the negotiations on the protocol should be completed
in with a view to adopting the resulrs at the third sssion ofthe COP
1997,
Developing countries contended that in accordance with the principle
ofcommon but differcntiated responsibilities, the process leading to a new
instrument should not introduce any fresh commitments for them. Indus-
trialized countries' (reluctant) acceptance ofthis position was an important
factor in reaching agreement and in shaping the instrument that emerged
from the negotiations. ([n the explicit exclusion ofcommitments for devel-
oping countries lay seeds of the fateful U.S. Senate's Byrd-Hagel resolu-
tion, which, by a vote of 97-{, reiected Senate ratifrcation of any agree-
ment notcontemplatingcommitmentsfordevelopingcountries.) Following
the Berlin meeting, a negotiating body, known as the Ad Hoc Group on the
Berlin Mandate (AGBM), was established to oversee the negotiation ofthe
new insrument. The AGBM met eight times between 1995 and 1997 and
produced a compilation text in time for COP-3 in Kyoto.
Countries participate in the climate change negotiations as members of
ofle or other grouping.{t The largest, and the oldest, is theG-77, which today
counts r3z developingcountriesas members..6 China isan associate member
and works closely with the group so that statements are usually made "on
behalfofthe G-77 and China." lt throughout the UN system, and
is active
the country holding the six-month presidency ofthe group usuallyappoiuts
individuals as spokespersons on a particular issue, or forcertain negotiating
"Decision r/CPl, in RE?oar op rtla PaRTrEs ro rHE CoNvENTToN oN rrs FrRsr SEssroN,
Addndum, P.rt IIi Actior, T.k n by the Parties, FCCqCPAggt/7/Add.r (r99s). For details
on th. Berlin Mand.lc .nd thc AGBM, ree Gruss sr GurDE aND AssEssMENr, at
^!.,
4l-6oi OBErrH0i & Orr, INTEnNATToN^L CLTMAT8 PoLtcy, at 4J-j4.
"The UNFCCC sccrarrirt has a us.ful [ote on th. vrrious groupitgs on its web site ar
http://unfccc.int/p.rtics-and_obs.rvrvpartics/n.goriarint_Jroups/itms/2n 4.php.
Morc d.tails on th. p.rty groups end their ncgoti.ting positions and influencc can be
found in F^rxex^ YenrN & JoANNA DEPLEDGE, THr INTrnNlrtoNAL CLrM^TE REGTME:
A GUIDE ro RuLEs, INsrrrurtoNs PnocsDurEs 34-46 (2oot).
16At ils founding in rq64, in thc contaxi
^NDofthc UN Confcrcncc on Tradc and
Development,
the group had . membership of77 countries. Membership grew in the following decades,
as more countri.s att.ined ind.p.ndenc andjoincd th. UN.
62 Development ofthe Intenational Clinate Change Regime
sssions. The group houses the diverse interests ofcountries ranging from
membrs of the Organization of Petroleum Exponing C.ountris (OPEC)
to small island states. Sometimes certain developing countries will pursue
their interesr through smaller groups, such as AOSIS, a grouping of43 low-
Iying and island countries, and the LDCs. AOSIS was formed during the
negotiations on the UNFCCC. The member states ofthe EU negotiate as a
bloc,led by the country holding the Union's rotating six-month presidency.
The Umbrella Group is loosely organized and brings together non-Eu
industrialized countries, usually Australia, Canada, Iceland, |apan, New
Zealand, Norway, the Rusian Federation, Ukraine, and the United States.
The Umbrella Group evolved out of thc IUSSCANNZ coalition (|apan,
United States, Switzerland, Canada, Australia, Norway, and New Zealand),
which became active during the Kyoto Protocol negotiations at COP-3.
The Umbrella Group countries share an interest in advocating for cost-
effectiveness and flexibility in the development and implementation ofthe
climate regime. A fairlynewgrouping is the Environmental lntegrityGroup,
consisting of Mexico, the Republic ofKorea, and Switzerland.
The key isues in the negotiating process - thc AGBM - that would cul-
minate in the Kyoto Protocol can be grouped under three broad headingg.
(r) specific policies and measures that might be included; (2) targets, or
"quantified emisions limitations and reduction obiectives," in the nego-
tiating jargon; and (3) developing country concerns relating to financial
support and technology transfer.aT At the instigation ofthe EU, the Berlin
Mandate compitted the parties to elaborate policies and measures for mit-
igating climate change, ranging from energy efficiency appliance labeling
through to carbon taxes. After intemal wrangling, the EU submitted a list
of policies and measures, some of which were intended to be mandatory,
but this "command and control" regulatory aPproach was re.iected by the
United States, which preferred to retain flexibility with respect to choice of
mitigation mechanisms.d The EU proposals did not garner much support,
with th OPEC states especially emphatic to exclude carbon taxes. A turning
point came at COP-2, when the United States spoke out in favor ofbinding
emission reductions, taking the wind out of the sails of EU's arguments
for mandatory policies and measures. The watered-down version of the EU
lTSeeGruan pr er., GutDE ANDAssEssMENr, al 62.
dFor more details,
see O8ETTHUR & O11,INTDRNAI toN^r. CLIM^18 PoLIcY, at ro3F{
3.2. The Kyoto Protocol 63
proposals is contained in Article z. A few years later, in an audacious pol-
icy about-face, the EU embraced binding targets and market mechanisms,
establishing a EU-wide emisions tading scheme in uoo5.
COP-z was held in Geneva in early luly r99r. The IPCC's &cond Assess-
ment Report (SAR), officiaily published in June, concluded, "The balance
of evidence suggests that there is a discernible human influence on global
climate." The Geneva Mrnisterial Declaration endorsed the SAR and stated
that it should provide a scientific basis for strengthening action, particularly
action by Annex I parties to limit and reduce emissions ofGHGs. The dec-
laration also noted several findings ofthe SAR, including that achieving a
stabilization ofatmospheric GHG concentrations at twice preindustrial lev-
would eventually require global emissions to fall below halfof 1995 levels.
els
The Geneva Conference also saw an about-fac b), the United States, which
changed the dynamic of the negotiations when it announced support for
legally binding commitments, With this, it became clear that despite some
lingering objections, binding coinmitments would be a feature of whatever
instrument eventually was adopted..e ln retrospect, it is somewhat surpris-
ing that, until well into the AGBM proces, it was uncertain whether the
emission tartets would be legally binding or fiamed as so-called soft targets,
similar to those in the Convention.to
The next sction provides an overview ofthe key provisions ofthe Pro-
tocol, For practical purposs, the sction focuses on analfzing the most
relevant provisions, providing details ofthe negotiations, where relevant.
3.2.2. Key Provisions
The basic structure ofthe Protocol may be summarized briefly as follows.
The substantire obligations of industrialized (Annex I) countries are set
out in Article z (policies and measures), Article 3 (emission target and
timetable), Article 4 (joint fulfillment by a group of parties), Article 5
(inventories and methodologies), and Article (reporting). Article ro largely
7
restates the Convention provisions on cooperation and national communi-
cations. Article rr essntially repeats Convention Articles 4(3) and u, pro-
vidingguidance toAnnex II panies on financing for developing countries to
f,Scc Gruu rr rr,., GvrDrAND AsssssxsNr, at flpJt.
tosra Ollrrror & Orr, INTBTNATToNA! CrtMATr Polrc"r, at 49.
 64 Deyelopment of the lnternatioru Clintte Change Regime
carry out their inventory and reporting obligations. The institutional rols
of the COP, the Secretariat, the subsidiary bodies, and rlated matters are
dealt with in Articles 9, 13, u, rj, and 16. The market-based mechanisms
designed to asist Annex I parties in meeting their obligations to reduce
GHG emisions are covered in Article 6, Article 12, and Article 17. Article rg
requires the development ofcompliance procedures and mechanisms, Arti-
cle 19 makes the dispute resolution provisions ofthe Conyention applicable
to the Protocol. The legal boilerplate relating to ntatters such as amendment,
entry into force, and so forth is covered in Articles 20 to 28.
Arricle z(r) sts out a menu of policcs rnd measures to be adopted by
Annex I countries, which are phrased in no nbind ing terms and qualified (.,in
accordance with its national circumstanccs" ). The policies covered include
enhancement of energy efficiency, protection and enhancement of sinks
and reservoirs, development of renewablc florms of energy, and reduction
or phasing out of market imperfections and subsidies that run counter to
the objectives of the C,onvention.t,
Article z(u ) calls on Annex I parties to pursue the limitation cr reduction
ofGHG emissions from aviation and marine bunker fuels, working through
the International Civil Aviation Organizrl ion ( ICAO) and the Internationa]
Maritime Organization (lMO), which arc rhc inrernational organizations
that deal with thes sectors. International bunker fuel emissions wre not
included in Annex I parties' Kyoto targets, Iargely because no agreement
could be reached on how to dscribe responsibility for such emissions.rl
Accordingly, while Annex I partles musr tally these emissions in their GHG
inventories, they are excluded from national totals and are reported sepa-
rately. The issue continues to be on the agcncll oIthe protocol's Subsidiary
Body for Scientific and Technological Atlvicc (SBSTA), which has discussed
matters related to improving the monitoring and accuracy of emissions
international bunker fuelsaswell as liaising with ICAO and lMO.ri For their
part, these organizations have been studying the issue but have not moved
toward control measures.t{ Driven by growth in air trayel and international
t'SrcUNFCCC, A.t.
2(r)(e).
trSaa Or!f,tt Ur & Or-r, INTTTNATToNA! CLtM^T[ poLtcy, nt lo7-8.
i3Slc Mprxooolocrcer
IssuEs RrL TrNc ro EMrssroNs rroM INTTTNATIoN^! Avr^-
TroN M f,mrME Tr^rsporr, NorE Ey rHr. Sr(:xr r^Rr^r, FCCC/SBSTA/2oo4IINF.5
^ND
(2oo4).
lfhc Thirty-Sirrh ICAO Air.mbly .stablished a group ro devclop a progrln of action
on climatc <hangc and int.mational .viation, but parties could not aircJon a ptoposel
j,z. The Kyoto kotoal 6j
trade, both aviation and nraritime emissions are rising rapidly so that regula-
tion under future international climate policywillbe important.ti Emissions
from CO, rose about 68 percent btween r99o and zooo.s In addition, var-
ious factors amplifr the effect of emissions from air travel: a spcia! report
ofthe IPCC on aviation noted that while aviation was rcsponsible for about
z percent ofCO, emissions from human actiyities, it ac{ounted for an esti-
mated j.j percent ofclimate change.:z Given the lack ofavailable substitutes
for aviation and marine bunkers, efficiency improvements are the focus in
both transport sctors.t8 With respct to aviation, the IPCC has stimated
that fuel bum could be reduced by 6 to r8 prcent with better operating
measures, particularly air traffic control.
The agrement on binding quantified cmissions targets and a timetable
for their achievement reprcsnts the heart of the Kyoto Protocol. Under
Article 3, Annex I parties, as a group, committed themslves to individual
and differentiated emission targets, which they would have to meet with
a view to reducing their overall emissions of the applicable GHGs by at
least , percent blow l99o levels, The indiyidual targets, relatiye to the r99o
baseline, are inscribed in Annex B to the Protocol. During the negotiations,
various targets were proposed, rcme for specific gases, but the introduction
to cndorr ami$ions trrding, Thc rcsolution adoptcd provides that emissions trading
s(iamas should only ba implcmcntcd with mutual conscnt of tha states concemed. See
-C,oFsoLrDATED Sr TsMsNr oF CoNTTNUTNG ICAO PolrcrEs Pr crrcEs RTL TED
ro ENVTRoNMENT^L ProrEcTtoN, Als. Ras. 436-22, .ppcndix.s ^ND
K and L (2oo7), compilcd
in RrsolulroNs ADoprrD ar tlrr j6Tx AssEMBlv, Provisiond Edition (Scpt, 2oo7). At
thc regional lcvd, thc luropc.n Commission has propos.d bringing ayi.tion, induding
flights into rnd out of th. EU, und.r th. Europ.n Union Emision Trading Sclrcme,
Saa Cor,rvrssrox or nl! Eunoprrx Couuunrrrss, Pnoposal- pon A DrrEcrrvE op rIlE
EuRopEAN Paf,ltlMENr rxo or rae C,ouxcrl AyENDrxc DrrlcrryE 2oor8/Ec So
ro INGLUDE Avr^TroN AcrrvrrrEs r\ TfiE ScnEME lof, GraENBousE G^s EMrsstoN
^s
ArLow^NcsTr
DrNG wrrxtx rnrCoxMuxrrv, COM(2006) 6tE (Dc.20,2006). Dspite
opposition from airlin6, it raam3 th.t thc EU gowmmcnts will adopt an amcn&d version
ofth. propoel. Sc. Jamcr K.r,iltt, Plan on E'/l.ittbns Hir,5 a, U.S.-E!rop, Ri6, Nsw yonl(
TrMrs, Daccmbd 21, 2oo7.
lJMrcnrl oex Eurx rr AL., AN ANALysrs oF O?Trors lor INcLuDrNc INrErNlrroNAL
AvrATroN aND MlrrN! ExrsstoNs rN A Post-zo!2 CuM.ATr MrrtcATroN RsclME, Ncthcr-
Lnds Envio n.nt Agcncy R.pon, MNP Rrport 5oou4oo7/2oo7, lJ (roo7).
tolxrlecorsrxxpxrl Prxe! ox Cr.rx.rrc tHrxce, Cux-erz CxrxcE 2oo7: Mrrrc^.
_
TroN. Coilr iuatoN or Worxrxo Group Ill To rHB Fourrn AssrssxENr fupoxt oF
rB! IttErcovrrNxDNr^L PAxrLoNCLtx^T! CtlANG! ljo (Ban Matz ct d. cds., zooz).
tTIPCC Srrcul R:rorrr AvurroN IND TxE GroB^L ATxospnEns 6, 8 (Joyca E. pnnc
ct d. .ds., 1999).
sTh. uJ. of biofu.lr in.vi.tion i5 b.ing oplor.d. S.. P'/;trI.l W.tyjn t, Ailin Flia 0747
oa Fucl lnm a Phnt,'Nav YoRx Tryrs, Da(.Inbar ,o, 2ooE, .t Bt.
66 Development of the Intenationul Cli ate Change Regime
ofdifferentiated targets helped to bridgc the existing differences. While the
EU advocated that an earlydate for meeting targcts should be met- 2oo5 was
proposed - the United States preferred zoro. The rump ofthe EU proposal
found in Article 3(z), which provides that each Annex I partyshould,
is to be
byuoo5, have made "demonstrable progress in achievingits commitments."
From a hirness perspective, it is interesting to note that, apParently, there
was never much question that targets would be formulated with reference
to, and largely on the basis of, historical emissions; alternatives, such as
indexes calculating emissions relative to PoPulation or GDB were never
seriously considered.5' ln the first place, a recognition of political reality,
the selection of r99o as a base year for cntissions can also be seen as an
acknowledgment of acquired rights, at the expense of fairness principles
based on responsibility (polluterpays) or equal per capita shares. The choice
of a base yea6 against which emission reduclions are measuled, also has
distributional consequences.6o By the time of the adoption ofthe Protocol
in 1997, the economies of Eastern Europe and the former Soviet Union
had undergone severe contraction, with emissions levels much lower than
they had been in r99o. Similarly, the reunification of Germany, and the
shuttering of les efficient East German industries, acted as a brake oy
emissions, making r99o a favorable baseline. The same was not true for less
economically advanced developed countries, which were in the process of
catching up, such as lreland or Spain, or the Llnited States, which saw more
rapid economic growth after 1990 than most EuroPean countries.
Other kcy isgues ctncerned which sources (gases) would be covered and
how to account for sinks (forests). With respect to sources, neSotiators
opted for a so-called basket ofgases, or a comPrehsn5ivs 3pplqach that, in
addition to the three GHGs - carbon dioxide, nrethane, and nitrous oxide -
includes three trace Sases that have very powerful warming effects. The
Protocol thus defined and put into Practice thc comPrehensiv approach to
GHGs previously adopted in the Convention The basket ofgases approach
introduces a degree of "what" flexibility because parties can select the gas
or gases on which to concentrate their mitigation activities' enabling them
tlsccGrurr rr er., GurDa AND AssEssMENT, at 77. The next saction draws haavily on his
&ln .ccordanc. with Afiicl.3(r), thc historical l,ase year for most Annex I Partics is r99o,
but p.rtias undarSoing tha procass of tlansition to a market cconorny may choosc r year
or pcdod othcr than r99o. P.rtici with e base year olher th.n r99o er. Bulgarir (trt8)'
Hung.ry (.vera8. of r98t-r987), Poland G9E8), Ron)ania (r9E9), and Slovenia (1986).
j.z. The Kyoto Protocol 67
to choose the most cost-effective options. A comprehensive approach thus
promotes efficiency. To make reductions of the various gases comparable,
negotiators turned to the global warming potentials (GWPS) that the IPCC
had developed for the various GHGs. The GWP expresses the greenhouse
forcing effect ofa gas relative to CO.. Using the GWPs, collective emissions
of the applicable GHGs can be calculated as CO.-equivalent emissions,
which is the term used in Article 3 ofthe Protocol.6' Thble 3.r illustrates the
respective GWPS of the GHGs controlled under the Kyoto Protocol as well
as their main sources.
The technicallyvery complicated issue ofsinks came to prominence quite
late in the negotiations.6' Up to half of the carbon emitted from human
sources is quite rapidly abrcrbed by terrestrial sources (plants) and the
oceans through the operation ofthe natural carbon cycle.63 Countries with
significant forests stood to gain if absorption by sinks was to be counted
against CO, emissions (the so-called net emissions approach). The subiect
became conroversial, not leastbccause counting sinl$ (forests) appeared to
be postponing actual cuts in emissions and seemed to favor some countries
over others. While it was agreed that parties should not be able to count
natural sink (existing forests), this begged the question ofwhat constituted
an anthropogenic sink.6. The approach eventually adopted counts "the
6lAlthough thc GwPs arc
a conv.ni.nl tool, qu.stions h.vc ben raiscd conccrninS rheir
scientific soundncss and accuracy,sae GruEB ET GurDE AssEssMENT, al z4
^L.,
(rcfcrrinS to rcadcmic criticisnB that GWPs.ra "uncrlain ^ND
and logicelly impcrfed" ).
6ISrcOlerrxUr & OrI, h.TrrNlrroN^L
CTIMATE PoLtcy, at rlo.
6lThe
storegc c:pacity r'n land and in theoccans is cL.rly not unlimitcd.ly'hila considerable
urc.rtaintics ramain, indicitions arc th.t th. oc..ns absorb about half of rnthropognic
carbon. As warming increascs, the physical upt.k ofthis carbon is cxpcct.d to decrcase.
Sr.Christoph.r L. Sabin. etal.,TheOceantSinklorA thropogenic CO,,]o5G662) ScrlNctr
t67 ( 2oo,t). ln .ddition, hi8h.r Lv.l5 ofCO, h.v. also bGn link d with acidific.tion of thc
ocaans, vith yct uncartain consequcnccs for orgrnisms and ecos,stens, but it is thought
lhat corals and components ofph)'toplankon may b afrected. See THE Royer- Socrrrv,
OcEAN AcrDIFtc^rtoN Due ro INcBsAsTNG ATMospBErrc CARBoN DroxrDE, Policy Doa.
rro5 (2ooj).
6alt is
frequcntly pointed out that bcausa natural forcsts are carbon sinks, there oughl
to bc r way to link thcir prot.ction and prs.rv.tion to thc gn.ralion of carbon offsct
crcdits. In gencral, onc problam with carbon offsats for rvoidcd dcforcstation is that alter'
n.tiv l.nd uss, commonly loSSing or soybcrn farmrng, ara currcntlyeconomically more
.ttr.ctiva. Within th. climat. ragir,lc, countrics with largc areas oftropical r.inforest thar
arc expcri.ncinS siSnifrc.nt dcforcst.tion (and r.sultant cmissions) hav nol cncouragcd
discussions of rny mcasurcs or policias ralatad to preserving forcsts as nrtural sink. This
hrs changcd, hovrc'acr, in *c p.st f.s yc.r$ with Indondia, for initan.., joining other
smallertropical rainfor.rt countrig in.xprcssing interest in markct inccntivas for reduced
 s
_! j.z. The Kyoto Protocol 69

