Non-paper on Guidelines regarding
Article 6 of the Kyoto Protocol
(submitted by Australia, Canada, Iceland, Japan, New Zealand, Norway,
Russian Federation, Ukraine and the United States of America)
This paper presents preliminary views of Australia, Canada, Iceland, Japan, New Zealand, Norway, Russian Federation, Ukraine and the United States of America on the guidelines for Article 6 of the Kyoto Protocol. We believe that projects under Article 6 could provide opportunities for cost-effective reductions and removals of greenhouse gases and contribute significantly towards achieving the objectives of the Kyoto Protocol. These projects could also enhance the capability of the host countries to take domestic actions through transfer of technologies and financial resources.
Although the elaboration of guidelines is not a mandatory requirement for the implementation of the Article 6, it would be useful to lay down guidelines for ensuring smoother and more consistent implementation.
The Article 6 mechanism should contribute to environmental effectiveness by facilitating reductions of anthropogenic emissions by sources or enhancement of removals by sinks of greenhouse gases in a cost-effective manner. Therefore, the design of the Article 6 mechanism should be simple, transparent and minimize transaction costs.
The paper consists of two parts. The first part presents our ideas on elements for the Article 6 mechanism. The second part is proposed decision text.
The inclusion of a particular element in this paper is without prejudice to whether that element is ultimately reflected in the Article 6 decision or elsewhere.
Part I : Elements for the Article 6 mechanism
1.Participants of Projects under Article 6
Under Article 6, a Party may acquire emission reduction units provided that " It does not acquire any emission reduction units if it is not in compliance with its obligations under Articles 5 and 7." (Article 6.1. (c))
Article 6 also provides that "A Party included in Annex I may authorize legal entities to participate, under its responsibility, in actions leading to the generation, transfer or acquisition under this Article of emission reduction units."(Article 6.3.)
2.Project Eligibility
2.1.Approval of a Project
Article 6.1.(a) requires that "Any such project has the approval of the Parties involved."
2.2.Reductions and Removals
Article 6.1. (b) requires that "Any such project provides a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur."
Noting Article 6.1(b), guidelines should be further elaborated, taking into account the following possible situations:
3.Emission Reduction Units
3.1.Denomination of
Emission Reduction Units
(See paragraphs 3 and 4 of the Annex of the attached decision
text.)
3.2.Issuance and Transfer
of Emission Reduction Units
(See paragraph 5 of the Annex of the attached decision text.)
Parties’ Registries
Tracking the generation, transfer and acquisition of emission reduction units will be necessary to verify the Parties' compliance with their respective target.
A Party should establish a national registry. To simplify tracking and reporting requirements of various Kyoto mechanisms, a Party might choose to use one registry for more than one mechanism. (See paragraphs6, 7, 8, 9 and 10 of the Annex of the attached decision text.)
4. Reporting and Verification
Reporting and verification of projects are critical to ensure environmental effectiveness. In this regard, we propose partial decision text in paragraphs 11 and 12 of the Annex of the attached decision text, but note that further elaboration of the guidelines is needed. (See paragraphs 11 and 12 of the Annex of the attached decision text.)
5.Question of Implementation
Article 6.4 states that "If a question of implementation by a Party included in Annex I of the requirements referred to in this Article is identified in accordance with the relevant provisions of Article 8, transfers and acquisitions of emission reduction units may continue to be made after the question has been identified, provided that any such units may not be used by a Party to meet its commitments under Article 3 until any issue of compliance is resolved.
With regard to the implementation of Article 6.4, further elaboration is required. In particular, a clear, objective and expeditious process to identify “a question of implementation" and to resolve an "issue of compliance" needs to be established.
6. Relationship with “assigned amount”
Article 3.10. and 3.11. states[emphasis added];
Any emission reduction units or any part of an assigned amount which a Party acquires from another Party in accordance with the provisions of Article 6 or of Article 17 shall be added to the assigned amount for the acquiring Party.
Any emission reduction units or any part of an assigned amount which a Party transfers to another Party in accordance with the provisions of Article 6 or of Article 17 shall be subtracted from the assigned amount for the transferring Party.
Decision Text for the Article 6 Mechanism
The Conference of the Parties,
Recalling, in particular, Articles 3 and 6 of the Kyoto Protocol,
Noting that the Conference of the Parties serving as the meeting of the Parties to this Protocol may, pursuant to Article 6 of the Protocol, further elaborate guidelines for the implementation of Article 6 including for verification and reporting.
Recognizing that according to Articles 3, paragraphs 10 and 11, of the Protocol, activities under Article 6 will not alter the total assigned amount of Parties included in Annex I as set forth in Annex B of the Protocol,
1. Decides to recommend to the Conference of the Parties serving as the meeting of the Parties to the Protocol that it take a decision at its First Session to adopt the attached Annex.
Annex
Definitions
1. References in this Annex to “the Protocol” are references to the Kyoto Protocol of the United Nations Framework Convention