5q net changes in greenhouse gas emissions by sources and removals by sinks

-f resulting from direcr human-inducedlznd-use change and forestry activities,
E
limited to afforestation, reforestahon and deforestation since r99o.,{r This
lc
o
dcfinition left a number of questions open, and the adoption of detailed
implementation rules proved difficult and time consuming.6
R=
! The Protocol does not establish a set of firll-fledged institutions.6T
Although not stated explicitly, the supreme governing body is the Confer_
.o-o 6 ence ofthe Parties serving as the Meeting ofthe parties, or the COp/MOB as
,!
ET E it is known.6 The COP/MOP is assigned the responsibilityofkeeping under
&3: d
a review the implementation ofthe protocol, and it is empowered to make
+58 3
"the decisions necessary to promote its effectiye implementation.',6e This
is consistent with practice in intemational environmental law of bestowing
] 9 quite wide legishlive (or quasi-legislative) and adminisrative powers
!p on COPs.To The enurnerated tasks of the COpiMOp include assesing
.93d : J th implmntation of the Protocol and the extent to which progres
-irE5 .=
a?
a [. 8 e!; t toward the objective o( the Conyention is being achieved,z periodically
;!;EgI 5 E> t-
'ie ;3s3EEs v
T:
dcfor.it tion. Co6t Ric. h.s pioDa.r.d thc cooccpt ofacorystan sdvicas, Forastry Law
U: c o.t: -
u i13:.S;
gi U \J .:! No.7r5,.dopt d in 1996, rccognize four rrviccr ptovidcd by Coru fuce! forcsts: carbon
=,U EUE 8
-90
E;E E i PE .-
q
scqucstErion, hydrological sarviacs, biodi\rcnity protcclion, and scania bcauty.
Protocol, Art. jG), .mphata .ddcd.
6 Daciiion
I EE.EOs t9lCP,9, in REporr op rH! CoNrrrlNcs or rt! p^rrtss oN lrs NrMrH srssroN.
a 5d !9;
t;\
Addandum, P.n ll: Acrion Takcn by lhc p.rrics, *f. ,, fCCOCplr""yilrair-i.""ijl
r..clion ,.r, $mm..iring thc outcorDc. ofCOp-9.
. -S.r
oTSaa
Oarrrxux & Ofi, lxirrN^rrox[ Cuxarr poucy, al ,,{o-at, dctdlinq $lry r
c
3 = a ; 9'.2 e
.i ciE
,z m.iority of thc p.nias to lhc convantion prafarrcd not to crc.ta nc* instituU-om 'fo,
.1 (,t rcrsons ofcconomy 8 wdl es out oft d6irc to rarin .uthoritf in tha sub,sidiary bodics
ofthc convcntion.
ssc. id .t 2,p-{r.
Th.r thc COP/MOP is. !cp.r.rc.ntity ftom rh. COp .pF.rs ftom Art.
.9 Ui 13(2)-6), prcvidint th.t in COP/MOP m.ctings, nonp.rti.s m.y participet as obs.rvcrs,
but th.t dacisions undcr thc Protocol mry bc mr& only by p.nicrr; thc protocol. Similarly,
5Ed _cd
iEfsEiEiixFg Yz.: whan tlE COP/MOP mc.ts, brrra:u mcmbaE who arc not panics to th. protocol shall bc
raplacad by.dditional mcmLcrs who arc partics. (Thc buriau consists of rcpr.scntatives
clcctcd in accordencc with $. rgional groups of thc UN end taskcd with chairinq and
'E
BQ coordin.ting th. COP rnd itr v.tious bodi6.) &s 4&o Rlporr oF rxE SuB",or^*, -Boo,
Q ct por IMpLBMlNratroN oN rrs ETGETBENTB SsssroN, FCCqSBV2oo3/s, paaa.
ia (2oo1):
o o "Thc SDI rccognizcd thet th. COp .nd th. COp/MOp erc lcgally distinct with scpatitc
o E-e
z ez agcndt."
qProtocol,
'!
(J t c
o
!F ps.r OsrrrHt)ru(a).
^fl. & Om, INTETNATIoN^L CLrM^aE poltcy, at 243, noting th.t th. .l.b-
I oration of tha aompli.nc. ragim undar An. 18 may edd quasi-judiciJ powcrs to the
lirr, &r, for dcvclopmcnt! wirh r6p.cr ro MEA' gcncr.lly, ,un Brunna: Copine with
e e E
Er ,t Conscat l,oy-Matiag undct Mulrihte,al Elvi.lnmantaL ,{graararats rs Lsrorx Jo;ex[
l, U 2 or lxrsrl.ruox^! Lenr r (roo:).
nPrctocol, Art. rl(4x.).
 7o Detelopment of the Internatiottttl Clirutte Change Regime
examining the obligations of the parties under the protocol, considering
and adopting reports on its implementation,T, and carrying out the devel_
opment and periodic refinement of methodologies for the effective imple_
mentation of the Protocol,r With respect to subsidiary organs, Article r5
provides that the SBSIA and the Subsidiary Body for Implementation (SBI)
established under the Conveution shall also serve, respectively, as the SBSTA
and SBI forthe Protocol. As with thc COp/MOB nonparties to the protocol
may participate as observers, but not in decisions concerning the protocol.T.
Although the functions of the subsidiary organs are not specifically enu-
merated in the same manner as in the Convention, the protocol, in various
places, assigns tasks to the subsidiary organs such as mandating the SBSTA
to provide advice in relation to sinks lnd nrcthodologies.T! Article l3(5)
provids that the same rules applied under the Convention will be appli-
cable to the Protocol until such time as other\lise decided by consensus.
This has the effect of incorporating the state of affairs existing under the
Convention, meaning that decisions under thc protocol are also subiect to
consensus.T6
3.2A. Flexibility l\lcchinisnls /
The Kyoto Protocol introduces flexibility in sevcral respects. First, and very
importantly, three trading mechanisms - JI, CDM, and international emis-
sions trading - provide flexibility regarding the location where emissions
reductions can be undertaken.z Second, the conrprehensive approach, dis-
cussed in section 3.r,2, introduces flexibility as to rvhich GHGs count. Third,
the provision ofa 6ve-year commitment pcrrod (2oog-2orz) allows some
i.4 An. r3(4)(b).
"S.e
7lS.r
ia tur. r3(4)(l) and Arr.5.
7aS..id-An.rj(2).ltcmsofrh.aScnd.ofthSIts't\Jn,t\BtwiUbctearlyidcnrrfi.drolhat
it is cl.r in which capacity thc bodies are adin!, in .rher words, uDder the Convention
or Protocol,
7t
Sr. i.4 Art,l(4) and Afl. 5(2).
'6Sea
OrErrxon & Orr, INTPRN^IroN^L Ct.rM^ r! I',,r r, y, ri loo. The reason is that the
impassc on thc rules of proccdur, and the cons&lucnt absence ofa provision on voting,
mcans that d.cisions havc to ba talcn by conseoslrs, a srnte of affairi that givcs obiectois
a vato. In practicc, at crucial timcs, chairmen have managed to carry majority dccisions
ovar tha objcctions of a fcw stats.
'Sar, for dircussfon ofyarious rypcs of fl.xibilirv. ti 5ker, Fbxibitity, Enissbn, Tradin|
aid th. Kroto hotocol in Por-rurroN roR S^Lri Evrssrors Treorui ,r,xo lorlrr lvrr.el
MENr rroN (Stcvc Sorrell & Jim Sk r.ds., 1999).
3-2. The Kyoto Protocol 7r
leeway regarding when the commitment must be met. ln addition, coun-
tries wilh economies in transition, in other words, the countries of Eastern
Europe and the former Soviet Union, were granted flexibility in choosing
their baselines.^ Iast, Article 4 ofthe Protocol allows members ofa regional
integration organization to fulfill their obligationsjointly under a so-called
bubble arrangement.Te The EU assumed an overall reduction commitment
of8 percent below r99o levels, which was then divided into individual targets
for the r5 member states that jointly ratified the Protocol.Eo The arrangement
permitted the EU as a whole to advocate for, and assume, a fairly aggressive
target, while also providing the flexibility to take account of differences in
mmber states'conomic development, generation mix, and so on.Er
Foremost of the measures allowing for fledbility are the market-based
mechanisms elaborated ill Articles 6 (joint implementation), Article rz
(clean development mechanism), and Anicle 17 (intemational emissions
trading). Legally, support for such flexibility can be found in the Conven-
tion. Article 3(3) states that policies and measures "should be cost-effective
so as to ensure global benefits at the lowest possible cost" and "be compre-
hensive, cover all relevant sources . , , and comprise all economic sectors." It
also provides that efforts to address climate change may be carried out coop-
eratively by interested parties. Article 4(z)(a) states that Annex I parties may
implement policies and measures jointly with other parties and cooperate
toachieve the obiective of UNFCCC Article 4(z)(d), provided that the COP
shall decide on criteria for joint implementation. Before considering the
/Sircc.Io*.rr.., w.r..ff.ctivcly gr.ndfath.r.d, bing ablc to s.lcct a yc.r wh.n dr.
c(onomy w.. robuit and rmisionr .t . historicrl high point was potcnti.lly ofconsidcrablc
bcncft. Among fi.
countrics with diffcrcnt basc ).rs .rc Bulgeri. G969) .nd poland
(r9EE).
DIf tlrc group of countrics hilr to mca its collcctivc t rgat, cach of thc countrics,
and
thc r.Sional interation org.niz.tion th.t is . p.rty to thc Protocol, wil bc hcld liable
.^
rccordinS lo it5 individud t rgctr undd rh. budcn.sharinS agrccmcnt. S.. An. 4t6).
@Sre
lug.n L.fcvara, 7T,i. EU Gr.rnhotlt Go! |-,nissbtt lowoice Trading Schcma inCL.-
xAT! CHlNcs aND CAtroN Mr,rxsrs: A HANDroox op ExrssroNs RsDucrroNs MEcx-
7t, z-8t (F.rh.n. Y.min .d., 2ooj), lntcrnally, thc burdcn-sbaring agrccmcnt
^NrsMs
was rnadc binding on the u mambcr stetcr ofthe EU. See Council Decijio n zoo2hsalE0
ofApril 25, zoou, Art. z, zooz O, (L rjo) r, ,. Bc..usc Art. 4 ofthe Protocol do.s not pcrmit
adandmantx to burdcn-sharing egrcamcnt!, thc acGession ofro mcmbcrs to thc Union in
_ zoo4 rnd a further I in 2oo7 h.s not .ltcrcd thc EU burdan-sharing .gr.cmant.
E'E.g.,
thc EU! cconomic.,ly lG$ d.wlop.d countd.s could incrcaic th.ir cmissions ovcr
thc r99n ba*linc (Grccce |lo pcrcdt, Iral.nd +rj pcr(.nt, atld Podugd +4o Frccnt),
whiL othcr countric5 acc.pted daaps cu(l !o comp.nsat (Austria -15 parc.nt, Dcnmark
-25 paccnt, and Gcrmrny -25 pcrc.nt).
72 Development of the International Clinntc Change Regime
market mechanisms in greater detail, it is worth considering their common
features and the context in which they operate.
To illustrate how market mechanisms function, it may be useful to con-
sider a hfpothetical national cap-and-trrde scheme. Under such a scheme,
total GHG emissions from the relevant sectors, usually power generation
and other large, stationary industrial installations, are limited, or
capped,
over a given period of time. (In the case of the protocol, this is the
first
or 2oo&-zor2 commitment period.) The {irms in question are eligible for
allowances, which can either be distributed for free (,,grandfathe-red,,)
or
auctioned, Allowances correspond to a given unit of emissions,
usually a
ton of carbon dioxide. The total numbcr of allowances distributed
is less
than the expected amount ofemissions lrorn all covered industries
over the
period in question. The consequence ol this regulated scarcity
is a price
on carbon; all else being equal, the tighter thc cap, the higher
the price of
allowances. Emision control costs vary across different plants
anj indus-
tries. That is to say, the marginal cost ofabatement varies,
Some firms may
find that they can engage in mitigarion activities, for example, by installin;
more efncient machinery, and then seil excess allowances. Other firms, fac-
ing higher abatement costs, may instead lind that it is cheaper to purchase
emissions allowances. The carbon price acts as an incentive for firms to se(
out the least-cost mitigation opportunities, with lhe result that the overall
mitigation effort takes place in the most eflicient manner. For this reason,
economists prefer market-based instruments over command-and-control
regulatory policies, such as design or pcrf61p4116g standards, which, it is
argued, result'in economic losses.8, The experience in the United States
with the r99o amendments to the Clean Air AcCr resulted in reductions
of sulfur dioxide at much lower cost than had been predicted, providing
major boost to the proponents oftrading nechanisms.Ea A larger and more
r'Robc.t.N.
Starin", wl, at Can We Leorn lrortt tE Goud polic/ Expdinent? ksson,
SO, Allowance Trading,rz(3) lounx,rr_ or EcoroMrc pensnrcrrves 69, 6g (rqqa).
Iron
Intcr-
.stingly, Stavins also summarizss rcasonswhy legislarors, regulators, and industryfavored
a command-and-control aDDroach.
8!Clcan
Air Ao of r97o,4: udc S S zo,u (:oo,.
!'Thc savings
arc gcncr:lly cstimared to have l,ccn nh,nrr UStt billion
(in 1996 dolLrs)
pcr ycar. Howcvcr, thc calaul.tion o[savings ir rnsnivr t6 135urnp11e.,
,5.ut .hc]n tivc
rcsulaloryoptions.ScaCurrrsCrnrsoxrrrr,surrunDroxrrrrCoxrrorsyELrcrrrc
UrrLrrrEsi WH^r Ar.E rHE G^rNs EroM TR^DE?, Discussion papcr 98-4.{-REV, Rcsourccs
for rhc Future J-t (2ooo). Accordint to Office of tvlanagemeniand Budget calcul.tions,
for thc pcriod t992 to t995, th. ben.6ts ofthe Tirle IV SO: trading provisi;s exce.dcd the
j.z. The Kyoto Protocol 73
diverse market-with more mitigation opportunities- leads to loweraggre-
gate mitigation costs so that on economic efficiency grounds, larger emission
trading markets (national or international) are preferable to smaller ones.65
Studies demonstrate that developd countries could significantly reduce the
cost of meeting their GHG reduction goals by making use ofthe flexibility
mechanisms.s6
Theoretically, taxes can achieve the same results as a trading scheme, at the
same or lower aggregate costs.87 [n hct, economic theorysuggests that taxes
are rnore appropriate for addressing climate change, where what counts is
not achieving a particular level ofpollutants year to year - as in the case of
air pollution - but ensuring a change in the long-term trend. In practice,
however, carbon taxes have, with the exception of a few European coun-
tries, proved politically unpalatable. For their part, regulated industries may
prefer emissions trading, in part because such a scheme creates a radable
asset, as opposed to a tax that extracts revenue.EE If emissions allowances
costs 4ox, SeeOFFrctroF M
N^GEMsNT AND BuDcDT, DR FT 2oo3 REpoRr To CoNGREss
oN THE Cosrs AND BsNEFrrs op FEDE*^! REG ut-.{TroNs, 68 Fed. R.g. t49r, 55oo (zoo3).
-
6tEconomic
studics confirm that dobal trading, as opposcd to domes-tif aoion, lo,n.., ii,.
cosl ofmc.rinScommitm.ntsundcrthc Kyoto Prorocol. Se.rohn P WFnt & funnifer Hill,
InfioCuction a d Oyefliew, i,r Txe Cosrs oF THE Kyoro PRorocol: A MuLrr,MoDEL
Ev^LU^rroN, SpEcr^L IssuE oF THE Extncy lourxel vii (John p Weyant cd., 1999).
This is ona reason why the private sector may prcfer a federal cap-and-trad. system in
- th6unitad Strtes, as opposcd to a number of overlapping but sparatc state schemes, for
insten(a, tha planned California initiative.
!okonomic modclingstrorjlvsutgcsts
thal marginal abatcm.nr (osrs aresignificanrly lower
ifglob.l tr.ding is institutcd. S.?. comp.rison of th. rcsults oftwo doz.n modls by Urs
Sptin$\ The Marker fot TiadabL CHc Pcnnits undefile Kyoto Prorocot: A Survey ol Model
,-Strdin, 2r(J) ENEncy EcoNoMrcs 5r7 (2ooj).
"' Economic analysh suggests that prica (tax) measurasara mor. suird than permil ortrading
a (quantity) approaches to certain environmntal problems. In particulat price measures
are morc.mci.nt insitu.tions whcrc harn'fu| conscqucnccs ofthe pollution (cxternality)
are r function ofa much l.rgar rtod accumuladnt in th. cnvironment, rathcr lhan an
annurl flow. Thc lad of a d.finit., short-tcrm tfurshold for savcr d.magc also favors a
tax .ppro.dr. This is tha casc for ozonc-deplcting sub,stana6, groundwatar pollution, and
tha accumul.tion ofGHGr in th. aimo{hr. ln th. c.s. of climatc ch.ng., bccause the
problm is causcd by thc tot.l concantration ofGHGs, tha marginal bencfit of reducing
a unit ofcmissions is rather low In th. terminoloty of.conomics, the marginal benents
curv. is flat r.l.tiv. to the marginal cost ofabatcmcnt, and hcncc priccs arc prcferred on
cfnci.ncy grounds. &. Rrcri^rD G, NrreELL & WrLu^M A. plzlL RsGUr-^rrNG Srocx
ExrErN^LrTras uNDsn UNcEtT^tNTy, Dbqrssion P.pr 99-to-REy Rsources for th
Futurc l-2 (2ooo). Tha classic enelysis on th marits of prices vcrsus quantitics is M. L.
..Wcilzm.n, Pri.., vr. Q,/ardd6,4t(4) REvrEw or EcoNoMtc SruDrEs 4ZJt (1924).
""S.e GnUBB ET AL,, GutDE aNo AssEssMENT, at 90. Thc "politicel c(onomy" of trading
schemcs is cov.rd by Stavins, rlpra nota 8r, at 74-76. Since permits ar. .lmost always
 74 Detelopment of the Interfiational Clinate Change Regime
or permits are allocated at no cost - that is, grandfathered, as opposed to
auctiond some firms will extract a bene lit, or cconomic rent. With a tax,
- in low-carbon infr astructure.
revenue is channeled to the goyernment, which, in theory, can recycle it
by
adjusting other taxes to address distortions in the tax system and fund other
desirable activities, like worker retraining in emissions-intensive industries
or research on clean energy technologies.8e Functioning emissions trading
markets require careful design and a sophisticated regulatory framework,
as
demonstrated by the experience ofthe F,uropean Unicn Emission Tiading
&heme (EU ETS) in 2006, when information showing that many firms had
benefited fiom an overallocation ofallowances resulted in a dramatic drop
in prices.{ A recent study concluded that the first phase of the EU ETS
offered three key lessons: (r) accurate emissions data are essential to set_
ting an effective emissions cap; (z) a cap-and-trade scheme should provide
enough certainty to influence technology investment; and (3) the method
for allocating allowances may have important economic effects in that free
allocation may distribute wealth to covercd entities, while auctioning could
generate revenue for goyemments.er Availability offullinformation _ actual
historical emissions, monitoring of emissions, and realistic calculations of
expected growth - are critical for the regulator. Given weaker regulato%
frameworks, as well as uncertainty about emissions growth pro.lections,
cap-and-trade schemes are generally not regarded as a preferred policy
option for most developing countries. Finally, unlike acarbon tax, under an
emission trading scheme the pribe ofcarbon is subject to volatility _ during
an economic downturn the fall in output will also depress allowance prices.
fraely alloc.ted (grandfathercd), regulated indusrries are able to xtract an economic
rcnt.
In addition, ftee initial allocation servs as a barrier to entry for new fums, who
would
havc lo purdai prmils, For legislators, a perrnir scheme with a frec
allocation has the
advanlagcofmaskingthe cost ofregulalion. unlikc r iJ\ tor mor on rhis, ss.
Narhaniel O.
Icohanc et al,, Iiir Croi.e of Regulototy Inriuo0ts i Entionrnental poliy,:z H.rnvenp
.-ENvrroNMsMr^L LAw REvtsw lrt-{7 (t998).
"eSea e,g., thc ecological tax rcforms in Germany, which aim to reduce the tax burden on
labor and shift a ponion ofit to cnvironmentat consumption. E.8., MineralOil Tax law
zr, r99z, as amended lMindalalsrurrgc,rru vom zr dezrmber r99z).
vuAfter
^^ofDecemtrer
it trecame known in April 2006 rhal 6rms rn ,e,eral member states held conside.
ably more allo*'ances than aatual emissions of the covered installations, the pric of EU
ellowancls (EU J) alrhost hal'rcd. Whilc regulated en tities may have an interesi in irrfl"ting
thcir cmissions projecions, the intgrity of a trading scheme dmands that the rcgulatoi
ha\r acacss to real mission6 data.
9tU.S. Govmxxrlrr Accourrr.rrr.rrv
Orrrcu, INTDRN^rroN^L C rr^lE CH^NGr pRo-
cf, Ms: LtssoNs LsanNED tnoM TflE EuroppAN UNroN's EMrssroNs TTADTNG SCIiEME
aND tHE Kyoro Ptorocor's Ct cex DevslorMeNr MECH^NiSM, GAO-og-r5l (2ooE).
j-2. The Kyoto Ptotocol 75
Volatility may reduce the incentive for firms to make long-term investments
3.2.3.1. ,oint Implementation. fI is a project-based mechanism by which
emission reductions are achieved in accordance with proiects implemented
in an Annex I country by inyestors ftom another Annex I country. The
inyestor/invsting country can then claim the resulting emission reduction
to sell on the market or credit it against the investor country's target. The
term joint impbmen atior has a somewhat tangled history but under the
Protocol, its meaning and ambit are clear and uncontroversial.e'. JI has its
roots in Articles 4(z)(a) and (d) ofthe Convention, under which the COP
established a pilot phase for activities implemented jointly (AIj). Under
AIJ, industrialized (Annex I) parties could implement proiects reducing
emissions of GHGs or enhancing tieir removal through sinks in other
countries, both industrialized and developing.er Participation in the AIf is
voluntary and no credits are granted for any reductions achieved under
the program.ea However, the eligibility requirements for AI| projects closely
tracked thos that were later made applicable to JI and the CDM, includ-
ing that activities should result in real and measurable environmental bene-
fitsthatwould not oftheproject.et AIJ enabled
have occurred in the absencc
countries to gain experience with a project-based mechanism, includ-
ing an approximation of emissions reduction potential, costs, and likely
barriers.e6
9zSeeGrurr rr t., GurDE aND AssEssMENr, ?t E7-89.
9'Daciiion
in Rsporr o! Trra CoNaarENcE o! THB PArrrEs oN rrs Frssr SEssroN,
ADDENDuM, P^rr Il:AcrroN TaxEN By rflE Pannrs, FCCC/r995//Add.r (1995).
'/CP.r,
9{Thc pilot phas. of thc AIJ continu.s, with rt7 projcts in
42 countries. Ss4 Acrrv-
rrrDs IMPLEMaNTED JorNTLy uNDEn rxE PrLor PnasD: SEVENTH Procf,Ess Rsponr,
UNFCCCI/SBSTdroo6/E (zo06).
9t
Dccision 5/CP.r, iD I EpoBT o! Trra CoNFEBaNca or rrr! Plrrrrs oN rts Srvrrrx Srssrox,
ADDENDUM, P rr ll.'AcrroNTaxlN ByrxE Parrrzs, pere. r(d), FCCC/r99:/Add.r (rggs).
srs Charlottc str.ck, ,loin t Inpbrncntation: Hktot/, Requiefientt arul Challoges, inLEc^L
Aspscrs os [MpLEMzNTrNc rKE Kyoro Proroco! MEcHr.NrsMs: MaxrNc Kyoro WoRK
roE-, (David Frtcstonc & Charlott Strcck.ds., zoot).
ssaa c,g., r study prparcd for thc govcmmcnt of thc Netherlands, which ana4%d AIJ
projecls to cstimate th. pot ntial markct for crcdits uodcr the CDM, including priccs.
NBTBEBT NDs Et{lBGy REs! rctl FooNDArroN (ECN) pr !., PoTENTTAL aND Cosr oF
TnE CL8AN DlvEropMrlfr OprroNs rN THE ENExcySEcrox: INvENToRy op OprroNs lli
NoN-Al{NEx I C,ouNrRras ro REDUCE GHG EMrssroNs (1999). ,ason An&rson & Rob
Br.dl.,l, Joint bnlhiDnt4tian and hnissiont Ttadirg in CEE in CLrM^rE CH^NGB
^ND
CAtBoN MAuETs, rrpra notc 6ot et 2r-r3.
76 Derelopment ofthe Internatiotldl Cli atc Change Regime
Although there are many similarities, it is important to distinguish JI
from its close conceptual cousin, the CDNI. Il pro.iects take place between
Annex I countries, and the mechanisnt is intended to assist Annex I parties
in complying with their emission reduction obligations under Article 3 of
the Protocol. The CDM has a dual purpose: to assist Annex I countries in
meeting their emissions limitation and reduction obligations and to pro-
mote sustainable development in host countries, for instance, by promoting
transfer ofclean technology. Because fl projects are implemented in Annex
I countries, the credits earned from a givcn project - known as emission
reduction units, or ERUS - are deductecl from the host country's Kyoto
allowance, known as assigned amount units (AAUs). This means that JI
proiects do not introduce additional allowanccs into the system; the over-
all amount of emissions under the cap docs not increase. Environmental
integrity is safeguarded by the requirenrent that a Jl host country maintain
an appropriate inventoryofGHG sources unil sinks as well as an accounting
system for additions and subtractions liom its allocation of AAUs. This
contrasts with CDM, where there is no dcduction from an allocation of
allowances because projects are located in tlcveloping countries with no
Kyoto target. To maintain the environmcnr.rl inlegriry ofthe CDM - tha,
--
is, to avoid the issuing ofcredits nol blscd on real emission reductions
the verification, monitoring, and certification requirements for the CDM
are more onerous than the equivalent JI provisions.ez
The basic eligibility requiremints for.ll proiects are set out in Article 6(r),
namely, that pfoiects require the approval ofboth countries involved (host
and investor), that any reduction in emissions by sources or removal by
siula must be additional to any that would otherwise occur, and that coun-
tries maintain proper inyentories and conrply with the Protocol's reporting
obligations. Article 6(3) provides that private sector entities may, subiect
to the authorization of the country concerned, participate in JI projects.
During the negotiations, it was envisaged that the private sector would have
a key role to play as investor in, and devcloper of, JI projects. However,
since Jl projects result in a subtraction fronr a host country's allocation
of AAUs, with potential consequences lbr compliance with its emission
reduction commitments, government su|ervision is important, Hence the
97Strrcx, supra note ru. The requirmcnts lor CDNI projects
9t, at are discussed in grcater
dtail in the next section.
j,z. The Kyoto Protocol 77
proviso that private sector participation is subject to authorization and the
requirement that both the host and the purchasing country must approve
the proiect.
As noted previously, developers of JI projects must demonstrate addi-
tionality; in other words, they must make the case that pro)ect emissions
will be lower than a credible baseli;re, which would have applied but for
the proiect. The Protocol dos not aldress the process for verifying addi-
tionality and other requirements for fI pro.iects, simply stating that the
parties "may . . . fr.rrther elaborate guidelines for the implementation of this
Article, including for verification and reporting."eE The rules developed to
implement fI provide for tv,ro variants. The first, known as track r JI, is
available to host counties that haye demonstrated certain reporting and
accounting requirements. These couutries may themselves - without addi-
tional oversight - veri$ that emissions reductions achieved by the project
are, in fact, additional.ee Such self-verification does not jeopardize envi-
ronmntal integrity because, as noted earlier, reported proiect reductions,
even if nominally inflated, are subtracted from the host countryt alloca-
tion of AAUs.roo A second option, involving more oversight, is available
for Annex I countdes that do not meet the requirements for track I JI.
In this case, an independent body, the )oint Implementation Supervisory
Committee, carries out the tasks of ensuring that project design meets ]l
rquirements, veriryingemission reductions, and confrrming the issuance of
ERUs.
For Annex I countries that are not on track to meet their Kyoto commit-
ments from action alone, the attmction of |l stems ftom lower mitigation
costs in thecountries ofEastern Europe, as comparedwith costs in the more
advanced industrialized economies.'o' In the process oftransition to market
SProtocol, Art. 6(2).
$ro/CP.z, in REpoBT o! TrrE C,oNPERENCE o! THE PAnrrEs oN rrs SEVENTH SEssroN,
ADDENDUM, P^Rr II: AcrroN T^XEN ByrnE CoNpERENc! o! rHE P^RrrEs, annex, para.
2r, zr, FCCC/CP/2oor/1tlAdd.2 (2oo2). S..lari Veyr,,nen & Franck Lrcoq, 'Iiack One JI
ond "Grcening of AAUS': How CouA It Work?, in Llcar AspDcrs oi IMPLEMENTTNG Tr.rE
Kroro PRorocor, Jrpra note 9t, at 116,
'mThc linc scparating int.rnational .missionr trading of AAUS under Artide rz and trad 1 ll
can become rather blurrcd. Thc implications arc further cxplored by V;iyRyNEN & LEcoa,
supfinotc a9.
thc lapanese economy is alrcady vcry cnergy-effcicnt and has a low carbon int.nsity.
'ot E.g.,
Therefora domcstic abrtemnt @sts ar high, .nd Japan ii an active participant in the
markt to a(quire JI and CDM crcdits.
 78 Dewlopment of the lnterndtiondl Climote Change Regi e 3.2. The Kyoto Ptotocol
economies, most ofthese countries moved arvay from their earlier reliance
on energy-intensive and less efficient heavy industries. With emissions well
below their r99o baselines, several of thc economies in transition will have
a surplus of AAUS available in the first K,voto commitment period from
2oo8 to
2or2.'o2 For host countries, thc advantages of fI over pure emis-
sionstrading lie in the transferofclean energy technology, enhanced energy
efficiency, and ofcours, greater long-term reductions in GHG emissions.
From the perspective ofinvestors, JI projects may presnt fewer regulatory
and related risks than the CDM. This is particularly true for track r |l
projects, for which risks associated with baselines, additionality, and verifi-
cation can be mitigated in a manner nor feasible under the CDM.ror At the
same time, unclear institutional responsibilities in host counties, coupled
with a lack oftransparent approval proceclures, and political uncertainties
in some host countries, has meant that the ll market has been slow to reach
its full potential.'or The value ofthe JI marker stood at US$499 million in
zoo7, up fron US$r4r million the previous year.,or
The expansion in membership ofthe IiL.i in zoo4, and again in zoo7, has
diminished the attractiveness ofseveral Elsrcrn European states as JI hosts.
On joining theEq these countries becorne subjcct to the EU ETS. The EU/
ETS coyers some r2,ooo installations, accounting for almost 4j percent ;f
CO, emissions ofthe z5 European membcr states.,,,6 The EU ETS applies to
a range of installations, including in the grorvsl g4ng1.11an, iron and steel,
glass, and cenrent sectors. The first phasc oIthe EU ETS covered the period
zoo5-zoo7, wffle the second phale coincides with the K],oto protocolt 6rst
commitment period, from zoo8 to 2or2. The EU ETS is intended to assist
the EU in nreeting its Kyoto commitmcnt ofan 8 percent reduction below
r99o levels. The EU amended the legislation establishing the EU ETS so that
certified emission reductions (CERs) from CDNI pro.lects and ERUs from
ro:Axoerson
roJsrnrcx,
& Breoley, r,?/a nola 96, at lo1- i et lrl-2t. Tha provisionr of thc Linking Dir.ctive rclating to doublc countint ar reSarded
rupro nota gt, at ri5.
'qrohn O'Bri.n, Optimkn anid lJncertainty?, ir Kyoro rHE CarBoN M^nxErs:
^ND
FINANCTNG CLIM TE Por.lcy ro 2or2 AND Br.yoND, A SprcrAL SuppLEMlNT to ENVG
roNMENraL FtNlNcE aND C^REoN FrNANcr St8 12o06).
'o'Kar,rx Cepoor & PnrrrppeA^lanosr, Worr n it^Nx.5r^rr
TRENDs oF rHE C^rBoN
^ND
_M^rx8r r (2006).
rosr.
Diractivc 2oo3/E7lEC ofthe European parlianlnr and ofthe Council of Octobcr 13,
2oo3,.st.blishing a schme for GHG emission allowance trading within thc Community
- OaDrrn0r & Orr, lNrErNArroNAr- CLIMAT! Poltcy, Jtpra note
and amcnding Council Directiv. 96/61/EC, 2ool O I (L 17) 3r.
79
II projects could be traded in the EU ETS.'o7 Subiect to some limitations,
the so-called linking dircctive makes it possible to conyert project-based
credits that meet the Kyoto standards into EU allowances.roE Firms sub.ject
to the EU ETS can thus draw on CDM and fI credits in meetingtheir targets
under the scheme. Intraction ofthe EU ETS with CDM and JI gives rise to
the rather technical issue of double counting, which "refers to a situation
in which CERs or ERUs are issued as a result ofrcductions that also lead to
a reduction from emissions fiom an installation covered by the [Emissions
Trading] Directive."'oe To prevent double counting under the EU ETS and
the Protocol, installations covered bythe EU ETS are not eligible to generate
ERUs under JI.
3.2.3.2. CleanDevelopmentMechanism. Thesecond flexibilitymechanism
is the CDM, which isestablished by Article 12 to serve the twin goals ofassist-
ing developing countries in achieving sustainable development and aiding
Annex I parties in meeting their emission limitation and reduction com-
mitments."o The CDM has its roots in a proposal for a Clean Development
Fund advanced by Brazil, to be financed from 6nes levied on Annex I parties
for noncompliance.r" As elaborated by the United States in the final Kyoto
ro7
Dircctivc roo4./ror/Ec of Octobr 27, 2oo4, amcodint Dirctive 2ooy'E7lEc, enablish-
Sea
ing e schm. for GHG amigsion allow.nc. lrading within th. Community, in respect of
_thcxyoto Protocoll proi.ct m.chanisms, 2oo4 OJ (L
l3E) t8. For d.tails on thc Linking
Dircctive, rea hrEvERE, tupra notc 60, at rr6-J8,
'dTh.dir.ctiva does notcaptha numbcrofCERs.nd ERUs$ mambcrstatcs mayintroduce
into thc ETS but provi&s th.t incluiion ofan amount grcatcr th.n 6 pcrccnt ofa mcmbcr
statct EU allow.ncas will triggcr a revicw process. CER5 and ERUS from forcstry-rclated
projects arc cxcluded.
to9lrervere, supra note
Eo, at u6. 8.g., doublc counting t ould aris, where a Jl projecr is
impl.mcnl.d at an installalion subi.t to thc ETS. Th projccl will gilr ris. to JI cr.dirs -
which can bc trrdcd in th. EU ETS - ar rrrrl aJ fi.aing up EU allowanccs assigncd to
tha particular inst.llation. 'Ib pr.vnt doublc counting, tha opcrator of thc installation
k rcquired to cancel a EU allow.ncc for cv.ry rl crcdir (ERU) that ir issued. For a more
dctailed discussion ofdoublccounting under the EU ETS and JI, serSrREcx! rr./pra nore 95,
as heving mrdc JI projects in EU countrias Lss attractive, lcading to criticism ftom lapan,
which fclt it was bcing dcnicd acccss crdits n.dd to m.r its Kyoto obligations. Linking
thc EU ETS to other cap-and-trade schcmcs has been mooted from timc to time, and if
and when suah arranScmcnts comc into bcin8, doubl. countint will also bc an issue.
rroMark
K.nb.r, fiz Clea n Dd.lopmefi Mcchanbn : AToollor Prcmotins lang-Tefl Ch ak
Ptotcction ona Sustainobh D.t lopmefir?, in Cr-rMrrr Cxercr exD CAnBoN MARxErs,
J!p/4 notc 8or irl 26J.
trrsec
41, at t6t-66i
FCCC./AGBMA99z/MISC./Add.3.
 Eo Development of the Intenational Clinate Aange Regime
3e. The Kyoto Protocol 6l

negotiations, the proposal was tralsformed into what is now the CDM,
elaborates the rules and modalities governing the CDM, approves and reg-
which incorporates the underllng principle of joint implementation.,,r
isters CDM proiects, issues CERs, and carries out other functions relating
Lila JI, the CDM is a project-baxd mechanism, but in this case, credits to the CDM."! The EB is subjcct to the "guidance" ofthe COP/MOB which
may be earned for proiects oacuted in developing countries. Every
CER is the supreme body of the Protocol. The COP/MOP fulfils this function
is equivalent to a ton ofCO,. For each CER purchased, an Annex
I party, only in relation to a number ofenumerated issues - for instance, the rules
in effect, increases its cap; unlike under JI proiecrs, the CERs generated by
CDM projcts are not baclcd by a subtraction fiom an Annex I party's
ofprocedure ofthe EB and the geographical distribution ofCDM proiects -
but it does not serve as a general ayenue ofappeal for decisions taken by the
assigned basket of allowances. Thus ensuring the environmental integrit),
EB."e The EB has established several panels and working groups to assist it
of CDM proiects is all the more important.,,r Resulting GHG reductions
in carrying out its functions. The Methodology Panel, tasked with develop-
must be real and measurable and,.additional to anythat would
occur in the ing project methodologies, has attracted th most attention and scrutiny.
absence ofthe certified projct activity.,,,,a Thus developers ofCDM
projects Project developers and investors in the carbon market have criticized the EB
must demonstratethat a projectt reduction in GHG emission, goes beyond for supposedly applying overly stringent pro.iect approval criteria, lack of
business as usual, which involves showing that emission reductior,, gir"r_
transparency, and insumcient resources and capacity, with negative conse-
atcd by the proiect are in addition to any that would have occurred
in the quences on the abilityto cope with its workload.'r Overall, the registration
pro.iedt absence (the so-called additionality criterion).',r epM proiects
are ofpro.jects is accelenting, and the EB's funding shortfalls, resulting from its
also required to contribute to sustainablc rlevelopment, but
rhe determi- reliance on voluntary funding, will recede as it begins to benefit from the
nation oflyhether this criterion has been met rests with the host countrv.
collection ofadministrative fees levied on CDM proiects. On the other side,
To ensure the environmental integrity of the CDM and its proper
admin_ studies have pointed to problems with the CDM market, particularly with
istration, the COP has developed detailed rules covering projecivalidatiop;
respect to the additionality of some CDM credits."r As it is not possible to
registration with the Executive Board (EB); end the verification,
certifi;_ ensure that every credit from an offset mechanism like the CDM represents
tion, and issuance ofcredits from CDM activities.,,6
a real, measurable, and long-term reduction in emissions, the use ofcarbon
The implementation ofthe CDM is overseen by the CDM EB, which
is
composed of zo members (ro full-time members and lo fccgcP/2oo/rr^dd.2 (1oo2). Mcmbcrs of thc EB rcrvc in thcir pcrsonal ap.city, arc
alternates) drawn
from among $nnex I and non-:Annex I (developing) countries.rv rquirad to teka a writtd o.dr ofsrNicc, and may not hava a pccuiary or finrnci.l intelcst
The EB in .ny $pcct of. CDM proi.ct .ctivity. &. J!r,r4 D.cision rzlCPz, respccrivcly, para. 8( c),
ll'I::tj C^DM,, n thz Ktoto NcSotiation, Hot/ CDM Has Work d &, o Bridgc
(c), and (0, Mooeurrrs lND PnoclDunas rot A CI-E N DEVELopMENT MEcr NIsM, As
l{.lsuo: b.tee.n a body csrabliskd undcr publi( intarnationd Lw, th. dci.iom of th. EB .rc probably
Lhreloryd and Dcwlopiflg Wotds?, E Mrrr.;r r ror AD^prartoN Srrericres pon
^No not subjcct to rcvicw und.r domcstic l.w. Th. EB is solcly subject to thc political and lcgal
Gr,oIAL CHlNcr l9r, t97 (tooi).
control ofth. COP/MOP.
"'Ernorinc Mcijcr.& frcob Wcrtman, Kzepiry tt Cli)n - Safeguarding thc Ftvironrnotal
lntcgnay oltk Chan D.*loptent Mechanin. nLt,,tr A.peirs "r Maria Netto & Kd-Uwc B.r.ni S(imidt, CDM Proi.rt Crrb and th. Rob ol th. IIIFCCC
or inprrvexrrr"c rxr Scoctatht, in LEGAL Asp.crs o? IMpLEV aNTTNG THE Kyoto ProlocoL, ,!pta nota 9i! at
KYOTO PTOTOCOT. nota O{. at ror_
rqProtocol,
An.
'
r:(lJ.'UrlA
r'n-4o.
tl9Dccision
rrt Rtporr oa rflE CoNllrENcE op rHE P srrEs, supra [otc u7, anncx,
t7lCP.z, in
&teilcd dirusion of basclinaa end addil ion alir, ree Axel Michaalo\d. Dctemiwtion
For
, f.rhan. Yamin, The Inu atbnal Ruhs of thc Kloto Me.hanitnt in C,.It,i rE
para!. 2-a.
{ tusclina arul Additio@tiry lot th, CDM: A Ou,iat Etement of th. Gedibiliry o( tht Cr NGr C^iDoN M,{rxEts, rrpn [ota 60, at 3i4.
au R.girrB, in C,'rxrts CHexcr ,ar,ro Ce nroI tUr nxrrs, raia no,, U, iz.' ^ND
,,,Ch
ror e summary ot th. CDM proicct cycl, rec t d rh J nn ydmin. Th. In.emational ", ''For rn crprcssion of such vi6rt, ,ra lxrrrNATroNAL Ex$sroNs TnADTNG AssocrlttoN,
Rub, of the 2006 Sr^rE oFTTTECDM: IETA PosITroN oNTHECDM Fox CoP-ry'MoP-2rr-2o (20(}6).
Kyoto Mcchanisms in CLtM^rE Cfi^NGE
M.rir N.tto & Kai,Uw Barani Schmidt, ^ND
C^pBoN M^RxErs, ,t,p.a notc ao, rt rirr; Saa aljo C^poor r
AMsrosr, Jr,rFa notc roj, at 4J.
CDM prq cyrt" o"air"'na" oliiifrZdd,
L1o^: "rt - --' ''tAxsr Mrcr rLowr & PaLr.Av Puroxrr, ADDrrroNAUTy DriBRxrNArIoN or haDI^N
,,,,j f"""1* IMILDxENTTNG
rxa Kyo r. pn., ocor, sspra norc 9j,.i iri.- CDM ProrDcB: C^x INDhN CDM ProrDcr DEvlropErs Ourwrr rHr CDM ErscrralvE
"'Sac Dacision r7lCP.7, in Rrporr or rHe C,oxrnnlN, r or rHE
pARTlEs oN rrs SBVENTT Boero (zooz); U.S. GovEnxxlFr Acco rn rauurr Ortrca, ,!pra not 9r; D.vid victor
SEssroN, ADDiNDUM, P l'l lll AcrloN
TAXEN By rEE CoNisnENc! or pARrtBs, ru! & Mid..l war., .A Rralisti. Poli, on Inr.national Carron qftrrs PESD working Pap.r
VoL.Il, aNNtx, MoDALrrlDs ANDPToCEDUREs !oR CLP^N DEvELopMtNrMtcl|.txrsx,
^ 7. (2oo8).
 E2 Development of the Intemational Climatc Change Regime 3.2. The Kyoto hotocol E3

Afrlca Middle East developing countries, it may tend to rinforce past advantage; that is, more
Europo & 3./. 1.h gos to thos countries that are alrady more capable. Project develop-
Central Asia Latin Amorlca ers presumably seek out host countries offering the lowest cost-mitigation
1%
& Carlbbean opportunitie$ the underlying logic ofthe CDM is efficiency, not necessarily
150/.
equity. A properly opcrating CDM cannot be expected to lead to an equi.
table distribution of prciects; nonthlss, building the capacity of smaller,
poorer developing countries to attract CDM investment can help.
Fairness may be well and good, but is it not correct that scarce mitigation
resources be allocated as effectively and efficiently as possible? Estimates
A8la Paclric are that Kyoto Protocol panies and private sctor companies will have a
79.7% compliance demand of about 2.4 billion mtric tons of Co,-equivalent
FrcuRE3.l. Proiccted regional distribution ofCEIts in 20r2. Sourc?: Adapted from units, to be met from the units of the three flexible mechanisms. The-
CDM Pipeline, JorgeD Fenhann, UNEp Risoc Ccnrre (2oo8). oretically, credits generated by the CDM coutd suppty two-thirds of this
demand, at a relatiyely low abatement cost.q Nonetheless, the overall con-
offsets in a cap-and-trade system can potenrially undermin the systm's tribution to mitigation is decidedly modest.u5 One answer is that making
integrity. resources available directly to developing count es, with a view to putting
The CDM market has generated a greirt (lciil of interest on the part of them on a low-carbon development path, may be a better us ofresources.
developing countries, who potential inl)ux oftechnology and resources,
see a Another is to ask whether the CDM has met its other objective, namely,
as well as developed countries, who see chc,rI'cr compliance and opportu;
promoting sustainable development in the host countries. In this respea,
nities for their private sectors in banking. .r.lvising. and legal services. Th'e
it remains to be sen whether the CDM can deliver broader sustainable
value of CDM credit purchases in zooT rc.rched US$8.2 billion, a frgure
development benefits for host countries, for instance, with respect to the
that dwarves other multilateral investnrents in climate mitigation.,r, As is transfer of clean technology.'6 An analysis ofthe development dividend -
evident from Table 3.r, the geogiaphic distribution ofCDM proiects is very
the social, economic, and environmental benefits - for CDM host countries
uneven, with Asia and Latin America accounting for the lion,s share. An
found that projecs giving rise to the highest numbr ofCERs received very
rnalysis by theUN Development progranr mc cstimated that Asia and Latin
low scores."7 Given that the CDM transfers technology in only 39 percent
America are expected to generate around 95 percent ofCEfu through :orz;
of projects, another study noted the room for improvement, while also
Africa is expected to garner only 3 percent of CERs by that date. ,,3 Coun_
tries from regions that have so far benelited less from the CDM, such as tlscc C^poor & Axrrosr, ,!pra not. roj, at rt-{
to-jr. C, UNDB rr/rra notc r2t, at
sub-Saharan Africa, have called for mea,,ur.. r.r,,,^-^r. , m^re.^,tir.kl- (astimeta CDM could ,ncct rt to ro pcrccnt of &mard for K)aoto units).
t"It is cstim.tcd that by 2or2, tot l co,-equivalc cmissioDi (co*q) abetad und.r th
distribution of proje.t,. ciu.n th. r,ig;'i,li,.ii,'.,",#ffi:,:ff [."ffiH: CDM could cwntudly r..ch r.6 billion tons, with . rengc of r.4-z.z billion. &e Ceroon
CDM, project size (more tons abated equals more credits), and economies & AMlrosr, Jl/rro nota ror, at rE. Accordind to tlrc IPcc, fiom 2ooo to looj, annual
ofscale (many similar projects), it is unsurprising that China woddwid..mLlion ofcor ftom fosil fuck and lend u6..r..stim.t.d to h.v. b..n .bout
and India lead J2 billion rnnudly. ThG total rcductions echicvcd undcr thc CDM .r. thus aquiv.l.nt to
in the number of projects. Because the abiliry ro attract CDM investment .pproxirBtdy +E pcrcrnt of .nnud CO, cmi5sions.
depends significantly on existing emissions rctluction '-SceHrr-pexC. oeCoxlNcx ! r AL.. TEcHNoLocy Tr NssBr rNTHECLE^x DEvELopMENI
potential, as between MEcllANrsM, ECN-E-o/-oo9, Encrgy R.i.{ah Cntrc oftha N.th.rlendr (2oo7)i K.trin
Mlbck, Tthnobg|Tafitl.rs in th. Cban Dd.loprncnt Mcchonbm: ln httettiv.s Issue, 7
':rCrpoon &Avaeost, srpru nola ro5, at 19. ENvrroNxBNT ND DEvsLopMErt EcoNoMtcs,l4g (2oo2).
''J(JNDP, THE CLE N DEvELopMaNT Mecx,rrrrv. AN rz7^rrox Cosrrr, MertNo DlvElolMENrworx rNrHE CDM: Prusr 2op rHE DlvELop-
\ssr,ssMENT oF pRocRlss ll_t2
(1006).
MrNr DTvTDEND REporr, IISD (2oo7), http://www.iisd.org/dim.t./globaudividcnd..sp.
84 Development of the International Climate Change Regime
finding lhat transfer is distributed unevenl,y across technologies and coun-
tries.uE Finally, CDM ought to be evaluated against the backdrop of the
climate regime as a whole, particularly the obligations ofdeveloped coun-
tries to transfer environmcntally sound teclrnologies and provide financial
assistance to fund the mitigation in developing countries. On fairness and
policy grounds, the CDM cannot be a subsrirute for those comr,ritments.
The CDM is at the intersection of international and domestic law: estab-
lished under a treaty, the Kyoto Protocol is or.erseen by art international
body exercising administratiye functions, the EB, in accordance with rules
adopted by the COP. Project developers and investors - the key private
entities in the system - are subject to both the provisions of the Protocol
and the international rules adopted by thc (lOB decisions of the EB, and
domestic rules of the host country for instance, with respect to environ-
mental impact assessments and taxation. While some have criticized this
governance structure as unwieldy and burcaucratic, a more balanced per-
spective view might hold that progress in cstnblishing an innovative and
unusual set of institutions has been quite successful thus far. Uncertainty
concerning the post-2or2 climate framework and the future prospects ofan
international carbon market is the most im|ortant flctor influencing th9
outlook for the CDM.
3,2,3.3. International Emissions Trading. Under Article r7, Annex I parties
to the Protocol may engage in imissions trading for the purposes of ful-
filling their coryrmitments. The Protocol provides that each Annex I party
has a number of AAUs corresponding to its individual emission allowance
inscribed in Annex B ofthe Protocol."e Thc cmission targets in Annex B to
the Kyoto Protocol are expressed as a percentrge relative to r99o emissions;
the AAUs simply express this as units of CO,-equivalent emissions.
The concept of international emissions trading was introduced in the
negotiations by the United States, winning the support ofthe other mem-
bers of the JUSSCANNZ coalition, but opposed initially by the EU, and
rejected by developing countries. In the knowledge that signifcant domes-
tic emissions cuts would be politically diflicult to obtain, the United States
regarded trading as critical to meeting any target it might assume. The
'{Maltc Schncidcr ct al., Unddttonding the CDM'S d nribution ,o Techno@y Ttontl.r,36
ENEBGY PoLrcY 2933 (2oo8).
t1'Protocol,
Art. 3(7).
3.2. The Kyoto Ptotocol 85
EU, skeptical at first, rrme to accept the concept but argued that trading
should remain supplementaryto domestic action. The most seriousopposi-
tion came from the developing countries, which argued that trading would
allow the United State. the largest emitter of GHGs, to avoid meaning-
ful domestic action.rro This, in tum, threatened the position of countries
such as China and India, which, at times, advocated the position that over
time, the per capita emissions of industrialized countries should contract,
eventually converging at equal per capita levels with those of developing
countries. Finally, developing countries were aware that under trading, the
Russian Federation potentially stood to gain from trading with its large
number ofsurplus AAUs, with an attendant transfer ofwealth.rl' Flooding
the market with AAUS would also have the effect ofdepressing the price of
CERs generated by CDM projects in developing countries.
3.2.3.4. Compliance Mechanism. )anuary r, zoo8, marked the formal start
of the compliance period of the Kyoto Protocol. Article 18 requires the
COP to "approve appropriate and effective procedures and mechanisms to
determine and to address cases of non-compliance \yith the Provisions of
the Protocol." This rather basic provision, while specifuing that the proce-
dure should include an "indicative list of consequences," left a great deal
to be fleshed out in the post-Kyoto negotiatiors in the COP.']' Objections
to the proposal for binding penalties were overcome with the insertion of
the final sentence <,f the article, providing that "any procedures or mech-
anisms. . . entailing binding consequences shall be adopted by means of
an amendment."rll The compliance mechanism of the Kyoto Ptotocol has
been hailed as unique to international law']r Together with market-based
flexibility mechanisms, it comprises the innovative features of the Proto-
col. This section starts with a briefoutline ofapproaches to compliance in
tloseeGnurr
rt el,, GulDa ND AssEssMENT, at 94-9t.
rl'with th. withdrawel of th.
Unitcd from the Kyoto Protocol, the marka for credits
Statas
f.om Russi. .nd oth.r EITs is rnuch $nallcr. ln any cvcnt. it i5 thought th.t buycrs will bc
r.luctant to purch.sc "hot air" or windf.ll .llow.nces. Various options have bccn .xplorcd
to "green" such allowenccs, Se. VIrryNrN & Lscoe, Jrpra note 95, tt r55.
'llFor detrils, scc WrrxsM^N, Jlpra nota 3iz; Jacob WcrLam.n, Th. Negotiation oJ a Kyoto
Cotrylianca Systefi, itt haPLEMENTTNG THE CLTMATE REGTME: INTI8NATToN L C,oMprt-
17 (Ol.fSchramm Stokkc.t el..ds.,2oot).
^Ncs
'llseeOserrxUr e Orr, INTERN^TIoN^L CLTMATE PoLrcy, at 216-18.
tltWerxsurr, rapra notc rjr, at 19.
86 Detelopment of the Internatiotutl Clirnate Change Regime
3,2. The Kyoto Ptotocol 87

international environmental law This scene setting is followed by a derrip- empirical studies.'{ A conclusion cirawn from this line of thought is that
tion ofthe compliance mechanism itself.'rt compliance does not derive predominantly from deterrent effects or con-
Classically, breach of an obligation under international law entitles the sequencs, Another group of scholars, however, regard enforcement and
wronged party to reparation or compensation - such as in rhe seminal the calculations underlying compliance and participation as central to the
Trail Smelter arbittation,r6 - with the parties arguing their case before an design of effective intemational regimes.4 Faced with evidcnce of rela-
independent third part),.In truth, this third-party dispute resolution isquite tively widespread complianc, advocates of this position ask whether states
uncommon in international laq and even more so in international environ- choos to participate only in treaties in which compliance imposes little or
mental law.r37 For one thing, states tend to avoid the confrontational (and no cost. Finally, it has alrc been noted that the perceived legitimac/{ and
unpredictable) approach entailed by formal dispute sttlement, generally fairnesr{ of a particular rule will influence parties' compliance with its
prefrring negotiations. More imponant, traditional dispute settlement
- terms.
akin to domestic tort action simply not appropriate for harms involving
- is The process ofdrawing up the rules for a compliance mechanism began
a range ofactors, diffi.rse causation, and long timescales.,io In such circum- at t}re first conference after the adoption ofthe Protocol. The Buenos Aires
stances, a process resting on monitoring, superyision, and management is Programme of Work on Adaptation and Response Measures, adopted at
a preferred means ofachieving the objectives ofthe instrument concerned. COP-4 in 1998, established the Joint Working Group on C.ompliance, which
Accordingly, some scholars view noncompliance procedures, whether for- was mandated to articulate procedures by which "compliance with the obli-
nral or informal, as a natural extension ofexisting information-gathering, gations under the Kyoto Protocol should be addressd."qt At the resumed
ntonitoring, and supervision activities that arc normally carried out by the COP-6 at Bonn, a$eemnt was reached, among other things, on the objec-
conferences of the parties of many treaties.,re This view is strongly rep- tives of the mechanism, the consequences of enforcement, the scope of
resented by the so-called managerial school, which holds that althoug!, the enforcement, and the conditions for lodging appeals.'{ At COP-7 in
many international regimes invest little in explicit enforcement, the dgree Marrakech, parties agreed that the compliance mechanism would consist
of compliance is quite good.'{ This position is supported by a number of ofa Compliance Committee, with two functioning branches: a Facilitative
Bmnch and an Enforcement Branch.r4T The committee consists of 20 mem-
utsce a&o, oI| thc complianc
m..h.ntm, Geir (,lfrrcrn & Iacoh Wcrkmrn, Ih? Kroro bers, with ro elected to serve in each respectiye branch. Memberq who serve
Comgliaau Syscm: lo*ards Had Enfotccmenr, n IM rr lMpNrrNa rrrE CLrMrrr fucirlc:
INTaBNATToNA! CoMpLraNcE, iJrra not rJJ, at l9i Farhane y.min, Tha Intarnatbnal Excrorxc CouxrrrEs: SrtllctxaNrNc CoMpLraNcE wrrn INTETNATToN^r- ENvr-
'4tSac
Rulrj on tha Krdlto Mccharirnts i, CLrM^r! CH^NGE C^rBoN M^rxrrs, ,lrra nota roNMrt{r^! AccoBDs (Edith Brown Wciis & Harold K. J.cobson ads., t99E).
80, .t 5r-66; ADdri.i Nrntics & c.r Klaassen, On ^ND the euatity ol Conplionc. M.cha- t+Scc
Scorr B^nf,rrr, ENVTnoNMENT aND STATpcraFr (2oo3)i Scott Barratt & Robert
smt oIth. Kroto koto.oh2(4) ENErcy Poucy (2oo4); CBrrsrtAN HorrwrscH, St rlns, lncftising Padiaiponon and Cornplianc. in Intdnatbnal Climare Change Agee-
'1, '4
Das NrcBTBrNxaLTtrNGsvErFAxREN DEs KyorcpRororoLLs: ENSTEHUNc-CEsr^LT- mariat J INTETN TToNAL ENvlx'oNMENTALAcxEEMENTs: PoLrrrcs, LAw AND EcoNoMrcs
WtrxuNG (2oo5), y9-76 (2oot).
tY
Trail Sn l\t Afiifiation (t)nit d Stotcs v. Canada). i AltL rE2 (1919) .nd 3j AllL 684 l"Txoxr.s M. Frrxcr, THE Pow8i
oF LEGltrM cy MoNG NarroNs (t99o).
(r9{0. I(Txoyrs M. Frrxcx, FarrNrss rN [NTDrN ttoNAr LAw IND lNsrrrurtoNs (r!Dj).
!74 not:blc cxc?tion is t}lc Gabcikoto-Nagynaror Darr Crr, (Hungery v. Slovakia), rrt
ICI Dacision 6/CP.4, in Rspoir o! THE CDNFETENCE oBrxE P^rrrEs oN rrs Fourrn SEssroN,
R.p. (1997). ADDENDUM, P rr ll: AcrroN TaxEN sr rflE CoNrEnENcx oF TIIE PARTIES, anncx tr,
'nP^;rlcr^ BrrNrr & Ar.^N BoyLE, INTETN^TroN^r. L^w rHE ENvrroNMENT,2ND !D. FCCOCPAgeEA6/Add.r (teee).
^ND
rto (2oo2). But r.. alro Hari M. Orofsky, Is Clina tc Change "Int..,ationol"? Litigation\ ''6Dccision rz/CMP.r, in RErorr oF TBE CoNiltlNcE oF TrrE P rrrEs SEnvrNG as rxE
Diagonal WaW R,l/a. {9(r) VrrctNl^ )ouRN^L oF INrlRN^rloN^L L^w j67 i2oo9), MlltlNG o! txB Plnrrrs, ADDsNDUM, PArr [[: AcrroN T^itN Ey rEE CoNpEBENcE oF
contanding that climatc changc rcgulation necessitates "muhiscalar l.gal approedr.s
- that TIrE PArrrEs SErvrNc as rHE MEsrrNG oF rIrE P^rrrEs, FCCC/KP/CMPlzoojlSlAdd.j
---i5 on6 which sinultancously cngagc more th,rn one levcl of govcrnancc." (2006).
laTDccirion 1CCP7, in
rsArrerl REpoRT oF THE C,oNFsf,BNcs o, TrrE PaRTras, ADDTNDUM,
Cxeyps & ArtoNrl HaNDLEn CH^yEs, THr NEw SovllsrcNTy: CoMpLtlNcE P rr Il: AcrroN TaxEN By TBE Coxr:rrxc: oF rHE P^rrrss, vol. lll, anncx,
wrrx TrEATtt! tN I!.iERNATToNAT REcuLAToRy Rrcru:s (rgg:). FCCC/CP/2oor/r3/Add.3 (2oo1).
Et Developfient ofthe Internotional Clinate Change Regime
in their individual capacitie$ must have recognized 'tompetence relating
to climate change and in relvant 6elds such as the scientific, technical,
rccio-economic or legal fields."'d Membership in each branch is composed
as follows: one member from each ofthe live regional groups ofthe UN,'re
one member from the small island devcloping states, two members from
parties included in Annex I, and two mcnrbcrs from non-Annex I parties.
This means that developing countries havc a majority representation on
both branches. The committee is requircd ro make "every effort to reach
agreement on any decision by consensus."'rn Where this fails, decisions
shall be adopted by a maiority ofthree- forrrths of the membrs preslt and
votinS. However, as Annex I parties werc unwilling to permit developing
country members to have the final say in the Enforcement Branch, a double
majority provision applies - decisions also require a three-fourths maiority
of members ofAnnex I parties.
Expert reviewteams (ER'Ib) are responsi[rlc for reviewingAnnex I parties'
performance of their technical reporting requirements, for example, yvith
respect to inventories of GHG sources. ERTs form a crucial part of the
compliance system, As independent and technical experts, they are not
meant to make.iudgments on compliancc, but instead to raise "questionsrf
implementation." ERTs are drawn up by the Secretariat ofthe Convention,
from a Iist nominated by the parties. Action by the committee can be
triggered in the following ways: qucstions o[ implementation raised in
reports submitted by the ERTs, by a partl.rvith respect to itself, or by a party
with respect tp andther party."r After allocation to one or the other branch
by the bureau of the committee, the relcvrnt branch carries out an initial
screening, including weeding out de nrin inris submissions.
The mandate of the Facilitative Brnnch consists of providing advice
and facilitation to the parties in implementing the Protocol and pro-
moting compliance by parties with their obligations, "taking into account
the principle of common but differentiated responsibilities and respective
capacities.""t With respect to matters f.rlling outside the mandate of the
td
&a id. rt rnncx, smion u.
''9Thcy arc African Group, tatin Afierican and Caribbean, Asian Group, East.rn Europcan,
ind wcitarn Europc and Othcr.
ItoDccision
14,/CP.7, in Rspoir oF rHs CoN P^RrrFs, rrpra norc t46, ar
anocx, scction II.
rtr
src i4 at rnncr, scaion vl.
rt:Jcc
i.4 rt rnncx, scaion IV
3 2. The Kyoto Protocol 69
Enforc.mnt Branch, the Facilitative Branch is responsible for addresing
questions d implemerratio, - the technical term for matterc brought before
the committe - concerning steps taken by industrialized countries to m in i
mize the adverse effects of climate change resPonse mea.sures on deYeloping
countdes, and information provided by Annex I countdes on the extent
to which us of the flexibility mechanisms is suPPlementary to domestic
mitigation efforts."r In addition, as a means of'providing for early warn-
ing of potential non-compliance," the Facilitativ Branch is responsible for
providing parties with advice and facilitation on a number ofissus, Prior to
the first commitment period.r Thes Provisions appear designed to allow
one parq/ to involve the Facilitative Branch in a question whether another
party has, before the commitment period, established the requisite national
monitoring and reporting systems.
The consequences that the Facilitatiye Branch is competent to apply'
taking into account the princiPle ofcommon but differentiated responsi-
bilities, encompass, among other things, the facilitation of financial and
technical assistance, including technology transfer and caPacity building
from sources other than climate funds established under the Convention
and Protocol and the formulation of recommendations to the Party con-
cerned, taking into account futicle 4(7) of the C.onvention, which states
that effective implementation by developing countdes of their commit-
ments willdepend on industrialized countries meeting their commitments
to make available financial resources and technology."t It is clear from this
outline of consequences as well as from the contrasting language relating
to the Enforcement Branch that decisions of the Facilitative Branch are
not intended to be binding. While the Facilitative Branch "shall decide" on
.determineIs]
the application ofconsequenceg itsenforcement counterPa
that a Part), is not in comPliance.""6
The Enforcement Branch is resPonsible for determining whether an
Annex I party is not in complianct with its emissions limitation and
reduction target under the Protocol; the methodological requirements for
estimating emissiolls by sources and removals by sources and the rePorl-
ing requirements; and the eligibility requirements for ParticiPation in JI'
rtl
Sr. i4 .t anna& s.ction IV
"4
sc. id.
"t sra id at an[ax,
sactio[ xW'
rt6s.. id. .t .oncx, !.ction Xlv .nd xv
9o Dctelopmett of the InEnationol Climate Change Regime
CDM, and international emissions trading."/ At more technical level, the
a guidance," considering the reports of the committee, and adopting deci-
Enforcement Branch is also empowered to make adjustments and correc-
tions in the vent ofdisagreements btween a party and an expert review
team regarding, respectively, inventories under Article 5(z) and databases
for the accounting ofAAUs.
If the Enforcement Branch determines that a party is not in compli-
ance with the Protocol's requirements concerning the GHG monitoring
and accounting systems, that party is obliged to submit to the Enforcement
Branch for reyiew and assessment a plan analvzing the causes ofnoncom-
pliance, measures to remedy the noncompliance, and a timetable for doing
so.'5E Where the Enforcement Branch determines that an Annex I party does
not meet eligibility requirements for JI, CDM, or international emissions
trading, "it shallsuspend theeligibilityofthat Party."'rr proulrlon is made for
reinstatement. Finally, revealing the teeth of the compliance system, where
the Enforcement Branch determines that a party has exceeded its assigned
amount, deduction equal to the excess plus jo percent (excess x r.3) will
a organizations (NGOs), are permittd to make submissions. The Enforce-
be made from the assigned amount for the second commitment period. In
addition, a noncompliant party is required to draw up a compliance action
plan and issuspended from making translers under international emissions,,,
trading, pending reinstatement,'6o
If a party it
has been denied clue process by a final decision
believes
of the Enforcement Branch, it may lodgc an appeal with the COP/MOB
which may, by a three-fourths majority of pitrties present and voting, over-
ride an Enforce;nent'Branch decibion.'6' Asi<lc from the appeals procedure,
the relationship of the COP/MOP with respect to the Compliance Com-
mittee is explicitly limited to matters such as "providing general policy
rtTsea
rd. at.nnex, sction V
It6&a
i4 at annax, saction
XV. On April ro-t7, zoot. lhe tnforcement Branch confirmd a
preliminary finding that Grecce was not in compliance with its national sysrcm rcquire"
ftants, makiag it thc first countrl found to be noncompliant with a protocol obliga-
tion. Saa ENsorcaMENT Br-ANcn, REposr or rHE FouRTH MEETTNG, April 16-17, 2ooE,
COEBi/Czoo8/2. Greccc subsaquantly submi ed a revised plan pursuant to thc rcqucst of
lh. Enforccrncnt Br.nch and a rcqu.st to hav. its eligibility to participat. in th. m.IkA
rncchaniamr rainst tcd. ARcr considering the revised plan and lnost racant ERT rcport,
thc Enforccmcnt Branch found thzt there was no longr a question of implcmcntetion
with Espcct to Graaca. srs Exrorcrurnr Br,rrcn, Df,crsroN UNDIR PARAGT TH 2 oF
SEcrroN X, Cc-2oo7-r-rJ/Grecc./EB, November rl, 2oo8.
'1e see id.
'@ su;d.
r6rsa
id at.nn.x, scction xl.
j.z. 'Ihe Kyoto Protocol 91
sions on adminishative aud budgetary maners. This indicates that those
countries that wished to insulate the committee from more politicized
COP/MOP deliberations succeeded, at least on paper, in doing so. Equally,
th potential grounds for appeal appear fairly narrow, subiect, ofcourse, to
the interpretation adopted by the Enforcement Branch. Crtainly the end
result is closer to a process with hirly predictable consequences and limited
discretion, as advocated by the United States, rather than with case-by-case
review, as preferred by the EU.'6' Because decisions by the Enforcement
Branch will presumablybe based largely on technical questions * submitted
by the ERT or another party - the scope for arguing denial ofdue process
appears limitd. Moreover, the Enforcement Bmnch is likely to evaluate all
information carefully. The material on which the branch bases its deter-
minations would, in practice, consist ofthe report of the ERT or the party
having raised the question. Outsid organizations, such as nonSovernmental
ment Branch is empowered to appoint experts to assist it. Some deference
by the Enforcement Branch to factual contentions by the party before it, as
is found in the practice ofjudicial and quasi-judicial bodies with respect to
findings offact, would not be surprising.
The generally positive assessment ofthe compliance reSime must be bal-
arrcedagainst the critical views ofsome scholars. Barrett, for instance, singles
out the compliance regime as one ofthe Protocol's grave defects.'63 Barrett
points out that there is little to prevent a party determined to have exceeded
its emissions quota from simply carrying its pnalty from one commitment
period to the next. In addition, a party found to be noncompliant will
bargain for a generous allocation in a succeeding commitment period. [n
short, he argues that the consquences contemplated in the noncompliance
procedure are simply not enforceable.
Another observer of the compliance system notes that in the course of
its negotiation, the parties gradually moved away ftom the soft managerial
compliance regime, exemplified by the Montreal Protocol, toward hard
compliance.'6r In essence, it appears that the parties came to believe that it
was appropriate that tougher compliance provisions should back binding
'6'werxsu^x, rupra norc rjr! at z{-2j,
'oJBrllarr & Srrvrxs, rl/pra nota l4l, at Ito.
'o'wzrxsnel, lrpra note \r, et 22. Sea olra4dyw !rrsM^N, JUpr4 nota J2, at 4E-66,
 92 Development of the Internotional Climate Change Regime
j.j. Finalizing the Prctocol 91

emissions limitation and reduction commitments. The Kyoto

compliance Marrakech in zoor, where the parties adopted the so-called Marrakech
system is also distinguished ftom its Montreal protocol counteryart
in that Accords, containing the Protocol rule book. This section traces the comple-
the toolsofthe managerialapproach-technical and fi
nancialassistance_are tion - and, to an extent, the evolution - of the Protocol through the various
ofless relevance to the exclusively industrialized group ofcountries
subject COPs. It concludes with a short assessment ofthe strengths andweaknesses
to binding targets under the protocol. Finally, fairness requires a strong
of the climate regime.
and impartial compliance mechanism, which fully upholds the tenets
oi
procedural fairness. A weak mechanism, with loopholes that
are easy to
exploit, raises the possibility that noncompliant parties could avoid
doing t.3.1. Conference of the Parties (COP)-I: Attending to Unfnished Business
their fair share and, in the longer term, increase the burden on compliani
The Kyoto Protocol wa: adopted at the third COP, in 1997. COP-4, the
parties.
first meeting of the pa ies after the adoption of the Kyoto Protocol, was
an opportunity to deal with the unfinished business of those climactic
3.3. FINALIZING THE PROTOCOL: CONSOLIDATION AND CHANCE negotiations.'67 The parties adopted a number of decisions - the Buenos
- Aires Plan of Action - that established a negotiating agenda for the
THE LONG ROAD TO ENTRY INTO FORCE
coming into operation of the Protocol.'6E The Plan covered a number of
Its imminent demise already certified by critics, the protocol finally
entered issues, including the 6nancial mechanism, the development and transfer
into force on February 16, 2oo5.r6i The legal instrument adopted in 1997
of technology, the implementation of Convention and Protocol articles
set targets and timetables, but the technicai details to bring
the overall concerning adverse effects of climate change on developing countries, and
framework into operation remained to be worked out. This iask,
in what the Kyoto mechaDisms.
came to be known as the Kyoto process, fell to the COB which, in
the period, With respect to the financial mechanism, the parties agreed that the re-
before the Protocol came into force, was requested to carry out
a range structured GIiF would serve as an entity entrusted with the operation
of tasls to ensure its prompt start.,66 This process of filling in the gapsis
of the financial mechanism referred to in Article rr of the Convention
covered in greater detail in this section.
and that the COP would review the performance of the GEF every four
Like the C,onvention, the pr<itocol is also, in many respects, a fiame_
years.'q Among other things, it was also agreed that the GEF should fund
work insrument, with the draften having left many details to subsequent
the full cost of initial and subsequent reports by developing countries on
negotiatior. In particular, the rules for the markerbased flexibility mecha_
emissions and measures taken to implement the Conyention (known as
nisms remained to be elaborated. The samc was true for other basic
opera- national communications).'7o Demonstating the early concern of devel-
tional details relating to reporting and accounting for ernissions, financial
oping countries regarding adaptation and vulnerabiliry the GEF was also
assistance for developing countries, and the compliance mechanism.
After asked to implement idaptation response measures in particularlywlnerable
protracted negotiations, most of these issues were resolved at COp_7
in
'67crurr rr t.,Gurpp rxo AssEssMENT, at 24Fj3. For a sumrbary of the met-
ing, se. abo Repon of the Foutth Conference oI the Pafties to the F@fle$rc* Conven-
'6tJeaDrruo Vrcron, Tna CoLlApsE or rHE Kyoro pRorocol Tna SrnuccrB ro Sr.ow tbn on Clirruta Changc, a(97) EaRrH NEcorrarroNs BULLETTN (1998), availible at
Gr,os^r W^nMrNc (2oor). The Ruseien Federation deposited ^NDits instrument.i;;,il;;; http://urdvr,iird.celvohr. The Earth Negotiations Bul.tin (ENB) is widely rcgarded as
Ujitcdtlations on Novembr r8, 2oo4. fo .,h inB d lonS priod oi**""irr,Y.
,66withlha a factual and authoritativa sourca of information on rntcmational cnvironmntal and
Jea uactsrcn Vul.tl, in RxpoRT or rxr Corrrnrr.rcp oF THE p^rTtls
ox rrs Txino sustrin.bl. d.wlopmcnt negoti.tions.
SssstoN, ADDENDUM, PART Ilr AcrroN T^(EN sv rxt Coxrrrrxct tssr. D.cision /CPa in REpoxr o! TxE C,oNpExENcE o! rxE PanrIEs oN trs FounrH
op rHE p^RTrEs
FCCClCPhgeThtAddt (reeE). S., a,so OBERTHu- & O-r, lN;;;;;;;
PoI.rcy, at 2{r. In cffed, th COp scrved as an ad hoc prepara,"ry
a;;;; SrssroN, ADDBNDUM, P,IRT II: AcrroN TAXEN Ey rrrE CoNFEtENcE oF THE P^RTIES,
COP/lvtOP. Th. tust session of the COp/MOp fornulty ad;pted
,i.-i*
U"af i". FCCCICPhgg8/r5/Add.r (r99e).
in preparntion for tlc entr), into force ofthe protocol.
COt;:.irtilJ;;
the
'69see id. Decision J/CP4.
'7osee id sz 4lio UNFCCC An. a(r) and An. D(r).
 Internatioru Cliinte Change Regime
fi. Finalizing the kotocol 95

94 Development of the

countries.'76) ln legal termsand consistent with the principle of com-

-
and related caPacity
countries such as preParations for adaPtation activities
change launched mon but differentiated responsibilities - the Protocol does not Provide
building.'z The decision on the adverse impacts of climate Discussion
for the negotiation or assumption of voluntary commitments'
*o.k-progru. to examine the issue, including identification and con-
" of such commitments engenders normous susPicion among developing
sideration o]f -easur", ,,rch as technology transfer and insurance'r7" The commitments'
a deadline of COP-6 in countries, which regard them as a slippery slope to binding
decision on the Kyoto (flexibility) mechanisms set of the principle of common but differentiated
rules to flesh out the details as well as undermining
zooz for the parties to make decisions on the
responsibilities.
necessary to make these mechanisms operational '71 continues
fault line between A second example ofthe fault line cvident at COP-4' one that
The conference highlighted once again the Persistent review of the adequacy
to fore with the to be manifested in the neSotiations, related to the
indushialized and developing countries' which came agreement on
commitments for of commitments under the C'onvention.'z While there was
proposal by Argentina, to Place the issuc of voluntary on
the inadequacy of commitments, Partics could not reach agreement
aeveloping. on the agenda'i|Ihc proposal faced immediate mitigation
"ornt.i., the develoPing the reasons, with developing countries criticizing insumcient
and fierce resistance from G-77 an<i China' rePresntin8 turn' attention to
by the industrialized countries, some of which, in
drew
proposal' Argentine pres-
countries. After the Predictable reiection of the at COP-
a voluntary tar- the formers' lack of emisions reduction obligations' Similarly'
ident Menem Pledged that his country would assume in reaching agreement on the
COP-rz in rz, in :,oo6, great di(ficulty wa5 exPerienced
get at the n.ri COP'' (At recent confercnces' for instance' arguments' and
advocated the amend- mandated review of the Kyoto Protocol'r^ The interests'
i.lairobi in 2006, the Russian Federation has also
chief protagonists remained targely unchanged'
to allow for voluntary commitmenls by
ment of the Protocol
developing

staSc ll eaivitics, wher. stat' t consisls of planninS' th' idcnrification of nf 3A.7. COP-, Pause ond helude
r.gions, and capaiiry burld'r'g' 5'r Decisron r CPr'
'rso-cellcd in REPonr ot
prelude to the
".."Uf. "".1*a
,r" Cor.rr*"rac" o,-t"l P'urros ot Irs Frn' r irrslor' Aooexnuu' P'rrT II: AcTtoN Hailed as a modest success, COP-5 was in truth largely a
(ii)' LNECCcJCPhggSh/Add r The meeting adopted
oF rHP P^RrrEs' frrd 4lJ )(i)-
i^""" niore substantive decisions scheduled for COP-6''7e
i"rij. "ttt"C."**"c! has, until rccenilr limircd lts sctivitres with r'sPect
to aoaPurton
if,. crf for developing a number of imPortant decisions on technical isues such
as guidelines
; p.ip,.,io" 'adaptariorr in the form of support
f;ilifi -nrlional
for
n ntlfort for aclual adrplalion pror guidelines
.o,.intries communications The h'! for reporting of annual inventories by Annex I countries'Eo and
Xilil;;;;; fru,ii"tion ro' n"nv a"'etoping to'ntrics' prrt''.,*1t".'P'
i.l-a a.".topir,g.ut.. (SIDS)' In moa th' Gl I lrun'hcd lhc US$5o million slrare'
to
Iiplr".i*-"'r,.fa"r"rion (SPA), whi(h '( inrcnde'l to P'lol rn op'rationel appro"h '76Thc Rusien Fcdcration! insist.ncc
oII this point tb' uth COB in D'(rnbcr 2oot'
ili;;ilf. il't]j;-rnJ'^on"'n' r" " ' GEt Asstsr^NcE ro ADDaEss A-DAP-
to cxrcnd into thc momiry hourq with thc issuc"uscd
rcponedly only rc5olvcd (tcmPoraruyl
" F^crLIrY' JorNrSuM'
t^rl.r, Ciilc t/rtia/Rev,r (2oo4), and Gror^r ENvTRoNMENT (2oo4)' rvaihble at
* .l*.",ft-ftout ,f,on;
'ill
"" rzth COp in Nowmbcr
lo Pr.5id'nl Putin ihc proposal wes oncc a8ain Prcsscd
." txe i"^*., CEF Couxclr Mtr:rrri;' Mry r9-n' para 26 tic 2006. For th' tn of th' so-calld Russian ProPosel' as
"^l"
iip'/n \)'rr nrerrts/GEF-C4/8ef-'23 html# "i
l'ia.*J cop", ,a, REPoRT or rus PTESIDBNT oN coNsuLrlrloNs coNcBRNING
"*.g.f*J;;iloocumcnts/council-l roB
Jointsummary.
",
i"o"o"^aor rt" Rrssrrr f sorilrroN ro DlvrLoP APProPitars ProclDUrls
l7'Sac Decision y'CP.r, in RTPoRT or rxE CoNrr'RENcE oF THE ParrlEs oN rrs Founrti "*"
rr" i""""r^i v."urrrelx Corlxrtxrrlrs' FCCC'/KP/CMP/zoo6/MISC'4 (2006)'

ii.i"rl'r-rp"i i"t.'r*. lt should b' noted rhat Protocol Art 4 rfcrs to "'dv!rs' "t
.v.ilebk rt hltpy'/rvw1v.untcc.int'
-oi 'ff'cts
Ji-tt it-gt t'*or th' imP'cts ot rerl''nic nreatlrlet'on non_Anncxl countri'3' TzUNFCCC, tur.4(r)(d).
ii"-.i..i* ii, ,rt impao oi rc"pon"e n'"'""'* the con('rn of thc oPEC
"nea" ses GiuBB Dt
,r,p-iJi;-.,liiliti""[y, p.nic6.t coP-r2 sid6t PFd.-lhoroud rcvicw end instcad
GUIDE
-Lit- rit" .t,n",.. picparetions for r rccond rcvicw of th' Prctocol in 2oo8'
\"ill lheir conomies
Policics affci ^L' .".aJio U."ii, i. r*r,
AND AS5ES5MENT, JuPta not' 4r' at 14'
l'l' *it-ii-i ii ilrn'dnlctcrcc d thc Pania to thc kon'votk anvaltbn on ainate
*iii rir fii'i, iit niPoRl oP rEE coNFERTN* or r*r Pan rres o* trs to,nt'. SessroN' Ciazqr, ir(iz:) E^rra Nrcofl^rroNs BulrErlN (1999)'

ttDt4 nol. 156. 's";;;i;;;;aiir ccPr, in RDporror rHE coNrBrBNcEoF ir'

PArrIEs oN trs FIPrtt
on clhnate
"n'i!:i'r'ii rii t*nt c*nloene of tle Parti: to the Frane*ork conl/ention ira"at,_io""arr", plrt ll: Acrron
"nd Trxex rY THa coN'ERENcE o! TnE ParrIEs'
Chantz suDn rrotc 165' UNFCCACPAqgt6/Add.r.
tlrc'and:fuxcntina took no edion rn lh^ rcSJrd
'ttn
 96 Detelopment of the Intenational Climate Change Regime
for expert reyiew of inventories submitted by Annex I countries.r8, These
decisions contributed to the transparency, integrity, and comparability of
emissions data - all critical qualities in rhe negotiations on climate change.
The modalities and procedures for the flexibility mechanisms, particularly
the CDM, and the design of the compliance mechanism were key topics
discussed. In both cases, the COP adopted decisions requesting the relevant
subsidiary bodies working on the two topics to continue their work, with a
view to adopting decisions by the COP at irs sixth session. With respect to
the CDM, NGOs wer vocal in reiecting thc eligibility ofnuclear energy as
an option.
fi.3. COP-6: Thirys Fall Apatt
The sixth COP convened in The Hague, with the aim of completing the
negotiations on the topics under the Buenos Aires plan ofAction. Despite
vigorous attempts to rescue the meeting,,8, it ended in hilurc, with the par-
ties unable to reach agreement on a number of issues.,E, Among the issues
that derailed the negotiations were disagrcements as to what extent CDM
and fl should be supplemental to domestic action by Annex I countries,rEaT
lllDacision
5/CP.r, in REpoRT oF Tn! CoNFERENcp ot. THE pARTtEs oN rrs FrFTx SrssroN.
supta notc t78.
tr'Whcn
diffcultics surfac.d, th. presidcnt ofthe Cop, Vr. Ian pronl of thc Ncthcrlanrls,
rricd_to clustar rcLtcd issucs for ncgotialion in hjgh levelgroups. S.a Sumfi ary of the Sixth
Anfti. ce o[.h. Pani.i to th. Fmm.Nlotk Conv.at nn on t linatc Chaay, l.riril,) EluLtx
NEGoTtATroNs BulrrrrN (1ooo). lvhan ngotiations stalled. thc pr.sident submittad,
in his pcrsonal capacit),, a note wirh proposals designed to achicvJa brcakthrough. Scc
Dacision r/CP.6, in REporT op rH! CoNFEREr]cp or rHE p^RrtEs oN rrs Srxrr Sissrox,
ADDENDUM, Plxr II:AcrroNTAXEN ByTHECoNTTRTNcEoFTHE parrt as, Vol. ll, annax,
FCCC/CP/2ooo/rAdd.2 (mor ).
t3],tndrcw
C. Rcvtin, Odd Culpti' in A
ops? ol ( tlr,rrr lalls, Nrw yorx TrMEs, Novcm-
ticr 2^E, 2ooo. For an analysis of th. maring Jnd rts \equli, ,.. Sur^,s D!ss^r, TH!
CLTMATE P.EcrMi }noM TtlE Hacur ro Mern,rxtcx: S.^.vrnc on SrNitNG TH? Kyoro
Prorocoli, Working Pepcr 12, Tynd.ll Cenrre , )oorl. rvarlablc .t httDJ/rrww.rm&ll
,ac.uupublicrtionyworking_paprs/wpl2.pdi CHRt< r r^N EcrNHoprR &r^x Conxrr.l,e,
RsrNvENTtNc rIrE CLTMATE NDcorr^rroNsi AN AN^r_ysrs or COp 6, policy Briefr, CEpS
( 2oor ), .vail.bl. .t hltD://wv,w.c.Ds-b.-
't'An.60)(d) ofth. Protocol providt th thcacquisition ofERU, from JI proiccisshould b.
"rupplcmantd to donrastic .ction" for tha purposes of meeting cmision riduclion com-
mitmcnts. Simila.ly, Art. t{JXb) states thet Annex I countries may usa CERS from CDM
proic_clr "to contributa to compfi.ncc wilh pan oftheir emission ;cduction obligations."
Thc 'rupplemcntarity, pmviso was support.d by the EU and orhars conc.rncjthat thc
u[c.pp.d r.cou!s. to thc flcxibility mcchanisns would allow Ann.x I counlri.s to avoid
3.j. Finalizing the Protocol 97
how much credit countlies should get for the carbon dioxide absorbed by
forests and grasslands,'Er and the compliance mechanism.'E6 The COP sus-
pended its sessions.and requested that the president 'seek advice on the
desirability of resuming that session in May/fune zoor in order to com-
plete work"'Ez Overall, aside from the divergence regarding specific issues,
observers identified the sheer scale ofthe agenda and the lack oftrust and
understanding among parties as reasons for failure.'68
j4,1. COP4bis: Compromise and Concessions
After the meltdown at The Hague, the resumed sixth session of the COB
COP-6 (Part II), ended witlt ncgotiators managing to reach agreement
on most of the critical political issues relating to the implementation of
the Kyoto Protocol. This was despite - or perhaps partly because of -
unlavorable developments in the United States. Responding to a letter from
a group of senators requesting clarification of his stance on the Protocol,
President George W Bush stated his opposition to the Protocol on the basis
that it exemptd major emitters and would harm the U.S. economy.'Er 11
June, President Bush confirmed the United States' rejectior of the Kyoto
taking dom.stic rction to rcdrcc cmissions. Thc .xrct mcaning ofthe "supplcmcntal" and
"prn of" provisions has rcmain.d contcsled.
tsThc
lcchnicrl tcrm of an ir land usc, land-us. ahant., .nd forcstry ( LULUCF ). Under Arr.
3b), Annax I parties can count rcmoBls b). sink r.sulting ftom dircd human-induced
LULITCF activitiai "limitcd to afforcst.tion, dfor.station and reforcsration sincc t99o."
This appro.ch .ntrils m.thodolotical and m.surcmcnt difficu.lti.s of its own, bul the
clcar limit.tion in Art.3G) is muddi.d sonodh.t by An.l(4), which dir.cts th COP
to dccida on rulas .nd guidclincs for counting "additional human-inducrd activities,"
such as forcstry managemant .nd cropland managcmant. Thc Unitad Statas advocatd
rccoSnition of what it claimed wErc cxtcnsirr COr s.vings from sink through forestry
managem.nt, whil. the EU pr.fcrr.d much morc limircd rccognition of sink act iviries. See
DEss^r. r.rrro nola r8r. at 4.
'&whilc thc EU rrgued for: binding compliancc m.chanism, countris such rs Ausrrrlie,
,apen, .nd th. Russian F.d.ration pref.rr.d r nonbinding system. Thc parti.s also dis-
a8red ovar tha aofiposition of aomplianc MiaJ, with tha Anncx I countri.s unwilling
to accpt qual rcgionel rcprcsa[tation as advanced W thc C-n {onp. See SunMry o[
the Si.xth Conf.ft ce of the Portiet, tupra note tu .
rrTDecision
r/CP6, in Reponr or rHE CoNfEaENca or rxD PanrlEs oN rrs SrxrH SEssroN,
rrPra nola lEo,:t prr:,2,
re
Dtsser, rupra notc rEr, .t 4J; Mich.al Grubb & Farhan. Yamin, Clirrati( Anbpse at The
Hagw: Wat Hapryne4 l,'/hy and Men Do We GoJtom Ha"e?, 7 INn!RN^TIoNA L Arr^r rs
25r-76 (root).
tsePr.sident
G. W Bush, Text ofl.tt.r to S.nrto,' H.lms, Cr.ig. Hagcl, and Robcrrs, March
13, 2oor, availablc at httpr/wwv..whitchouse.gov/ncws/r.l.ascs/2oot/oj/2ootojr4.html.
 98 Dc*lopment of the International Climate Changc Regime
Protocol and unveiled the administration,s climate change program, with
afocus on research and technology.,eo The U.S. opposition to the protocol
opned a rift in transatlantic relations.,e, At the same time, the supporters
ofthe Protocol, in the first place, the EU, were aware that if th.y.outa not
clinch a deal on the key outstandiDg issues, there would probably not be
another opportunity to resuscitate the treaty.
Progres was made in Bonn regarding four main areas: the rules for
emissions trading and the flexibility mechanisms; the eligibiliry of forestry
proiects undertheCDM and ruleson the counting of forestry managemnt;
funding and capacity building for developing countries to combat climate
change; and key aspects of the compliance mechanism. At the beginning
of the second week of negotiations, the parties agreed to adopt a political
statement - the Bonn Agreement - proposed by the president, which encap_
sulated agreement on the outstanding issues, with the understanding that
negotiations lvould continue on individual decisions.'ez The Bonn Agree_
ment sttled cenain issues that had bedeviled COp-6 in The Hague, among
them that the flexibility mechanisms ',shail be supplemental to domestic
action, and that domestic action shall thus constitute a significant element,,
of the effort made by Annex I parties to Dreet their emission reductiort,
commitments.,el It also stated that Anncx I parties ..are to refiain from',
using II and CDM credits from nuclear facilities to meet their commit-
ments, thus effectively ensuring that nuclear energy projects would not be
eligible under these mechanisms.,ea The parties also agreed that forestry
projects couldbe inEluded in the CDM. bur lhat (r) these would be limited
to afforestation and reforestation in the 6rst commitment period, with the
detailed technical procedures and methodologies governing such pro.iecrs
to be drawn up by one of the subsidiary botlies, and (2) credits from such
ftsSr.
Presidcnt G. W. Bu s|I,, pl.sid.nt Bush Disturses Gtobul Ctimote Chonge,Office of
thc
Pr.ss Sccr.tary, Whit Housc, lun. rr, &or, ,rvailible ar http://rswwihitehousc.gov/
ocws/ralaasas/2ooL/o6l2ooro6u-2.htrnl.
re'Sc.,
c.g., Fr:nl Bruni, Dep U.S.-E rcpe Split Cast, Long Sb,adow on B rh Tout, NEw
Yonx TrMss, luna rt, 2oor. A discussion of the various diplonratic cfiorts to bring thc
" s.$ion and wNch thc Conf.r.ncc dccid.d to forwrrd to its scv.nth r6sion for rdop-
.--admioistretion bacl to thc tebla i5 summarized by Dess,rr, iupra notc r8r, at 5_E.
l9rSac
R*orr or rxe CotrEnENca op rEE p^RT,". oru rxp ircoxo pent on ns Stxrn
Slssror{, P^xr li Procerolxcs, prras. 34-36, 4r-ro, FCCC/Cp/2oo (2ool). S.e ato
5 COP dccidad to forwrrd to its s.vcnth sassion for alabor.tion, complction, and adoption,
Sutnnary of th R.Ju,, d Sinh *stion ol the Contotr, e ol the pani* n ric UN komcuor*
, ,C.owcntion ot Clhtal? Clung., l2(t76) E^RrH NrcoIreirors Bur-r-rrrx 4 {roor).
"t Rc?on 4 thc Canfcmr. of thc Panb* supra nore y,o, at qt .
'sscr id l tl.
j,j. Finalbing the Prctocol 99
forestry projects could constitute no more than r percent ofa party's assigned
amount inthe first commitment period.ret With respect to forestrymanage-
ment and other additional land use,land-us change, and forestry activities,
under Article 3.4 th contribution of these sinks was subject to individ-
ual country cirps, st out in an appendix'$ Agrecment was reachd on
many aspcts ofthe compliance system, including such contentious issues
as membership,'e7 decision-making procedures,leE and consequences of
noncompliance.'ee Consnsus could not be achieyed, however, on whether
the consequences ofnoncomplianc should be binding.e
The issues on which the parties reached detailed agreement essentially
related to developing country concerns."o' Most important, the parties cre-
ated three new fundsr two under the Convntion - the Special Climate
Change Fund (SCCF) and the Least Developed Countries Fund (LDCF)1o'1-
and one, theAdaptation Fund,'o1 under the Kyoto Protocol.In somethingof
'%Id. zt tt.
's Id. zt lt-qz.E.g., Cenada ir pcrminrd lo count rcmovrls of ru million tonnas of COr
(MVCoJ p.r )l.r in th. commitmcDt priod, J.p.n 12 Mt/co,, and thc Russian Fed-
r.tion U.6l MI/CO,. Somc ob6rwrs rnaintain that th.se allowances undcrminc thc
.nvironmcnt.l intcgriry ofth. Proto@I. It tint.rcstinS, too, that . footnot .t 46 star6
th.t "comidaration war.lso givcn to nation.l circumst nc.s (includinS $c degrc. of.ffort
nccd.d to maat Kyoto ao[:mitmcnts end thc forcst man.g.mcnt mcasucs impLmcnt d)."
rtTA
total of ro mcmbcrs, with thc sclcction formule rasulting in six rprcsntatives ftom
ton-Aoncx I countrias .nd four from Annd L R.por, oJ th. Conlercnae of thc Pottbt, tuptu
notc r9o, el 49.
'* Srz i4 aI49. Dcciions arc to b. m.d. byconscBus, feiling which a thrce-qua(.rs majority
pravails, For tha Enforcemnt Bruch, fuinax I pirtias iDrirtcd on a doublc majority voting
proccdurc so rs to avoid th. possibility ofnon-Ann x I count.i.s colluding against them.
I9Sa.
id. .t 4a. Th. consaquancas includc subtraction ofcxccss cmirsions times r.l ftom thc
assiSncd amount of first c"mmitmcnt pcriod, addcd to the assigncd amount in the nxt
commitmcnl p.riod.
bo See Summary o! thc ncsumai Sixth S.ssion, supru not. r9o, et 8.
'ot,tt COP-obir, thc prni6 @nlartcd tha polirical Bonn Agrccmnt into onc sd of dcci-
sions forwarded to COP-7 for adoption and rnother rcquiring furthcr claboration and
complation. Sac REporr or r8! CoNlERaNcE or tte P,r*rrus ox rnr SrcoND PAtt of
rrs SrxrH SEssroN, rcspactivaly, Addanoun, Part lll, d.cisions on which thc COP notcd
th.t ncgoti.tions wcrc compLtad .nd coff.nsus rcachcd at thc sacond pert of th sixth
tion, FCCC/CP/2oo/t/Add.! (2oo1), and Addcndum, P.rt M Dr.ft dcciJion! on which
progr.ss rr.r nol.d by th. COP .r thc rcond part of its sixth scs.sion rnd which thc
FCCOCP/2oo/rAdd.2 (2oo2).
ro2Sec
Rsporr or rxs CoNpanENcE op rxa Parrrss oN TrrE SEcoND PABT o! rrs Srxrt
SlsstoN, ADDTNDUM Parr Ill, rllpra not.l99, at,+l-4j.
-' Sec id. t sa.
 roo Deeelopment of the Internationdl Clinatc Change Regime
an innovation, parties decided that the Adaptation Fund would
be financed
from a z percent share of proceeds fron Cl)M projects. In a victory for
developing countries, agreement was also reached on the creation
of an
Expert Group on Tkhnology Transfer.ro4 A decision under protocol
Article
3.r4, strongly supported by OPEC countries, requested Annex I parties to
report annually on the steps taken to mioimize the adverse effects oftheir
respons measures on developing countries.."5
j).3.5. COP-Z: The Marrakech Acconls
- Hard Bargaining
COP-7, in Marrakech, succeeded in the task of rranslatiug the political
Bonn
Agreement into a legal text.26 Decisions rvcre prepared with respect
to
nuts-and-bolts issues such as the rules and procedures applicable to
systems
and inventories relating to GHG emissions und removals by sinksbT;
the
compliance regime'o8; guidelines and procedures for the implementation
ofthe flexibility mechanismsDe; and land-use and forestry as sink for the
removalof GHGs.1to The more than two hundred pages oftext comprising
the Marrakech Accords are also known as the .,Kyoto rule_book,,'
After Marrakech, the protocol might perhaps have been compared to
9,
new house that - while still requiring a few touch-ups h.r. und th.r" I
was essentially ready to be occupied. Thc cost in enyironmental integrity
of "getting the job done" in Bonn and Marrakcch was judged by ,or*
"s
-asuid-"tzr,'
ry
Sca lid- at 5o. Countrics with aconomis depcndelll un,,ilxfo(s, particularly som. OPEC
mcmtErs, arc (on(arncd that miligation mer.llre, nnder th proto(ol may harm thair
markats.
dFor-a
summrry:ndovc rvica', tec Su,lmary o[ tlr Stu,:lth Conle,en a of the padie, to th.
Climat. Chang+ ttltS E^nrn Nrr;orrerroxs Bur_ierrr (uoor).
,^,yN 9:w.ntio!!n
'"'Dacirions zolcP.7,ltlcpz, zzlCp,7, and 2llcp7. rn Rr poRr ,rr rxe
CoxrsrnNce or
txr Per ss oN trs SlvENTt SDssroN, ADDtrNr,usi, p^RT II:.{crrox TAxsN By rHE
CoNFERENcE_o_r rHB P^rTlss, Vol. III, FCCC/Cp. ru,,t, rJlAdd.J (2oo2),
r6n
rrccr$on 2CUL7! m Raport op rxe Corrrrrr, I ,,1 rHE p^nTt[s oN tTs SEVENTH
SEssroN, ,lrpra nota :o5.
4 B:nking rcfcrs to thc possibilir/ of rct.iring unul.d AAUS fiom ona comhitmcnt priod
S.. D.cisions rtlcP7, t6lCP.7, 17l1p.7, rBlCOp7. and rUCp7, in REporr op rHe
CoNpER-
rxcl or rgz Prnrrts o* IIs SEvENrtt SEssroN, ADDENDUM, p^rr lI: AcrroN TaxBN st
,,^rxe Coxrerrxc: or rHE P^rTrss, Vol, ll. FCCC/Cp/roorlJ/Add,z (2oo2).
''"Saa D.cbions l/CP.7 and ty'CP7, in Reron: or r nr CoNrERsNcr o, rHE p^rrrEs
oN
trsSEvlNTa SEssloN, ADDINDuM, p^nr II: Acrron T,rxrr ly rxe CourERENc! oF THa
P^rrt!s, F@gcP/2ooL/r3,/Add.r (zooz).
j.3. Finolbing the Protocol tol
too high.':rr The main count in this indictment relates to the role played by
sinks, particularly the fact that the verifrcation of GHGs through forestry
management and other land-use measures is very loose.lr With the United
States having pulled out, another group of countries - Canada, lapan, and
the Russian Federation - assumed considerable sway with respect to the
final details ofthe Marrakech negotiations, and they were able to extract a
number of concessions from the EU."r
The combination of fungibilitylr of allowances and credits under the
Protocol and so-called banking"t has the potential to water down the envi-
ronmental integrity ofthe Protocol."6 (Parties with surplus allowances and
credits in the 6rst commitment period may bank them for subsequent com-
mitment periods. ) Particularly problematic may the units derived from sinks
proiects in Annex I countries under Protocol Article 3(3)-(a). Although
these removal units (Rl lUs) cannot themselves be banked or carried over,
their interchangeabilit), or fungibility with other Kyoto units means that an
Annex I party could simply surrender RMUs for compliance purposs in
the first commitment period, retaining surplus AAUs, CERs, and ERUs to
carry over into the next commitmcnt period.rz
1r
Sccrndyris of "Kyoto loopholcs" by SrLL H^r! & M^rrE MErNsxausEN, GTEENpEACE
INTEriiarroNAL EAcrctouND INponMATroN oN PoriNllAL lroptiol.Es rN TtIr Kyoro
Prorocol, IJpD^rB por COP-6 (P^rr T!/o), BoNN, (2oot).
t'1E.8.;
*hilc partics must dcmonsu.t th.t rcmovals from cropland managemcnt, forcslry
m.neg.m.nt, .nd similir adivitics arc hum.n induccd, thcrc is no requircment for tlre
submisrion of annu.l invlntorica, a! tharc is fot sourc6 ofGHG misrions arld ramovals
by sinlr in thc cesc of rlfor.5t tion .nd drforcrtetion. Thi. pot.ntidly undcrmircs the
tigor rnd cnvironmcntd intagrity of tha ararciJc. S.r Dccision rr/CP7, .nnaa paI., 8.
And whilc sink Aom forGtry m.n g.m.nt.r. crppcd by country no such timit .ppli.s
to tfu othcr l.nd-us. nr.$urai mcntion.d prcviously. With rcspcct to rcwards of hard
ba,tairing, thc concasion obt:ii.d by tIrc Ruisian F.dcr.tion is p.rticul.rly strikint -
it ,{as abla to doublc tha amount of rcmoEls ftom forartry managcment it could count
tow.rd it! t rgct, up ftom 17 MUCOI to l3 M! COr per ytrr timcr 6ve.
"t Set Summary ol tht Sannth Anl.rcn.c of thc Panier, supra notc ro4, at lt-16. See 4lro
Dsss^r, ,Irrro nota rEr, at r4-r7.
"rsa Dccision rE/CP.7, in Rsporr o! tnE CoNrErpxcr or TI{E Prnrres oN trs SEVENTH
Sessrolt, szpra ootc ro7, irDooq parai. rr-r1
ztt
for urc in r subrcque rt cornmitrnant pcriod. See iL ann.rq prras. 15-16,
_
''oThcrc ir no lirnit on thc nnmb(r ofAAUs tlut mry bc brnkcd or erricd ovcr. For CERS
end ERUa, raiFctivcly, . p.rty m.y not b.nl an emount grcatcr than rj pcrccnt ofits
initid *rigncd emount un&. Art.3OF(E) ofth. Protocol.
:rzln
t.lrcory, bankint intoduccs Acxibility .nd improvas thc .conomic .mciency of . cap-
end-trrdc mcchanism, hclpin8 to ovarcoma thc limit tions of fixed md r.thcr short
 ro2 Development of the InternatiotnlClindte Change Regime 3J. Finalbing the Protocol toJ

Careless engagement in international enlissions trading, and, to a lesser

borrows language from the Plan of Implementation, calling for diversifting
extent, JI proiects, raised the possibilily rhar Annex I parties could find energy supplies as well ..j actions to substantially increas the global share
themselves short of allowances at the end of the commitment period. To of renewable energy sources.22r
mitigate the risk ofoverslling by Annex I parties, it was decided that they
would be required to maintain a comnritment period reserve, which is an
amount equal to 90 percent of a partyt initial assigned amount, or five fi.7. COP-9: Milan

times its most recently reviewed emissions inyentory, whicheyr is lowest.rs Th uncertain fate ofthe Kyoto Protocol hung over the discussions at COP-9,
held in Milan in December zoo3.'r Entry into force was conditional on the
ratification ofthe Russian Federation, which sent mixedbut largely negative
33.6. COP-A: Focus on Addpkttion in Narr Delhi
signals on this point.a Nevenheless,the partiesadopted an imPortant deci-
With the technical details ofthe Kyoto flexibility mechanism in place, COp_ sion operationalizing the SCCF. The decision provides that adaptation will
8, held in New Delhi, saw the concerns ofdevcloping countries take center enjoy priority in allocation of resources and that technology transfer and
Prominent among them was adaptation of immediate concern to
stage.2t9
associated capacity building vrill also be covered.-t Supported adaptation
-
developing countries, but an issue that has generally played second frddle to activities will fall in a range ofareas such as water resources management,
mitigation in theclimate negotiations.l,o Thc parriesadopted theDelhi Dec- agriculture, integrated coastal zone managemnt, monitoring of vector-
laration on Climate Change and Sustainablc Development, which reafhrms borne diseases, and coping with disasters caused by extreme weather events.
that development and poverty eradication arc the overwhelming priorities A sticking point in th negotiations was how funds under the SCCF would
of developing countries.,'r It emphasizes rhrt climate change should be ofcountrieswith economies
be used to support the economic diversification
addressed while meeting the requirements ofsustainable developmnt an, dependent on oil exports,26 which was an issue because the initial decision
the need to integrate measures to combat climate change into national devel- establishing the fund provided that such diversification activities would
opment programs.lt stresses the importance ofadaptation to the impactsof be covered."T Supported by provisions in the Convention and the Kyoto
climate change for all countries, noting that dcvelopingcountries are partic-
ularly vulnerable, and calls on iniustrialized countries to furtherimplement
1"
See Plan ol Implemettotion ol the woid Surn,nit or Sustainable Developrre,lr, i,, REPoRT
their commitments relating to firtancing, capacity building, and technology
oF THa woRLD Suuurr ox SusT INABLE DEVELoPMENT, UN Doc. A/Conf./r99/2o,
transfer. With COP-8 taking place little more than a month after the World para. ro(c). Thc Plan of lmplemcntation is eccssiblc at hrp://wvrvr.un.ot8/csa/sustdcv/
Summit on Sustainable Development, it is unsurprising that the declaration documcnts/do$-kay-confcren.rs.htm.
12rForrn
rccount ofthc negoli.liont,ta SumnatyoftheNi hConleren eofthe Padi.saothe
UN Contention on Clifiate Changq r to ,2 Decamb.r 2oo3, r2(2ll) E^xrH NEcorIArloNs
comhihant priodl, Howcver, with thc potentirloflarge numbers offorestry.nd land- Bulurrx (rooj), &aa&oSuR^tE Drss^I sr CxrLlrxcss OurcouEs COP_9,
us. RMU' .nlcring thc syst.m, allowing Annex I countries to bank AAUS, iiis posiblc ^xo ^r
Bri.fing NorG No, lL T,,ndallCcntre (roor). ^1.,
that ncucomcrs in a sccond commitmnt pefl,\l wrlt k drradvanragd. Undcr a richtcr 24st.v.n L.t My.rs & Andrw C. R.vkin, Rurtio to Reject Poct o Climare Putitt Aide Says,
cap, ncw .nlr.nts will not have thc bufrer of rhc crrrty .rcquired, banked credits of iomc Nsw YoRx TrMEs, Deccmber 3, 2oo3.
Anncx I Dartis. oF rHE coNrltaNca ot rHE ParllEs oN lrs NtNrH stsstoN.
"'Dccirion ,/cP9, in REpoRT
'!lsaa Dcciion ls/CP7, in REpoRr or rHE CoNFrrrrr:r: or rxe p&rlrs oN rrs SEVENTH ADD8NDUM, PAf,T I[: Acrrox Tirxrn rv ttg CoxFaraNcE oF THE PART!Es, Vol l, 1l-12,
SEssroN, Jrpra nola to7, annex, par,.6, FCCC/CPhoo3/6/Add.r (2004).
rr9For.an-ac_count
ofthc ncgotiations, tee Sufin,aty (f tle Eighth Confcftnce of tha parties 26EU <ountrics argucd thatthe inclusion ofdivcrsification for oil exPorters would prcclude
to the UN Conwntion on Climate Chafige, u O obt rtt t y.,ya16"r'roor, ,t (zo9) Eerrr them making substantial contributions to th. fund. Th. issuc was deferrd for further
Nrcorr^TroNs BULLETTN (zoor). supro nole 22r.
considcration at COP-ro, following input by thc partics. S?e Dsss^r Er
""lnd*i !, Relun, Ctinak Taik Shilt Foru: r,, nrt rtt otat with Chang.s, New yoxx ^1.,
'17 See Dcaision 7tCP.7, in Reposr ot txE CoNPERENcE o! aHE PaRTtEs oN ITs SEVENTH
TtMss, Nowmbd j, 2oo2. PAsrlliAcrIoN TaxsN ByTnECaNsERENcEoPTHT Peerlrs,Vol.l,
utRsrorr SsssloN,ADDENDUM,
or ma CoxrErgNcE or rBr plrtrEs oN rrs ETcHTH SEssroN, ADDENDuM. parr para, 1(d), FCCOCP/2oor/r:/Add.r (zooz). This proviJion rpr.scntd . considcrrble
Il: AcrroN T^xEN syrH! CoNFsrENcEop rHE p^R r s.l, FCCC/CP/&or7lAdd.r (zooz). victory for thc OPEC countries, building on Protocol tut. {(8)(h), which situates thc
t04 Dewlopmeat of the Internatiohal Clinate Chonge Regime
Protocol referring to the adverse impact of response (mitigation) mea-
sures, oil-producing developing countries have advocated for assistance to
enable their economies to diversift beyond hydrocarbon exports.d In this
context, oil-producing countries emphasize the potential advrse impacts
resulting fiom carbon ta:<es and similar mitigation measures aimed at fossil
fuels.
The parties also adopted guidelines for rhe operation ofthe LDCF, which
is designed to provide assistanc to LDCs.1,e In the first instance, the fund
would be tapped to support the preparation of national adaptation pro-
gramsofaction, identirying immediate and urgent adaptation needs. Finally,
in adopting the technical rules for afforestation and deforestation proiects
under the CDM, the Milan meeting completed the last item on the Buenos
Aires PIan ofAction.so
34.8. COP-to: Bucnos Aires
The Rusian Federation's decision to ratiry the Protocol,,r, made shortly
before COP-to, reinvigonted the negotiations. A major outcome of this
meeting was the adoption of the Buenos Aires Programme of Work o2
Adaptation and Response Measures. It covers the following areas: adverse
effects of climate change, impact of the implementation of respons mea-
sures, and a requst to the SBSTA to develop a structured! five-year program
ofwork on the scientific, technical, and socioeconomic aspects of impacts,
wlnerability, Fnd adaptation to'climate change.,rl
potantiel n.gativa cconomic impacts of rnitigation neasures with the adversa imp.cts of
<.limatc chencc on daycloDine countri.s.
dsce
UNfCCi l,n. r(e)(hiaid Protocol Arr l, J, Jnd Arl.l(r4).
119
Dccision 6/CP.9, in RrpoRT oi rHe CoNFERENCE oF THE parrrEs oN rrs NrNTH SEssroN,
P^rr II: AcrtoN T^XEN Br THE CoNTEsENcE or rHE p^rrt!s,sl/pra nota r], at r3.
'1p Dcision t9/CP.9, in Rrporror rxr Coxrenrxcr. oF rHE paRTlEs oN rrs NrNTx SEssroN,
ADDENDUM, PART Il: Acrrox T:rxex lr rne CcTNFERENCE oi TBE ParTrEs, Vol. ll, tj,
FCCC./CP/boy6/Add,, (ioo4). The dccision addresses .omplcx issu.s r.l.ting to the
pcrmancncc ofsinlc by providing for two types ofCERS: a rmporary CER (ICER), which
cxpiras ive ytars aftcr its issuc, and a long-trm CER IICER), which .xpir.s at tha and of
thc crcditinS Friod of $e projc.t rctivity.
l3rscth Mydan,
& Ardr.w C. Rcvkin, with Rurid! Noa, Treatl in Emittiont CLart l,Ist
Hl.rdL, NEw Yorx TlMEs, Octobcr r, zoo+.
rlDccision r/CP,ro, in Rlpoxr op rxp
CoNFERINcE oF THE Parrrts oN rrs Terlrx Ses-
sroN, ADDENDUX, Parr [l: AcrroN TaKsN By rHE CoNFERENCE or rxE PAnrrEs, Vol. I,
FCCC/CP/2oo4/ro/Add.r (tooj),
I
j.j. Finalizing the hotocol lo5
The discussions on support for adaptation activities were again compli-
cated by the coupling of impacts from climate change with the impacts of
response measures becaus under thi$ agenda item, certain oil-producing
states argued that assistance under the GEF should be made available for
activities such as economic diversification.',r Donor countries resisted this
linkage and equivalencc. The EU announced that donors had pledged over
US$lo million for the SCCF.'I During dixussions on additional guidelins
for the SCCF and LDCF, developing countries reiterated their complaints
concerning their difficulty in accessing funds under the GEF, which had
been designated as the entity to manage both these funds.
Other decisions made by th parties concerned the adoption of simpli-
fied modalities and procedures for small-scale afforestation and reforesta-
tion CDM projects,2ri seen as facilitating community-level CDM projects
in developing countries,',6 as well as further guidelines for quality assur-
ance ofthe international transactions log (lTL), the software and technical
backbone ofinternational emissions trading under the Protocol.'37 The ITL
is designed to verifr that transactions involving allowances and other units
are consistent with rules agreed on under the Kyoto Protocol.
With the Protocol's entr), into force assured, negotiators also tumed some
oftheir attention to the issue ofthe future direction ofthe climate regime,
bearing in mind the expiry in zorz of the first commitment period under
thc Protocol. A proposal by the EU to hold two seminars was rebuffed, and
it was onlyat the last minute that agreement was reached on one seminar.':lE
Hcrmann E. Ott ct al ,, Ia TaI.s Two to Tang, - Clinuk Policy at coP to in Bu.nos Ait.s
"!
Bclond lou'sr .L oD Europr^N ExvrroNxrNTAL & PL NNTNG L?\wE4,E6 (2ooJ).
anal
4 Sunnary ol th. Tcnth Confeftnc. ol th. Panit.l to th. llN Convcntion on Climav change,
6-18 Daaonbar 2004,12(260) EarrH Nscorr^TroNs Bur-rrrrx 9 (uoo4).
Daciaion 3/CP.ro, in Rlporr oi rH! C,oNaprENcE oi rx! ParrrEsoN rrs TENrB SEssroN,
'!lt
ADDENDUM, PAnr II: AclroN TAxIN !y atl! CoNs!*ENcE op rHp P^rrIEs, vol, ll,
FccgcP/2ooy'ro/Add.2 (2oor).
'sE.g., thc DioCarbon Fund of thc Wortd Bank, http://<arbonfinancc.org/Routercftn?
Pat =Biocf &lcmlD=97o6&FID=9708.
!'7
Daciaio[ r6/CP.lo, in RrporroprH! CoNr!r!NcE oF TrrEP RTTEsoN rrsTrNaH SEsstoN,
Jryra nola 2JJ.
'rA5.xpaci.d, this di5cussion prov.d difhcult.nd th. rcsults wcr. meeg.r, with the pani.s
only rblc to agrca on a saminar for an informd cxahangc of vicws, $bjcct to tha cxprcss
condition that it rvould not "opcn my n totiations lcading to ncw commitments." See
RlpoRr o! trt! CoNrErlNc! o? TH! P^rrt!s oN rrs TENTE SEssroN, Plir I: Pr.ocErD-
rNGs,37, FCCqCP/2oo4/ro (2oot). StronS opposition c.m. ftom th. Unit d Statcs. S.e
Larry Rohtar, U,S. w4rer Do*n Chbal C,mmifirrcnt to Curb Grcenhoss. Goseq NBw YoRK
TrMEs, Dccmbcr 19, !oo{. For analysis, ,ea alro Orr ET lL,, Jrrpra notc 23r, at 8t.
 106 Deyelopment ol the Internationol Clinntc Change Regime 3.j. Finalizing the Prctocol ro7

industrialized country parties attempted to link the preceding process with

3A.9. COP- : Brcakthro gh in Montrcal
the broader review of the Protocol provided for under Article 9.4 This
Since the Protocol had enteredinto force in February z.oo6, COp-rr was held review ofthe adequacy ofthe Protocol would also apply to developing coun-
together x,ith COP/MOP-r to the Kyoto protocol.:re The Montreal meeting
tries. Article 9 states that the parties "shall periodically review this Protocol
was historic on several counts. The firsr meeting of the supreme body
of in the light of the bst rientific information and assessments on climate
the Kyoto Protocol, the COP/MOB formally adopted the draft decisions
change and its impacts," rdth the first review required at COP-rz/MOP-u in
that constituted the rule book agreed on in the Marrakech Accords and
2006. As a negotiatint tactic, establishing a link between the two processes
subsequent COPs.rro The meeting also Iaunched two parallel processes, or
presnted aD opportunity to bring pressure to bear on certain developing
tracks, addressing the next stage in the clinratc regime. Under the proto_
countris; however, in legal terms, the Article 9 review is intended to be a
col, parties initiated the mandated review of the commitments of Annex
separate proces, based on a thorough review of the latest science as well as
I parties by establishing the Ad Hoc \lbrking Group (AWG) to negoti_ technical and economic information.
ate industrialized parties' commitmenls for the post-2or2 period. Under
As noted earlie6 the scond track begun in Montreal consisted of a
the Convention, parties agreed to establish a non-negotiating ,.dialogue on
dialogue under the Convention. What it lacked in ambition, it partially
long-term cooperative action" to address clintate change.ra,
compensated for in terms of inclusiveness, both in relation to the issues
The review ofAnnex I commitments rvas rriggered by Article
3.9 ofthe (adaptation and mitigation) and with respect to parties. For those taking
Protocol, which requires that the COp/irlOp shall initiate the considera_
the longer view, the dialogue could be regarded as the first tenuous toehold
tion of Annex I commitments at least scven years before the end of the ina process leading toward greater involvement ofdeveloping countries and
first commitment period, in other words. by zoo5. The mandate of this those developed countries then outside the Kyoto process, Australia, and
review covered only industrialized (Annex I) parties. Developing countrie,
the United States. However, the latter maintained that any new process -
proposed that negotiations on the secontl conrntitment period should cori-
in fact, carefully labeled as a "dialogue" - should in no way lead to new
clude in zooS and argued that it was incumbent on industrialized countries
commitments.4. Thus the parties explicidy resolved that the dialogue would
to demonstrate leadership on mitigation. For their part, Annex I parties
- consist of an "open and non-binding exchange of yiews" and would "not
now excluding the United Stat'es, which, as a nonparty, was relegated to
opn any negotiations leading to new commitments."at
an observer role - rcsisted the establishment ofa timeline. Eventually, par_
Among other thiogs, the decision on the dialogue on long-term coop-
ties settled on less specific language stating rhat the negotiations of the
erative action to address climate change reaffirms that development and
AWG on Annex I commitments should be conrpleted in time to ensure that
poverty eradication are the first and overriding priorities of developing
there is no gap between the first and secon(i commitment priods.1.1 Some
country parties, recognizes the diversity of approaches to address climate
2r9For change, and emphasizes the essential role of technology in addressing cli-
an analysis ofthc meeting, rrc Hcrmann E . t)\t tt sl., The Montreal Climate Surnmir:
Stadiflg ahe Kloto Businesr and prcpa ngfol po!.10r?,louRN^Lop EuRopE^N ENvrsoN- mate change,4 The parties agreed that the dialogue would be structured
MrNr^L & PL^NNTNG L^w 90 (2006). as four workshops covering the following topics: advancing development
4A total of ninet.an dr.ft deaisions wer. re(onrn1.n(lcJ f,,r rdoption by the COp/MOp at
itr fi$t sssion, .r @ntaincd in thc reports of Col, i, Cop-8; COp-;, ,nd Cop-lo. see
CoMPENDTUM oF Dnrpr DEcrsroNs FoRw^Rr)r,rJ roF ADoITToN By rHE CoNFIRBNCB
oF
!lOrr rt rrpra notc zJ7, at 9r.
THE P^rrrDs SERvrNc rHE MEETTNc oF THti I,^ R I rFs ro rHE Kyoro pRorocol trs 4 kc id- 7t^u,
92. 5.. ako Sunmary ol thc Etcvcnth Canf.rdc. o! th. Podirs to th2 w conycrl-
^s
- ftrsr SlssroN: Norr sr txr Secnrrenrrr, par.r. ,, FCCC/Kp/CMp/2oojlJ.
llDaairion
^T tion on AifiaE ChangA 28 Na,cmbcr-to Daaibct zooi, rzlzgt) E^nrB Nscorr^TroNs
r/CPn, in RspoRr or rxp Cowrrnrrr:r oF.rHE p^Rrrss oN rrs ELBvENTfi BuurrrN ( (&ot).
SEssloN, ADDEXDUM, Part ll: AcrtoN TAxeN ny l lrr CoNFERrNcE oF THE pARTtrs, 4' sct tupra notc
3, 4r, zl 3.
FCCC/CPl2ooy'rAdd.r (2006). 46Repoet or rHE CoNFlrlNcE op rH! ParrlEs oN rrs ELEVENTH SlssroN, ADDEN.
:+Givcn
thc time rcquircd lo complctc lhe reqlli$tc r,rririJrinnr. an agr.cmenr would prob- Plrr II: AcrroN !y ttr!
ably nccd to bc rcachcd by thc cnd of :oog.
DUra, TarEN CoNparENca or rHE P^Rrrrs, f4, FCCSCP/
2ooj/rAdd.r (2006).
ro8 Development ofthe Internatianal Clitlite Change Regime
goals in a sustainable way, addressing action on adaptation, realizing the
fullpotential oftechnology, and realizing thc full potential ofmarket-based
opportunities.
The adoption of the decision on the compliance mechanism gave rise
to considerable discussion.aT Article r8 of the Protocol states that "any
procedures and mechanisms under this Article entailing binding conse-
quences shall be adopted by means ofan amendment to this Protocol." In
the Marrakech Accords, the legal status oltlre compliance mechanism as well
as its consequences were left open, and thc accords referred to COP/MOP
in the following terms: "il is the prerogative ofthe Conference ofthe Parties
serving as the Meeting ofthe Parties to the Kvoro Protocol to decide on the
legal form of the procedures and mechanisnrs relating to compliance.",r8
At the risk of some uncertainty about its exact legal status, both developing
and industrialized countries preferred adopting the compliance regime in
the form ofa decision of the COP/MOP!{e (-)pting for an amendment to the
Protocol raised th possibility of two categories of parties to the Protocol,
namely, those who had ratifled the amendnrent and those who had not,
with associated legal uncertainty."o
While the climate negotiations have, fror]) r heir inception. artracted atter],
tion from the business community and environmental negotiations, the
Montreal conference will be rememberetl for the manner in which one part
ofthe business lobby pressed for a clear signal on the future ofthe climate
regime. The representatives of'the carbon tinance industry - consultants,
investors, lawyers, project develbpers - now had a great deal at stake in the
continuation ofthe Kyoto flexibility mechanisms. It became clear that this
interest group would rpresent a signilicant new priyat sctor voice in the
evolution and development of the clim.rre rcginre.
47
Orr er tt, suDra norc >r7, ar 94,
4Decision:rCPz, in REponr oF rnr CoxEnnrr:r oF THE PaRTrEs oN lrs SEVENTB
SsssIoN, ADDENDuM, P^RT II: AcTtoN T^lr[N ay l.trfi CoNFEReNcE oF THE PAnTrEs,
Vol. III, FCCC/CPhoor/r/Add.3 (zoo2).
49Thc implicetionsarc analfzed by UlrsrsrN & \vEixsnr^N, rupra nole
rto
u4, at t8.
Summary o! the Ebvcnh Anf.rcnc. ol the Pa.ii.. o ttu LIN Conyention on Clinat. Chang,,
t
28 Nol,anbeFb Decernber 2oo5, 12(291) E^RrH NE(n'rr^rroNs BuLlrTrN rl (zool). Saudi
Arabia proposcd an amendment. Sae PRopos^r. rRoM S^uDr ARABr^ To AMIND Tgr
Prolocol-: NotE By rHE SEcnEr^Rr^r, FCCC/KI'/CtrlP/2oot/2 (2oo5).
j3. Finalizing the Protocol ro9
3.3.ro. COP-tz: Nairobi - The At'rican Adaptation COP
This section summarizes the discussions and main outcoms ofthe twelfth
CQP and the second COP/MOP.4I As the first COP to be held in sub-
Saharan Aftica, the Nairobi conference was naturally expected to advance
the adaptation agenda. As it turned out, progress was made on the estab-
lishment of the Adaptation Fund and the work program of the SBSTA on
impacts, wlnerability, aod adaptation.
The AWG on Annex I commitments held its second session at COP-12,
agreeing that future work would proceed under three headings: analysis of
mitigation potential and ranges of emission reduction objectives, analysis
of possible means to achieve mitigation objectives, and consideration of
further commitments. The first review ofthe Protocol, mandated by Article
9(r), proved to be a contentious that kept negotiators occupied quite
issue
late into the finaldaysofthe meeting. Dveloping countries, particularly the
African group and China, advocated concluding the review at the meeting,
while the EU wanted to launch a review process. Developing countries
also supported scheduling the second reyiew in four to five years."' Not
coincidentally, perhaps. the second review would then take place safely after
the date - generally assurned to be zoog - by when targets for the second
Kyoto commitment period would have had to be agreed on. In the end,
developing countries obtained language that the review would not lead to
new commitments, while iu return, industrialized countries preyailed on
the timing of the second review, which was set for COP-I4 in zoo8.,t3 The
Russian proposal to amendthe Protocol to allow forvoluntarycommitments
by non-Annex I parties again kept negotiators busy until the final hours
of the conference.". The proposal as it stands was not readily compatible
"'Thc author attandad tha rccond rrk of thc mactiDg (Novcmber rt-17, ,006) in an
obscrvs capacity. For an account of discusions rnd &cisions at thc Nairobi confercnce,
sec Summary of thc Tttcllth 6dctc1tc. 4 th. Pattia to th. IJN btu.ntion on Clh\ate
Chongc ond Sccond M.$ing ol thc Pania b thc KWto PlotocoL 647 Noy.mbe\ Dbt3)
EAirH NEGorrATroNs BuLLstrN (lo06).
"' scc id, at z.
1t'Decision
/CMP2, in REpof,T or rHE CoNTETENCE or rttE PARrrrs SErvrNG As rHE
MssrrNc or tll! P^rrrss ox trs SEcoND SlssroN, ADDENDUM, P^tt II: AcnoN TAxsN
!t
rHE CoNraraNcE oi rfi! P^rrras SErvrNc As rnE MEETTNG oF TIIE P^RtrEs,
FCCSKP/CMP/roo5/ro/Add.r (2oo7).
2t'As a
compromisc, prrtia raqucst.d th. prasidant of thc COP to hold a wortshop in
May &o7 to cxplora thc scopc rnd implications of thc proposel. &c Raponr or rxe
 tro Deyelopment of the International Climate Change Regime
ltl
3.3, Finalizing the Protocol

with the structure of the Protocol. It would, for instance, enable those
the CDM.{o By one estimate, the levy is projected to generate up to $9jo
,teveloping countries assuming voluntary commitments
to participate in million for the fund, considerably more than the $278 million that had been
all the Protocol's flexibility mechanisms, including international emissions
deposited or pledged for the LDCF and SCCF by the end of2oo8.t6' Third,
trading, the laner, of cours, being predicated on emission limitation and
the parties also decided that the Adaptation Fund "should operate under
reduction targets. In short, the mechanisms designed to assist Annex I
the authority and guidance of and be accountable" to COP/MOB which
panies in meeting their binding targets would be extended to other parties
will decide on its overall policies. It is legally and politically significant that
assuming yoluntary commitments.,5, Finally, under the Convention track,
the AF will operate not rnly under the guidance ofthe COP/MOB but also
the second workshop ofthe Convention dialogue on long-term cooperative
under its authoriry. The reason is that with respct to the other climate
action addressed the topics ofadvancing development goals in a sustainable
change funds operated by the GEF, the COP provides "guidance"; effective
way and realizing the full potential ofmarket-based opportunities.,16
authority rests with the GEF council, in practice dominated by donor coun-
The COP/MOP took an important step forward by defining the princi-
tries. For developing countries, manyofwhich have chafed underwhat they
ples and modalities governing the administration oftheAdaptation Fund.2r7 view as the exces.sively bureaucratic and onerous procedures ofthe GEF, the
Notably, the governing body will have a majority of members fiom devel-
decision on the Adaptation Fund, panicularly the voting procedure, was
oping countries (non-Annex I) and follow a one-country_one_vote rule,
rightly hailed as a maior victory.
differentiating it from the double majority oIthe other funds under the GEF
The SBSTA failed to make progress in reviewing the mandate of the
voting system.':s The Adaptation Fund is unique in a number of respects.
Expert Group on Technology Transfer (EGTT), which was establishd at
First, unlike the other funds, it is solely the creature of the parties to the
COP-7, with the objective ofenhancing technology transfer under the Con-
Protocol, outside the direct influence of United States, with negotiations
vention. De!'eloping countrl parties had long been of the view that the
led by theEU.', Second, unlike the other funds - which are financed fro2 highly industrialized (Annex II) parties were not fulfilling their commit-
voluntary contributions and hence dependent on solidarity _ revenue for
ment under Article 4$) ofthe Convention to take "all practicable steps to
the AI will be derived from a 2 percent lery on emissions credits under
promote, facilitate and finance, as appropriate, the transfer of, or accss
to, environmentally sound technologies and know-how to other Parties,
CoNpERENcE op rHs Parrrss SErvtNG As rHE MEETTNc op rxa parrrDs ox rrs Srcoxo particularly developing country Parties." While the EGTT fulfilled a use-
,,.SlssroN, P^rJ I: Procrzorrcs, parls, 134-30. tCCC/Kp/CMp/2oo6/lo (2oo7), ful role, there was a sense that the issue of technology transfer required a
") Rtponr ol txr Ptlsr orrgr oN CoNsuLTATro Ns Co xt rx rc rxu ptopos^! oi rlrE Rus-
p.

SIAN FEDlllrroN ro DEvEtop AppropRr^TE pRocEDUnEs roB TxE

r
more ambitious mandate. On a more positive not, the SBSTA adopted
Approva! or Vot-
uNrary CoMMtrxBNTS: SulMrssroN rRoM p^Rry, 9, FCCC/Kp/CMp/roo6/MISC.a decisions concerning its "five year program of work on impacts, vul-
(2006). ^
rtocopics nerability and adaptation to climate change," which consists of activities
of prcs.nt.rions rr..vrihblc on Lhe UNFCCC s.crcrari.t w.b sitc ar htto://
unft cc.invm..ringrdi.logu./it.ms/.,7 j9,php. (workshops, technical papers, submisions, etc.) to help countries make
--_
"'Dccilion 5/CMPI iD Rlporr or rnr C,oirprreNcr oF rxE partrss Serrrxc ls rne informed decisions on practical actions and measures.'6' The G-zZ and
,..Mzetttc ol txr P^RT|rs oN ITs SEcoND SrcstoN. Jlpra note 2rl.
China focused on a learning-by-doing approach and actual projects, while
''L.8al qu.slions rrtra r.iscd conc.ming how the voting proccdurc for tha fund would
opcr.t. within tha GEFI govarnanc s)stcm. The GEF ma intainad th.t tha hybrid formuta th UnitedStates led the argument for an approach basd on assssment and
ofth! GEF w.s f,ctibl. cnouth to .ccommodnte rhc u nique fcrt,.rrcs ofthc furrd, includint
th. f.ct th.t CER!, which will financc the tund, originare fiom projecrr in d.v.loping
couotris. Additionally,6 legal opinion from the worja grnk, whr.ch is thc truste. eDacision
oithi r7lCP.7, in Rlposr oF rrla CoNt!f,lNc! o, rra PAf,TrBs oN trs SlvaN l
GEF fun_ds, indiotcd thit thc uniqu espects of the Adaptarion Fund would
b. comp.tiblc SpssroN, ruprd not rr7,.t para. r'(.)-(b). CDM projccts in lcest dcvdopcd countries &e
with cEF prcccdurcs. Se cEF, cov!RN^NCE or rnr Gr.oat Cuxeru Cx^l.c" i*os,
.xampt ftom thc lcvy.
GEF/C.29lj, p.ra. rr (2006). 6'Mou-n, srpro notc rj7, rr
J.
'9Beuro M0r-ur, NerroBt 2006: Ttusr AND rBE FUTURE oF ADAPTATToN FuNDrNc l arRzporr on rnr Sursrorrxv Boov ror Scrarrrrrc aND TlcHNoLocrcAL ADvrcr oN rrs
(2oo7), av.ilabl..t hnpt//wws.orfordcnergy.orB/ TwENry-FrrB SsssroN, paler. u-n, FCCOSBSTA/2oo6lrr (2oo7).
 u2 Development of the lnternational Clinnte Change
Regime j.j. Finalbing the kotocol u3

research.r6r The adoption by the COp of the work program marked the timelines and stylized group positicns - with the greater urgency of climate
achievement of one concrete goal esrrhlished
by the Buenos Aires pro_ change in the public debate.
gramme of Work on Adaptation and Response
Measures, adopted in 2oo4
al CO?-lo. The COp also gave guidancc to the GEF for
the operation of
the SCCF under the Convention.,6{ Unrier the protocol, 3,3.11. COP-B: Dou/n n the Wre in Bali
parties adopted
guidance to the EB of the CDM, where rlisagreement
surfaced among the In the year leading up to the Bali conference, a number of meetings con-
parties with respect to the eligibility ofcrrrbon dioxide
capture and sto-rage tributed to setting a tone ofurgency with respect to climate change. In April,
projecm,a and adopted the rules of proccdure for the
tody ,..ponribl. the Security Council, under the rotating presidenc), of the United King-
for supervising certain )l projects.,66 On the issue
of emissions from defor- dom, convened its first ever debate on climate change.4 In June, under the
cstation, Brazil submitted a proposal for an international
fund to finance German presidency, the G-8 count es adopted a summit document pledg-
activities to reduce the rate of deforestarion in developing
countries.r6z ing to "sriously consider" deep cuts in emissions in their developing coun-
This came after Papua New Guinea, supporte<t by other
irolcal rainforest tries, but onl), after prolonged opposition by the United States.?o At the
nationg had placed the isue ofincentives for avoided deforestation
on the UN, the General Assmbly convened a thematic debate on climate change,
Convention agenda at COp-rr in Montrcal,,6s
which saw an almost exhaustive list ofcountries address the topic.tz At this
In sum, COP-ru did not deliver any breakthloughs, nor
was it expected to meeting, as before, the EU reiterated is position ofa zo percent cut by 2o2o,
do so. This was not necessarily the view taken by ihe
media, which perhaps to bc deepened to 3() peroent, if other maior actors committed to srious
found it difficult to reconcile the self-contained negotiating
pro..r, _ ir, ,., mitigation action. Likewise, the statements ofcertain developing countdes,
such as Brazil and South A-frica, hinted thal the), would approach Bali with
fi' Sunmary of tlc tttcffth_hnlern.e o[ the pa_ i., 1,, trc LtN Cot,renrion o Climat. Chorge a mandate to begin ngotiadons. In early September, the Asia Pacific Ccop-
and Sccond ],lc.ting ol ttv ponies io the Kynt,, p,t,r.tol.6_17 Noyehrbet, grirn
rr(;ra) eration Summit (APEC) countries, hosted by Australia, adopted a final
NEcorrATroNs BuL[ETrN 7 hoo6)
roaDacigion
/CPtz, in Rrponr or rH! CoNTERFN(:E oF THE plrrrts declaration pledging to work constructively toward a successfrrl meeting in
SsssroN, ADDENDUM, p^RT
oN rrs Twllprn
II: AcrtoN T^K.N ny t rrr C.-""_^., ;;; ;;;;;;", Eali, and they also agreed to "work to achieve a common understanding on
FCCC/CP/2006lr/Add.r {2oor)_
4Sra Dacision "l
l/CMp2. in Rrporr or rne CoTFEREN{]E or rHE paartas SERVTNG a long-term aspirational global emissions reduction goal to pay the way
As rx!
MEsrrNG op.TB! plirrEs or rrs SecoNn Srssro,,
thlt thaCDM Exacutiva Board continue (onsrderJrron ",,1..""a r"'ii. a.airi"r r.qralt. for an effective post-2or2 international arrangement."rT'1
otuew carbon capturaand storacc
(CCS) mcrhodologi.s und.rth CDM, -"'"u On Sptember 24, the UN secretar),-general conyened a one-dan high-
bur wirh at,l",,"t
thc COP/MOB wirh a dcision ro b. mad ar itipl;urOp,i
,,t;".1ffii1i'*;'-
rcSistrarion d.t fo. cDM projccrs w.s March
in r.oi. er't:h;;;;;) level event on climate change, which was organized around the four themes
rr, ro"z, ccs p.";.".-*ifir"ik i..iJi.a of adaptation, mitigation, technology, and finance, and which drew the
...undcr thc CDM in tha first commitmant pnod.
-DaciSion rCMP2, in Rpporr o? rxe Coxrrntxcr oF TriE p^anss
participation ofalmost 80 heads ofstate or govemment.'7! A.lthough a forum
SERVING ls rnE
or rrlE P^RrtEs oN trs SEcoND SrssrnN, rxpm not 2rl. for discussion, not negotiation, the meeting did generate momentum going
T6TMEET|NG
'.dnzrts, "positive incenti\es, for a nel rcduction of
froposl anviratcs
rrom nctorcstation,
cmissions
wirh funding to come fro , rndunriilized counrrics. S?s posr- 4S. Rcuten, U.N. Co!ncit Hilt bnpassa otNr Climot Chaig,NBw yo^t Trxrs, April t7,
Trvt lNcENrtvEs For VoLUNT^ry AcTtoN rN I)!\,FtuprNc CouNTitEs
ro ADDrrss roo7. UN SC, J66lrd mtg., uN Doc. S/PV.566J .nd 9PV566J (Rsumplion r) (2oo7).
CLIMATa CEANGE: Bn^zrlraN pErspEcrrvE oN RxDUcTNG
e^ro",ona ,"o* O"rorl rrc
Scc Growrx ero Rrsporsrarr.rry rN TxD WorLD EcoNoMy, Summit Dccl.tation, ,una
tsr^troN, Submission ftom B..zil, Dialoguc \Vorking lapc,
unfccc.inr/6les/m.tin8s/diato8uc/appticai,;n
zr, arailable at itio,ll 7, p.r.. 49, .dopt.d .t th. G-8 Summit, Hciligcn&mm, ei2il.blc .t http://www.g,8
I,drr*1, ,i1rir,pai.
w.u Jnon otrmbracing rhe concepr of avoidcd Jet,,rArrtron
fii'r;il"il;" .d.M.bs/GE/EN/GESu mmit/SummitDodm.nti/summit-docum.n6.hunl.
lzscc, for daails of sp.t rc .nd statmcnts,
as suchr rathir. thc oro- htgr/rvy,w.un.org/grprcsid.n/,tllfollow-
rs armcd at thc redudio ofennssio,ft.rt\l(t,,re\t.trx,n.
r.'rPosar up/th.m.tic-dimatc.shtrnl.
J4 KEDUcrr{G EMtssroNs FRoM DeronrsrrI,,,\ rN DEvELoplNc CoU|{IRtEs: trscr http://vrww,apcr.or&iaFdlcld.r.-d.cl.rationJ2oo/.clrn-alimaEchangc.htnrl.
p-ro-ecxgs ro Srruuurr! A.rtoN: Ap-
SuEMrssroNs r.nou prntres, FCCC/CVzooyUIS-.r rDw.rrcn Hog., U.N. Cr, EI lhg.5 Fan Actbn on Clirrar. Cl,argc Nrw Yorx TI}lEs, Septcm-
(roo5l.
bcr z1,,2oo7.
 tr4 Development of the International Climate Change Regime
3.3. Fihaliziig the Prctocol ll5

forward to Bali, with participants highlighring the need foraction on

climate of the so-called Bafi road map - in fact, a collection of decisions - is the
change.:7r Later that same week, the Unitcd States convened
its first meeting much expected and politically crucial agreement to launch a new process
in a planned series ofmeetings of major economies on energy
security and for negotiations on "long-term cooperative action" beyond zort. As noted
climate change, which brought together r8 major economies
as well as the in section 3.3.9, at the Montreal conference in 2ooj, parties launched two
EU and the UN.rt The stated aim of this initiative, quickly dubbed
the parallel processes - or tra:l$ - to begin addressing th post-2or2 action.
"major emitters" meeting, is to arrive at n long-term
inonbinding) goal The first, the AWG, was established under Article 3.9 ofthe Protocol, with
among the maior economies and establish nationally defined goals
and the aim ofelaborating for Annex I countries only, for the second, post-zorz
programs for improving energy security and reducing
GHG emissions.,76 commitment period. The second tracl the dialogue on long-term cooper-
The Bali conference - COp-r3 and COpi MOp-3 _ saw governments
make ative action - explicitly not a forum for negotiations - concluded with its
progress on several important atenda items, but the dominant
issue was the last workshop in August zoo7. ln their report to the Bali conference, the
expectation that the meeting would launch negotiations on a
future agree- cofacilitators ofthe dialogue outlined four options for the future, ranging
ment. The release ofthe IpCCt Fourth Assessment Report hadstrengthened
from an extension of the dialogue to a fully integrated negotiating process
thescientific case foraction,and media and public interest in climate-change
under both the UNFCCC and the Kyoto Protocol. The key outcome was the
reached a new level with the joint award ofthe Nobel peace prize
to Albe-rt Bali Action Plan, launching a negotiating process, the Ad Hoc Group on
Gore and the IPCC. A full day after the scheduled close, and after
high_ Long-Term Cooperative Action (AWG-LCA), which would proceed in par-
profile pleas for flexibility fiom the UN secrctary_general and the presid-ent
allel with the Kyoto negotiations, with the expectation that the two tracks
of Indonesia, the Bali conference conclu<ied with agreement on launching
would converge, resulting in a comprehensiye post-2or2 agreement, in 2oo9.
negotiations on future actions to mitigare GHG emissions.,z
At the heart The two critical issues in the negotiations on the Bali Action Plan were
/' whether to reference an IPCC scenario under which developed country
'7'Ser hnp//wwvrun.org/.li mate(ha ngc/roo7h reh lc! c l^r m mary
r shtml. emissions would fall zo to 4o percent below r99o levels by zozo, and the
"'ln.vibriort to Me.ti,t|- oJ Majot Eco otti,.,,,, r,r,Xv SecuriU and Ch,,ate Chonre,
letler Fom Presidenl ceor8. W Bush, Autu\r j. j,,,-. i,.,rtable degree to which the paragraphs on developed and developing countries
ar hflp:ilwww.whirchoule
.gov/n.ws/rcleas5/2oo7lo8/2oo7o8ot-7.htn)I. \r, ,r1,, deiails
on rhe iniriarive ar http:// resembled each other in terms oflevel of implied mitigation effort.,73 The
_
\,vwwstrte.gov/g/oas/;climate/merh/.
'/olohn M. Broder, At CliDMte Meetiry, Brslr n,\.j N., <Terify Cools,Npw yoRK figures, especially language relating to cuts proposed by zozo, were strongly
TrMEs,
lplemDcr 2f,2oo7.
opposed by a numbel ofdeveloped countries, which argued that settlingon
'n Sofi-e Like lt Cool"THs EcoNoMrsr, Deceml)er rz, .roo7, at roi Thomas Fuller & Andrew
Revkin, Clirnore Plan. Looks beyond Bunts Tcr re, Nr* y.* numbers at the outset ofthe meeting amounted to pre.judging the outcome
Tr"*,
roo7. For accounts of th. negotiations anJ \rnrnrJnr\ of ky ort..rn.r.
D;;;;:;-;;,
,"i -i"_",r* ofthe process.'1,e The paragraphs ofthe mandate relating to developed and
ol th. Thiiecnth Conletnce o[ the pa pi h rUN Convinrion on Ctinate chonl" developing countries are worth quotiDg in full, to illustrate the nuances,8o:
and Thitd Mee,ing ol rtrc paiiet to the Kyrto p,ototol,
J_ts Decembcr, e^ir",
NEcorr^rroNs Bu[LsrtN (.roo7)i pew Cnter ,,n Gl ,b:l Climate Chanse. "triof i"^^*,
t!.Tlll.enth Conlcreut ol thc parries r
rc I,N Co,w?ntio,t o, A-,1r, "f
Cnrii'"i (b) Enhanced national/internatio[al action on mitigation of climate
Third__Mc.nry oJ the Panzs rc hc Ktoto pt,,!,,,-rt, Fti ltecembd
\undated), ."rfiiUfi change, inciuding, inter alia, consideration of:
hnp://wwwf,cwclimat..or&/docUploeds/pewq,roCenter_COp%zor3%roSummarypdt "i
Robcd N. St.vins & ,oj.ph Aldy, Ber_r Clrua r r CH^NcL CoNr!rENc!:
(i) Measurable, reportable and verifiable nationally appropriate mit-
KEv Trxeewevs,
H.rvard Proicct on Intarn.tional Climate Agreentents, Decemlrcr rB, ,""r, *"if"Ufi'ai igation commitments or actions, including quantified emission
hnp://bclf.rccnr.r.kS.hervard.edu./publicariorr,rl-rvhaL_climarc_chinge_:.;;;;;;. -. limitation and reduction objectives, by all developd country
.htrnl; D. nicl. Bod.nrky, Eali Hi8h?, i
Op {k, r.. webtog, cntry posrixi-Oecembcr r9,
r(, r
:oo7, availablc.t hnp://wwwopiniojurjr.r,rgp.
^r./lqso75'27.st iril, S*,r. Mriir*,
tTlBoo^xsxv,
OxrorD INsrrrtTr por ENEncy Stuorrs, B,rrr rup, nolc :75,
2oo7: ON THr Ro,ro,{crrx (zooZ), r79
CEHt!f, oN GLoarl Crtuete Cxrrce, r upru nota 2Tr\ at t,
PEw
avrihbJe rthnp://ulw.o)dordclim.tcpolicy.orglul,h(rtions/mucller.hlml;
ni. Wri"nr'Uc
.t zl., The Bali R@dmop Jot clobal Cli ntc poticv _ Ncw Horizoas aad Old pitalk, 'oDecision r/CP.tr, in REporr o! raa CoNFERENcE oF Tfl! P^f,.nls oN rrs THTRTEENTH
Slzj SEssroN, ADDBNDUM, PI RT ll: AclroN TAXEN By rxp CoNllBENcs oF THE PAxrtEs,
JoURN^L oF E!RopE^N ENVTRoNMENT^L & pr AN:!rN.; L^w ll9 (2oo8).
FCCOCP/2oo7l6/Add.r (2oo8).
 u6 Dcycloprnent of the lntenational Clinote Change Regime
Parties, while ensuring the comparability ofefforts among them,
takint into accoult differences in their national circumstinces;
(ii)
Nationally appropriate mitigation actions by developing coun_
tr)'Partis in the context ofsustainable development, sulported
and cnabled by technology, financing and c"pailty-buitaing, in
measurable, reportable and veri6able manner. " on support, financial and technological, from developed countries.) This
The mandate retains, but softens, the differentiation between devel-
oped ("mitigation commitments or actions',) and developing countrics
("actions") aod, for this reason, marks an important step. In contrast,
the
Berlin Mandate, which, in 1995, launched thc negotiations leading ro the
Kyoto Protocol, explicitly ruled out any commitments for dyeloping coun_
tries. Even a cursory reading, however reveals that the negotiators managed
to introduce considerable leeway and flexibility. lb begin, the chapeau calls
for enhanced 'nationayinternational" action - satis$ing the interests of
parties, such as the United States, that preFerred national actions oyer inter_
nationally mandated targets. Second, the chapeau calls for ,,consideration,"
not negotiation, ofthe commitments and actions referenced in paragraphs
(bXi) and (b)(ii). It is worth noting that the developed .ountry p"..-
graph- paragraph (b)(i) - Iists actions as an alternatiye to commitmentd
and emission targets are referred to as "objectives,,, rather than,,commit_
ments," as in an earlier draft.r8r Further scope for differentiation is intro-
duced by the words 'nationally appropriate" as a qualifier for ..actions and
commitments."
The conccpt of"measurable, reportable and verifiable,, is a very signifi-
cant aspect ofthe Bali Action plan, as it reciuires quantification of mitiga-
tion, whether pursuant to commitments in developed countries or in ihe
form ofnationally appropriate action in developing countries.d. In a maior
shift, developing countries moyed from the qualitative commitments under
Article 4G) ofthe Convention to potntiall1. quantifrable ,,nationally appro-
priate mitigation actions" that are "measurable, reportable and verifiable,,,
or MRV.'3 But the Bali Action plan is consistent with principles offairness
!' Bo o^r"s*r, ,roro not" rr..
''Scc HarAd WUltcr, ,f.tc; urable, Rcponable atd Verijoble_ Thc Keys o Mitigarion in thc
Qpcnhog,n Daal, B poucy 514, t:; (zoo8); Cr__raB Brripr*""r"i
CLTMATE & D^*,r,
BoDANsry, MEAsuiEMp-Nt, REporrrNc VERrFrc^TroN rN posr-lor2 CuMlrr
^Nr, ^
a,"
AGn8EMENT, PEw CsNten ox Groa,rr Cr lvr rr ('H^N.,1 troog).
td.
3.3. Finalizing the Protocol tt7
and common but diffrentiated responsibilities because the flow of tech-
nological and financial assistance from developed countries must also be
MRV. (The result ofa last-minute amendment proposed by India, it enables
developing countries to insist on th contingency ofMRV mitigation action
also marks a departure from the past, when voluntary contributions were
the rule and there existed no provision for measuring assistanc flows. The
balances between and within the two paragraphs "reaffirm a core balance
in the C,onvention, in its agreement that the extent ofdeveloping country-
country action is dependent on the provision of finance and technology by
developed countries (Art. 4.7;.",rr In shon, principles of faimes relating
to the sharing of mitigation costs remain integral to progress in the climate
regime.
A final point worth mentioning is that the Bali Action plan eschews
the usual Annex I and non-Annex I language - categories codified in the
Convention - in favor of "developed" and "developing" countries. This
opens up the possibilityofthe negotiations inrroducing somedifferentiation
with respect to mitigation effort among developing countries, recognizing
the reality that this category contains economically ascendant emerging
economies as well as far in less developed nations.
In Bali, the parties also agreed on the scope ofthe secondArticle 9 review
oflhe Protocol, which provides that the parties are required to periodically
review the Protocol in light of the best available scientific information. To
satisry th terms of the ?rotocol, a prfunctory first review took place at
COP-rz, and it was agreed that a more far-reaching effort would be carried
out in 2oo8. The review is contentious because industrialized countries,
pointing to scientific findings on the future global mitigation effort, tend
to argue that effectiyenes denands that developing countries also shoulder
some of the responsibility for reducing GHGs. The panies agreed that the
second reyiew would focus on isues such as the scope and effectiveness
of the Kyoto Protocol's flexibility mechanisms and progress by developed
countries in rleeting their commitments on finance and technology for
developing countries.rE It was reiterated that the second review would not
lead to new commitments for any party.
*r.nt r,
dtDacilion
4/CMP} in RDporr or rHs CrNrlrlNc! op tIrE parrrPs SERVTNG ls rrlE
McprrNc or rxe P,rrrras ro rrrE Kyoro prorocot- oN rrs THrRD SEssroN, ADDBNDUM
118 Developnlent of the International Cli:natt Clnnge Regime
In a long-awaited decision, the parties agreed on the goyernance struc-
ture ofth Adaptation Fund, paving the way for this institution to become
operational. As noted earlier, the issue dividing thc developing and devel-
oped countries centered around who shoulcl ma nage and opelate the fund
- Despite the fact that deforestation in developing countries accounts for an
the GEF, an perceived to be institution dominaterl by donor countries, or
another body, urith greater dcisior-making powers for developing coun-
tries. In Nairobi, developing countries had won agreement on the point that
decision making should be according to majority rule. In Bali, the parties
agreed to establish the Adaptation Fund Borr<1 ds the operating entity to
"supervise and manage theAdaptation Fund, under the authorityand guid-
ance of the Conference of the Parties serving as rhe Meeting of the parties
to the Kyoto Protocol."'86 Unlike the other climate change funds, therefore,
the Adaptation Fund is not subiect to rhc Council of rhe GEF; rather, it is
the Adaptation Fund Board that will assume rhe function of drawing up
operational guidelines and policies as well as making decisions on projects
and the allocation of funds. The decision provides that the board will be
composed of t6 members rpresenting partics to the Protocol, with two
representatives from each of the five UN regional groups, one from small
island developing states, one from the LDCs, two from non-Annex I parties,
,,
and two from Annex I parties. Decision making is on the basis ofconsensus,
failingwhich, bytwo-thirds majority. Becausc the developed countries have
6 representatives and developing countries ro, the Iatter have a majority.
The decision designated the GEF as the funcl's secretariat, and the World
Bank as its trustee, on an interim basis, with r rcview schedule to be held
in three years. Overall, the decision means that dcveloping countries haye
secured a key ob)ective - control over the funcl - and, at the same tim,
benefit fiom the experience and technical resources oF the GEF as the
secretariat supporting the fund on a day-to-diy basis. It remains to be
seen whether the board will be in a position to exercise real supervision
and managment, or whether the secretariat will exert effective control, and
in this respect, the interim nature oF the arrangement is almost certainly
intended to have a moderating influence. Finall,v, although the available
PAnr ll: AcrtoN TAxEN By rxa CoNlEaENcE or rHE P^RTtEs SErvrNc As rHs MEETTNG
or rBE PAf,TrEs ro rfis Kyoro Pnorocol, FCCC/ K P lcl"lP /2oo7l9lAdd.r (rooE).
d6Dccision r/CMP.j,
in RspoRr or rHE CoNTERENcT oF rHE P^RrrEs SEnvtNc As rB!
MEETING oF THB P^nTrss To THa Kyoro PRorocol oN lTs THrRD SEssroN, s,lpra
nota 2E3.
3.3. Finqlizing the kotocol u9
resources are a welcome increase over the trickle thus far made available for
adaptation, they come nowhere near matching the need so that allocation
and priority setting are destined to be difficult and contentious.
estimated 20 percent ofglobal carbon dioxide emissions, projects designed
to avoid deforestation - as opposed to reforestation - are not eligible for
credits under the CDM.'7 At Bali, progress was made in recognizing efforts
aimed what has become known as reducing emissions from deforestation
and degradation (REDD) in developing countries. Papua New Guinea, as
the head ofa coalition of15 rainforest countries, placed the issue ofcrediting
efforts to avoid deforestation on the agenda at COP-u in Montreal. At COP-
rz, Brazil, which had thts far been skeptical of international discussions
of avoided deforestation, unveiled an altrnative proposal under which
countries reducing their deforestation rates would be eligible for payments
fiom an international fund established by donors, as opposed to emission
credits under a market mechanism-
Movingin the direction ofrecognizing REDD efforts, the parties adopted
a decision that, in carefully chosen language, encourages developing coun-
tries to explore a range of actions, including demonstration activities, to
address deforestation and forest degradation.d8 The decision also encour-
ages work on methodological issues such as the critical question ofbaselines
against which reductions can be measured.ln this respect, the decision states
that countries may have recourse to the "indicative guidance" provided in
an annex to the decision, as an aid in undertating and evaluating demon-
stration actiyities. Not addressed in the decision is whether the incentiyes
to reduce deforestation would flow ftorn a market-based mechanism or
donors. The issue of "policy approaches tbr and incentiyes" for REDD is
singled out in the Bali Action Plan as one ofthe items for discussion by the
AWG.LCA.
The issue of incentives for reducing deforestation is methodologically
complex because defurestation is the result of diverse social and economic
factors. Extending credits for REDD would be a boon to countdes that
have so far been left out of the CDM market; however, the bene6ciaries
under the current CDM afiangements are wary ofa flood of cheap REDD
fTWoelo Rrsounces lxsrrrurE, NrvrcarrNc
THE NuMsERs 92 (2oo5).
SDccision y'CPrj,
irr t{EpoRT op rHE CoNeERENcE oF rHE PaRTrEs oN rrs THTRTBENTH
SEssroN, r!?ra note z7E,
 r2o Development of the Internatiotrol Clinote Change Regime 3.j. Finalbing the Protocol r21

credits. Nonetheless, the isue has gained momentum, with the World Bank
announcing a US$3oo million Forest Carbon partnership Facilit), with the
dual aim ofbuilding capacity to undertake projects and demonstrating the
methodologies that could be scaled up for a firll-scale market.de
In the climat negotiations, when industrialized countries exrt pres-
sure on developing countries with rcspect to mitigation action, the lat-
ter push back with demands for access to clean technology and greater
financial support. In the opening days of rhc Bali conference, deveioping
countries tried very hard to turn the attention to technology transfer and
what they argued were the unfulfilled conrmitments made by industrialized
countries.'eo Their emphasis on technology transfer reflected a concern that
the emphasis on new mitigation commitments, including posibly fordevel-
oping countries, should not come at the expense ofagenda items reflecting
their interests. In the end, the parties agreed on a decision requesting th
GEF to establish a strategic program to scale up technoiogy transfer.:e, This
request had its roots in a more ambitious proposalbythe G-77 and China to
establish a fund under the Convention dedicated to technology transfer.,el
At the institutional level, the parties decided to reconstitrrte the EGTT for a
period of five years, with a number oftasks, including the development of9,
set ofperformance indicators, for use by the Suhsidiary Body on Implemen_
tation to evaluate technology transfer activities.,er politically, an undoubted
coup for the C-p and China is the language olthe BaliAction plan, which
very tightly links "mitigation action by developing countries,'with technol_
ogy and financing "in a measurdble, reportable and verifiable manner.,,le{
Openin8the door to "mitigation actions" is sign ificant, but the decision now
spellsoutone oftheconditions forprogress: increased financial support and
access to technology for developing corrDtries. Attempts by industrialized
countries todefect from the more stringcnt targcts-and-timetables approach
of the Kyoto track to th Convention process could fatall), undermine the
willingness ofdeveloping countries to define their mitigation actions. The
negotiating process must thus balance commitments and actions under the
Kyoto and Convention tracks. Given the variety of mitigation approaches
likely to be considered, the ability to demonstrate comparability of effort
across diffrent policy options assumes great importance.
3.3.t7. COP)4: Poznai, Polard
COP-r4 and COP/MOP-a opened against the backdrop of an ever deep-
ening, worldwide financial crisis.'et Coming after the dramatic events in
Bali, the Poznari meeting was not expected to deliver any breakthroughs,
but instad maintain a sense of forward momentum on key issues, while
carrying out the day-to-day business ofthe COP
After the Bali conference, it was clear that technology transfer and finance
would be key issues in the runup to COP-r5 in Copenhagen. At a climate talk
held in August zoo8, developing countries tabled a proposal that included
a Multilateral Climate Technology Fund, by which Annex I governments
would use frnances from environmental and energy taxes and auctioning
of pollution rights to fund technology transfer. They would also use pub-
lic 6nancing to promote public-private partnerships, including enterpriss
as well as research and development institutions. The aim of this mecha-
nism is to address cooperation on technology research as well as develop-
ment, diffusion, and transfer. Meanwhile, the World Bank, in 2oo8, establi-
shed the Clean lnvestment Funds (CIFs), which are a collaborative effort
among the multilateral development banks and some donor countries to
bridge the financing and learning gap until a post-zorz global climate change
agreement comes into effect.'l{ The CIFs consist of two funds: one aimed

8 at large-scale investments in developing countries, with the aim of con-

Forat Catbon Porrnership Fa.ilit/ Taket Air t)t Dqo(5r ior, World Baok, Deccftb.r
n, tributing to the demonstration, deployment, and transfer of low-carbon
av.ilable ar hrrp://go.worldbank.org/rEI ICNrFn,,.
"^^2oo7,
""COP-|J and COPIMOP) HighliShts: Tuesaay, Dt,:t rb.r4, r2(145) E^RrH NEGorrArroNs
BuLl.srrN (2oor,.vrilabl. at hnp://ww.i,sd.(r/downli,Jd/pdf/.nbl2J4j..pdi 2$
r,_ UacrsloD rllLLtJ, For reports on Pozna i, saa Foutte.nah Anf.reficc of th. Pani.,l b th. IIN A,ue aion o
lD XEpoRT OF THE CoNrERrjNcE ()r. THE panTrEs ON rrs TxtrrBeNrrr
Clifiot. Chang. ond Founh Meeting ol th. Paftiet tu rhc I(1o!o Protocol, summary prcpared
SEssroN, Jt/rro nota 278. al Dera. r.
D'Summary of thc by the Pcl, CGnt r on Glob.l Oim.t. Ch.ngc (,undatcd); Summary ol tlo Foutteetl t
Thine. i Co,tierenc. of th. nlni$ b rc UN Coneention on Climat. Conficncc ol th. Pant s lo th. IIN Crntntbn on Clinat. Chary. and Foutth Me.titg of
ond Thid Maeti'tg ol the Paiiet to E Kr .n, pt,hrnl )rpra notc r7j, al
,^,Change ,. th. Parties to the Kyoto kotocol, t-r2 D.c.mb6, i(39t) E,rrrn NrcorLrrloxs But-LerIx
'vrD.cisionl/CPlJ.ndDcision4,/CPrl,rnRrr,,n,,,, r r+ Corrpnrr,rc; or r",, p^*r,"" (2008).
oN rTs THtITTENTH SlsstoN, r/rra not !78, 96 Wortd Bank Boord
re'Bali AWofts Climot. hrv.srrr,ant Fundt world 8.nk, prss relase, ,uly r,
Acrion PIan, supra nore 278, at para. t{hr ir,.
2o08.
t22 Derelopment of the Internationol Clinttte Change Regime
technologies, and a scond that will identifr and promote targeted pro-
grams for scaling up efforts and relate capacity-building assistance. These
CIFs do not fall under the Convention, a point ofcontention for developing
countries. Responding to a request made at COP-r3 in Bali, the GEF in
Poznaf presented a program on tchnology transfer, which was adopted
as the Poznai strategic program on technology transfer,lrT The program
will consist of three funding windows to support technology transfer actiy-
ities: (r) preparation oftechnology needs assessrnents, (z) piloting priority
technology projeas linked to technology needs assessments, and fu) the
dissemination of GEF experience and successfully demonstrated environ-
meotally sound technologies.ts The initial funding for the program was set
at a modst US$io millioo.
On REDD a draft conclusion ofthe technica! body, the SBSTA, made
progress on methodological issues relating to the estimation ofbaselinesand
the need for robust monitoring frameworks. While some countries wanted
to broaden the rope ofcarbon sequestering activities, in the form ofcon-
servation and sustainable forest management, others preferred a narrower
focus on avoided deforestation. A proposal to refer to the UN Declara-
tion on the Rights oflndigenous Peoples was rejected by several develope!,.
countrieqbut the draft did recognize "the need to promote the full and effec-
tive participation ofindigenous people and local communities."'r Overall,
there appeared to be an increasing acceptance that CDM-style offset and
fund-based mechanisms would have a rolc to play.
Although thgre was broad agrebment on the n!-ed forthe Adaptation Fund
to become operational as soon as possible in 2oo9, extensiye discusions
took place on the question ofenabling dircct access ofparties to the fund.3*
In Bali, it was decided that parties could access the fund in three ways:
dirctly, that is, without any intermdiary agency or body; through existing
implementing entities, that is, UN agencies and programs; and through
acrredited executing entities at the national level. Direct access would have
"'Dcvclopmcnt rnd trrnsf.r of rachrologics, FCCC/SBUtoo8/L.28/Add.t (2ooE).
'$Rspott ol r Groer- Ewtroxurx-r Fecru ry ox rxr EuaoeerroN op A STf, tlcrc
Plocl yxE To Scar.r ui ttt! LrvELoF INVBSTMENT rN THE TrlNspEr op ENvrroNxlN-
rerrv Souro Trcrxor.ocrrs: NorE rr rHE SpcREr^Rr^r, FCCC/SBI/2oo8/I6 (2oo8),
4Rtoucrr,rc Exrssroxs rrox DpporEsrartoN
rN DEvELoprNc Coulrrnrasi Arpa,oactiEs
w
To SiIMUL TT AcrroN, FCCSSBSTA./2ooE/L.21 (2oo8).
Sfin?nty oI th. For,n cnh A4d.n c ol the Patties to the IJN Crtilcntion on ClhAt
Chalg, and fuufth Merting{ th. Pafiies to the K)'oto Ptotocol, stptu not z9t.
33. Finalizing the Protocol r23
the effect that funds could be disbursed direcdy by the Adaptation Fund
Board, rather than by the GEF, which had been designated as secretariat to
the board on an interim basis. At the insistence ofdeveloping countries, the
COP/MOP decided to confer on the board the neccssary legal capacity to
enable direct acces by parties to the fund.ro' Parties also carried out the
periodic review of the Kyoto Protocol mandated by its Article 9, which
was dominated by discussions ofthe CDM and the means ofaugmenting
adaptation financing. As noted earlier, the Adaptation Fund is supported
by a z percent levy on the credits generated by CDM pro)ects. In an attempt
to boost the flow of funds to the Adaptation Fund, developing countries
called for enending the levy to the othr Kyoto flexible mechanisms: JI and
international emissions trading. This proposal was resisted by developed
countries, on the basis that this issue should be considered as part of a
comprehensive agreement in Copenhagen.lol
In Pozna6, the chairofthe AWG-tCA presented acompilation document
of submissions from parties on the 6ve core elements of the Bali Action
Plan.soi The AWG-lCA rcsolved to "shift into full negotiating mode in zoo9"
and, to this end, adopted a work program authorizing the chair to prepare
two documents to advance its work.!o. The frrst would describe 'areas of
convergence" and explore 'bptions for dealing with areas of divergence."
The second document would be a draft negotiating text, prepared for the
AWG-LCAt second sssion in June 2oo9.
Observers noted that thc prospect of the incoming U.S. administration
created anticipation in Poznai.pt Also, while the conference was in full
swing, the leaders ofthe EU were meeting to adopt their climate and energy
package, with any sign of wavering auguring badly for the future. As it
turned out, the EU confirmed its target ofa 20 percent cut by 2o2o, but not
after concerns from countries heavily reliant on coal had been addresed.
The package, covering the period from 2or3 to zozo, establishes the rules
for the third phas of the EU ETS, details individual emission targets for
!rRrronr or tarAolr?^rroN
FUND Bo^rD, FCCC,/KP/CMP/2oos/L,7 (2,oos).
PrPrw CrNcr, rqpra nota 293.
lllor.rs rxoProposels oN P^tlcr tH r or rHr BaLr AcrroN PLAN: RrvrsaD NotE sy
rHE Cn^rr, FCCOAWGrcA/rooE/r6lRcv,r (2oot).
'qRzrorror rnr Ao Hcc WorxrNG Croup oN LoNG-TEf,M CoopEr rrv!AcTtoN lrNDaR
TH! CoNvENTToN To rl CoNrErtNc! or rBE PAnrlEs ar ms Fouf,TEiI..Tx SEssroN,
FCC|/AWGLCA,/zoo8/L.u (zoo8).
sPrw Celrrr, rupra note 293.
 r24 Development of the Internotion.i Clinote Change Regime g. Finolbing the Protoeol r:5

EU member states in sectors not covered by the EU ETS, and portfolio) had the potential to turn them into forums for meaningful dis-
contains a 20
percent target for renewable energy, a ro percent target
for biofuels, and a cussion. Given the generally private nature ofthese discussions, not much is
20 percent target for increasing energy efliciency by:ozo. In known ofthe conclusions reached, and it is dimcdt to assss to what extent
the runup to
the Copenhagen conference, Brazil, Mexico, and South Africa announced the G-8 dialogue has contributd to progress in intemational climate change
mitigation plans in Pozna6. Brazil pledged to cut the deforestation rate
ir negotiations. For their part, both the IEA and the World Bank prepared a
the Amazon by more than halfwithin a decatle,ro6 while Mexico stated number of studies and reports pursuant to their Gleneagles mandates, with
that
it would cut emissions by 50 percent by 2o5o, relative to 2ooo emissions.roT the Bank's work putting some hatd numbers to the financing challenge for
South Africa announceda strategyto arrest emissionsgrowth b y clean nergy and adaptation to the advers effects of climate change.ru At
2o2o_2o2;l
level offfor up to ro years, and then decline in absolute terms.3oE the G-8 Summit in Heiligendamm in roo7, under the German presidency,
It is in the nature of negotiations for parties not to tip their hats and climate change was prominendyon the agenda, but leaders could only agree
instead to wait for the end game. At the closc of the pozna6 conference, to seriously consider at least a halving of global emissions by zo5o.r" The
many
key issues remained unclear, including concrcte proposals from
industrial- statment issued at the Hokkaido Toyako Summit, under the presidency of
ized countries to implement the Bali Acrion plan language on
finance and fapan, in zooE, expressed their willingness to pursue the 50 percent reduc-
technology transfer and even the final status whcther rati6able
- or not _ of tion goal within the UNFCCC, on the basis ofcontributions fiom all ma.jor
the agreement to be reached in Copenhagen, economies and consistent with the principle ofcommon but differentiated
responsibilities and respcctive capabilities.r'r The statement did not address
3.3.8. International Developments outside thc Convention process the question of the base year against which the 5o percent reductions would
be measured.
Climate change was one ofthe key topics addrcssed at Gleneagles G-8
Sum- Governments, NGOS, and the business community have joined together
mit, held under the presidency of the United Kingdom. In the summd
in partnerships at local, national, regional, and international levels. A few
communiqu6, countries agreed to launch a Dialogue on Climate Change,
examples provide an indication of the scope and variety of partnerships
Clean Energy, and Sustainable DevelolrInenr und asked the International
and cooperative ventures that have arisn, some with international political
Energy Agency (IEA) and World Bank, respeclively, to develop alternative,
and legal significance, others not. ln January 2006, the United States and
clean energy scenarios and a new framework for clean energy
financing Australia - the two industrialized countries that had rejected the Kyoto
and investmerit.rq Forming part of the comnruniqu was a short plan
of Protocol and its approach of binding targets - launched the Asia-Pacific
action setting out specific actions taken and planned with respect to
cli_ Partnership on Clean Developrnent and Climate, dubbed APP.r4 (Australia
mate change. A number ofdialogue meerings rvere convened under the
G-8
plus j format,r'o and their size and composition (outside the
environment
3ltSaa Worro BANX, CLs N ENErcy ND DEvaLopMlNT: TowarDs AN INvssrMENr
'o6loshua. Panfow, Btuzil,s Decision ot, Dcl,t,.,tntr.t l)t,tv, pruise, W^sHrNGroN posr, Fr Mswoxx (2006); CLs N ENErcy IND DEVELoPMEMT: A PRocrEss RspoRT (2006);
uacmDcr 6, zoo8. at Aoo. .nd ClaaN ENErcy toa DDvalopuaN!: TIra wo!.LD BANr ActoN Pr-ex (:ooz),
JoTGerard Wynn,
Me*o iays to S.t Ch tdtc ,rt,. l t,f
,nd l.adf, REUrErs, Oc.cm- .v.ilebL .t http://v,rb.w6rldb.nk"orB^!tsSITPEXTERNAL/TOPICS/EXTENERGY/o,
bcr ll, 2ooE, avrilablc at httpJ/www.reuters.cooVanicle/environmantNews/idusTRE4- m.nuPK'.$6tr2-p.8.PK:r49or8-piPKx49o9t-th.Sit PK:3l68o6,oo.htr .
jtT&o8r2t | ?H}?c=RSS&fctdNa
"'Cheir'r Summ.ry Hciligcndemm, ,uD. 6, .oo7, .v.iLbl. at http://www.g-8.dc/
BA me
--.
r-Statcmcnt =envrronme nr News.
dcliv.r.d ar rh. uN Climat. Change Conferencc in poznari by Marrli- W.bs/G8/EN/GSsummit/SurBnitDo.m.ntvsummit-docurh.nts.hm .
nus ven Schelkwyk, Minist r of EnvironmeDtal Affairs and fourism, Souil
enica, "'Chair's Summrry Hokloido. ToFl(o, dy 9, 2oos, .vdLblc at http://$rw.mofa
Daccmbar u, 2oo6, .vailablc at httpr/wwwde:rl.gov.zal/NewsMcdia/MedSr"VrooaO..,V . go.iplpolicy/rconomy/sunmit/2ooE/doddocoEoTog-o9-m.htn .
statammtr rr.r2oo8.Ddf. l"Saa http://www.esiapeci6cp.no.rship.org/. For pcrh.ps th. or y lcg.l .nalFb of rh.
BThc Glcncaglcs Coinmuniqu6,
available ar h|lf :,/s.wfLo tov.uldFil.s/kfl./postcE_ Ari.-P.cific P.rtn.rship, ,.. Cluirtoph Holtwitch, AJiatir.n-paz:fichc Ponndschdlt ftit
Glcneglcs_CCChaxau.pdf, f
umwehydtaglkh. E$ttriUung und Kima - Blukadc oda Anti.b r dat intefiotionoL
lroThc
6vc arc Brazil, thin;, India, Mexico, and 5.\ h Afr icr. Klizarcfmai, m:stcrl thcsi.s, Junc 2oo7, copy on fiL isith thc .uthor.
 126 Development of the lnternational Cli ate Change Regime j.4. Conclusion and the Road Ahesd

ofcourse later went on to ratiry the prorocol.) Other founding members _

all Kyoto parties - are China, tndia, Japan, and the Republic of Korea, with 3.4. CONCLUSION AND THE ROAD AHEAD
Canada joining in :oo7. The App aims to accelerate the deployment
of Drawing together th material covered in this chapter, this section briefly
clean energy technologies through focused cooperation between member
assessesthe climate change regime to date. Challenges for the way forward
countries, working closely with industry. Thc App established a policy and
are also outlined. As outlined in this chapte6 states have steadily (albeit
implementation committee to guide its work and oyersee the activities of
slowly) built a climate change regime through successive COPs. Begin-
theeight public-privale task forces addressing eight focal areas rangingfrom
ning with the historic IJNFCCC, which established the goal of preventing
energy-intensive sectors (e.g., aluminum) to renewable energy. In ambition
dangerous interference with the climate system, states have established an
and institutional structure, the App stands held and shoulders aboye other
impressive and intricate multilateral regime, While management and fur-
partnerships in the energy and climate lieltl; continued engagement
ofkey ther development by COPs are now regarded as a feature ofmodern multi-
members and the commitment offinancial rcsources are likely to determine
lateral environmental agreements (MEAs), the Convention and the Protocol
whether it makes a real contribution with respect to clean technology or, as
have set a new mark for the development ofrules by such treaty bodies. The
many skeptics suspected, merely served as r cliversion bycountries opposed
multihceted nature and technical complexity of many of the issues dealt
to the Kyoto Protocol. Certainly the deploynrent ofclea:r energy technology
with are quite staggering. At the same time, deep policy differences and
has been insufficiently addressed under thc current climate regime, and an weightyeconomic in terests underlie many supposedly technical issues. This
initiative such as the APP - perhaps expandcd to include membership from
is true, for instance,ofthe somewhat arcane rules relating to emissions cred-
the EU and with closer links to the UNFCCC
- could go some way roward its for land-use change.and forestry. The political dimension stems from
remedying this deficiency.
a number of sources. First, nominally, the Convention and the Protocol
The Carbon Sequestration Leadership Forum (CLSF) is an example o!
are environmental treatiesi in reality, they have profound social and eco-
a technology partnership with participariorr, including fiom the Unitei
nomic implications. The future division ofthe mitigation burden between
States, Germany, Iapan, China, and India. The aim of the CLSF is to
industrialized and developirrg countries cuts to the core of disagreements
develop and make available cosreffectire rcchnologies for carbon dioxide
on global development and fairness in the relations between states. This
capture and storage.l" Methane'is a porvcrful GHG emitted from landfills,
chapter has touched on how industrialized countries have attempted to
roines, and oil and gas installations. Bringing together zo governments and
extend binding commitments to developing countries, which, in turn, have
well over roo corporations, the Methane to lvlnrkets partnership is an inter-
invoked the principle ofcommon but differentiated responsibilities, under-
national initiative aimed at advancing cost-cffective, near-term methane
lining the historical responsibility of developed countries. This aspect is
recovery and use as a clean energy source.r,6 Other partnerships have been
explored in greaterdepth elswhere.r'E Second, and more narrowly, the bind-
formed in specific industry sectors, for instancc, the cement industry, which
ing nature ofAnnex I parties'targets under the Kyoto Protocol endows oth-
is responsible for about 5 percent ofglobal crrbon dioxide emissions from
erwise technical matters, forinstance, guidelines and standards for reportinS
human activities. An example of practical cooperative action to address
and maintenance of emissions inventories, with greater significance. Fail-
emissions from this vitaleconomic sector is rhe Cement Sustainability Ini_
ur to maintain adequate accounting standards for GHG emissions and
tiative, formed by leading cement producers under the umbrella of the
removals can lead to suspension of eligibility to use the emissions trading
World Business Council on Sustainable Development.}7 mechanisms.
The process of regular COPs, backed by the preparatory work of the
lrtScr httpr//*ruir.cslforum,ortJabour,hrm subsidiary bodies, has proved capable ofsustaining and further developinS
l16Ser
http://wwwmethanaoriarkas.ors/.
Sa hnp://wv,wwbcsdc.m.nr.org/. J'6
src chaptcr 4.
'u
 r28 Development of the Internatioial Climate Change Regime j.4. Conclusion and the Road Ahead D9

the climate regime,In draftingthe Convention, the parties

went as far as they negotiations themselves, so that it means incremental (and admittedly nec-
could at that time in addresing climate change; some,like the
states ofthe essary) advances, but no breakhrough on the central issues dividing indus-
EU, would have preferred going further. (ln fairness, it
should be recalled trialized and developing countries.
that the IPCC'S First Assessment Report, issued in r99o, concluded
that As summarized in this chapter, and posited by scholars,r'o regular and
the evidence as to whether warming was attributable to human
or natural institutionalized procedrues - such as those typified by COPS - contribute
clruses was evenly balanced.rre) The need to supplement
the Convention to a situation whre states with diverse interests can nonetheless agree on,
with an instrument containing emission limitation and reduction
targets and steadily develop, institutions and rules to respond to a complex global
was quickly recognized, leading to the launch of the negotiations
for the problem. In short, the existence of a regular forum for discussion and
Protocol,
generating agreement and coordination on core issues, such monitoring
The Conyention and protocol have cstablished a number of
important and reporting of emissions, has value, which is admitted by those who
instilutionsand mechanisms. The protocol,s compliance system, *hil.
bo.- believe a decentralized approach is more practicable.s" Nevertheless, it
rowing fiom the experience of the Montreal protocol, is, in the view
of is possible that the hcilitating embrace of the rules and institutions of
many observers, the most sophisticated rnechanism ofits kind
in anyMEA. the climate regime may have become a straitjacket, insulating the process
The three flexibility mechanisms, particularly the CDM, exisr
at th; intr- fiom new ideas and permitting elaboration and rennement to substitute for
section of public international law and domestic laws. The protocol
has action and innovation. The climate regime, as summarized in this chapter,
led to the establishment ofan international carbon market,
in the process demonstrates a number of other disadvantages and weaknesses. First, the
Siving rise to a private sector constituency with a direct pecuniary interest approach taken in the Protocol emphasized binding targets to be met over
in the continuation of emission conrrols. An international body,
ihe CDM a relatively short time fiame (2oo8-2ou). Assuming full compliance by
EB, guided in its work by the COp, regulates the activities
ofprivate sector all countries, the cuts under the Protocol would have had a minor effect
entities involved with project activities in host countries. Host
on global emissions and overall a negligible impact on climate chang;
"ount.ie(
in turn, set the criteria for approving proiecls and apply domestic laws as nonetheless, several countries are having difficulty meeting their individual
they would to any other investmenr actiyity. putting this edifice
in place targets. The combination of very modest environmental impact and the
hasbeen the painstaking task ofthe parties in the years after
the adoption fact that some Annex i parties are not on track to meet their targets may
of the Protocol in 1997 and the. agreement on the Marrakech Accords in
appear to give credcnce to critics' arguments. This situation, coupled with
zoor. The next few years were spent tying up remaining loose ends,
The uncertainties about compliance costs, naturally increased the incentive to
Protocol a.lso became caught in a debilitating waiting game concerning
its exploit available loopholes. The overview of COP-6 (Pa II) and COP-7
entry into force, Only with COp-u in Montreal, in 2ooj, did ngotiators
showed how the rules concerning the counting ofsinks (forestry) were (re-)
turn to the next phase, that is, what would come after zorz when the first
defined. This leads some scholars to conclude that agreements like the Kyoto
Kyoto commitment period expires.
Protocol are essentially unenforceable because some parties will always find
It is perhaps not entirely unfair to say that the climate change regime
and exploit loopholes, and enforcement with real teeth is a nonstarter in an
has been a victim of its own success. After all, few other
environmintal international system based on voluntary agreement.31l
regimes would be criticized for the level ofproductivity and range
of issues
considered under the Convention and protocol. However, one problem r-stephen D. Krasncr, Structufil Ca$et onil Regirne Consequences: Regirnes as lnteflening
may be that saccess is increasingly defined within the parameter of climate variarlrr 36(2) tNTERN^rroN^L Ox.c^Nrz rroN r8t (1982).
3'1rDavid victor, Ftugm.nteil Cofton Marl/,tt and Reluctant Natbns lmplications
for the
Detign ofEfectille Archhectrreq in Ancxrrrcrunss roB AcsTEMENT| ADDB!ssrNG GLosAL
l'9lxrrlcoveuurxt tl CuMATE oN rH E Posr-Kvoro Wonro r3t (
Joseph E. Aldy & Robcrt N. Stavins eds., 2oo7).
PaN!!oNCuM.rrE CHANGs, ScrENTrFrcAssEssMENT o! CLTMAlE
pscott
Barratt, A Mllritra.k Ctimate Tleaty sftern, i', AsctrrrDcruars loR AGBBEMENT:
CH^NGI - RtpoRr or Won(rNG Group I (John Houghton et al. eds., r99o) ADDRESSTNG GLoE L CLrM^rE oN THE Posr-Kyoro woRLD, sr?ra note 3r9, at 237.
r3o Development of the Internationdl Climatc Change Regime
&cond, the sheer size ofthe annual COps (drawing anywhere from 6,ooo
to ro,ooo people) and the number ofinterest groups represented (environ-
mental NGOs, business NGOs ofyarious stripes) lends them an overwhelm-
ing quality. The sheer number of issues and their complexity elevated the
transaction costs of effective participation in the negotiations. Only large
and well-resourced delegations can participate meaningfully as national
actors, This raises concerns about procedural fairness. Recent COps seem
to suggest that thes mega-meetings may not lend themselves to creative
solutions among the key players in developed and developing countries.
Third, while groups have always been a feature of the climate negotiations,
lack of trust among key players means that negotiations are sometimes
trapped in unproductive dynamics. Fourth, while the multilateral process
has almost universal panicipation,],r the reality is that a relatively small
group of some rj large emitters are responsible for over three-quarters of
global emissions.:a By and large, they will also be responsible for much
of the emissions growth in the coming decades. Theory suggests that a
meaningful agreement among members ofa group such as this could have a
ma.jor impact on global emissions. The G-a plus 5 and the Major Economies
Meeting procesq spearheaded by the U.5. aclnrinistration from 2oo7 to 2oo8,
were initiatiyes intended to find common ground among Iarge eminers. T(e
experiencewith these initiatives suggests that although the existence ofextra
forums for the exchange ofideas and proposals is valuable, the Convention
process is imbued with considerable legitimacy and remains the focus of
the international climate change regime. However, if the Convention and
Protocol muliilateral negotiations do not deliver on the mandate agreed at
Bali, key parties may well consider that nrore is to be gained outside the
existing process.
What are some fairness implications of a core oI major emitters reach-
ing a deal? If such an agreement were substantially arrived at outside the
Convention process, it would undermine thc basic notion of equality and
participation that has so far been a fearurc of thc climate change regime.
l:lAs of August ,2, th. Convention had rq:
nrenrl)ers- Sr. Lrsr op SrcNlrorlls ANo
R^flsrc^rroN or rHE CorwrNrroN, available at h p://unfccc.int/6&ntial_baclground./
.onv.ntiory'slatus_of_ratific.tioditmy26}.php. As of lanuary 14, 2009, tht ptoto-
col had 163 countris and onc regional integrarion organizatlon (th. EEC). &s
Srerus or Rerrrcrrror, available at hltpi/Arnfccc.int/kyoto-protocol/brckground/
status-of_ralifi c:tiorl/itcms/26ll.DhD.
!4Worlo Rrsources Irt-,trr", rrpio not. ,t.
j.4. Conclusion and the Road Ahead 1J1
An agreemnt reached in the absencc of so many of the affected parties
would probably not be considered fair, bearing in mind the importance of
an open and legitimate process. In particular, meaningfi.rl participation ofall
countries in the proccs of setting a long-term target is crucial because of
their shared interest. (This underlines the importance ofthe "sharedvision"
mentioned in the Bali Action Plan,) In fact, vulnerable groups ofcountries,
like small island states, have a great deal at sta.ke in charting the long-term
mitigation path. Fairness entails that countdes particularly vulnerable to
climate impacts should have their concerns fr ly considered. Assuming an
acceptable lon8-term taryet, it is somewhat more difncult to see why a
smaller group ofthe most responsible countries should not take the lead in
working out a dea, to allocate the mitigation burden. For LDCs and other
poor countries, a fairnes concern would be whether an agreement leaYes
them enough growth space; in this context, access to low-carbn technolo-
gieswillbe of great importanc for them to realize development obiectives
in a carbon-constrained future. Countries also have a key interest in the
design ofinstitutions, for instance, a potential successor to the CDM. As new
instruments, such as REDD in developing countries, are introduced, new
tensions and faimess concerns may arise, Deforestation and other forms of
land-use change, mainly in developing countries, caus some 20 Percent of
global CO, emissions. A mechanism to slow the rate ofdeforestation there-
6re makes sense. And REDD potentially offers revenue streams for tropical
countries that haye not benefited from the carbon market, but also raises the
possibility ofa tide ofcheap credits that could depress the price ofcarbon,
lessening the incentive for clean energy develoPment and dePloyment, If
one considers that the cruxofthe climate problem is the world's entrenched,
carbon-intensive way of life, then excessive developed country reliance on
market-basd REDD may well serve as a distraction from tackling the more
challenging, but also enduring, mitigation task.vt In acordance with the
principle of sovereignty over natural resources, developing countries are
quite entitled to trade the rights to the sink capacity of their forests. But here
context is important. Do tropical developing countries have a real choice
between (r) additional assistance and funding to help manage and pre-
serve forests for both domestic and global benefit and (z) particiPation in a
3:t Sunita Narain, :oo9 B F!r, o/Promirq aditorid, CSE Equitywatch, ,aruar,, t, zoo9, available
at httpJ/wwu6.india.org/.quityw.tch/.dito.ial2oo9orrt.htm.
132 Development ofthe Internatioru Climatc Change Regirne
trading scheme, where preservation offorest tracts offsets equivalent emis-
sions in developed countries? Specific fairness concerns relate to the peopl
that live in, or derive benefits from, forests - willtheir interestsb adquately
safeguarded? Thus mechanisms should be put in placc forcommunities and
local governments to be beneficiaries and stakeholders ofREDD. It should
alrc be remembered that forests deliver a range ofbenefits, in addition to
carbon storage, including water storage, soil conservation, nutrient flows,
and biodiYersity.
The Bali Action Plan makes it plain that developing countries regard
mitigation actions on thir part as contingent on access to technology and
financial support from industrialized countrics. Thus far, the climate regime
has, despite promises embedded in the tcxt ofthc Convention, delivered lit-
tle in th way of credible incentives for developing countries. Given the
complicaled nature ofthe climate change regime, and the widely diverging
interests of parties, it may be optimistic lo irssume that one down-to-the-
wire negotiation will resolve all the outstanding issues. Certainly the widely
appreciated need to begin implementing some adaptation and mitigation
policies now militates against a "Kyoto 2," on which years are spent fleshing
out the rules, without initiating actrr.rl 1'olicv ehanges. At the same tin+.,
the number and complexity of the issucs l.rcing negotiators suggests t6at
a progres will likely come in the form o[ general agreements, with details
filled in. There is increasing understanding thrt future commitments should
establish a stable, long-term ffamework, providing certainty for the carbon
market and incentives for technological innovation. A graduated phasing in
ofpolicies wiuld ensure that economic costs are minimized, therebyavoid-
ing the premature retirement ofexpensivc in,iastructure. Thrgets would be
tightened over time.
The conclusion has drawn out a number of challenges facing the next
phase of the climate regime. At this point, the direction and shape of that
next phase remain to be determined.
4
Theoretical Aspects of Fairness
4,1. INTRODUCTION
Claims about fairness and justice stand at the center of debates about our
collective response to climatechange. But what does/airressmean? Clearly it
is a deeply coniested concept, onethat reasonable persons can understand
in inconsistent and even incompatible ways. As failness assumes greater
currency and salience in climate policy, it is worthwhile to outline briefly
the main approaches thrt lead to some of the arguments put forward in
the climate regime. Fairness and.iustice can be analyzed at quite abstract
levels, but the problem of climate change quickly directs the enquiry to
the practical, real-world questioos. Thus the chief aim of this chapter is
to identiry a number of principles that could shape different conceptions
of hirness in the context of climate change - principles around which
one can construct a rorrgh, working consensus of values influencing the
debate on the question of sharing the burdens and benefits of combating
climate change. Yet caution is advisd in plucking conceptions of fairness
and justice developed in particular theortical frameworks and attempting
to apply them, in a somewhat pell-mell fashion, to the problem of climate
change. The potential forerroris large, but fairness in climate change should
also be carried at a level that mixes ethics and morals, science and interests.
A question that may quickly be asked is, fairness to whom? Since nation-
states are the main (and most visible) international actors, it isoften assumed
that we are dealing with fairness between nations, in other words, inter-
national iustice. This raises at least two issues. First, fairness issues also
penetrate within the r'prders of a state. Different communities within a
particular state may have very different levels ofexposure to the impacts of
133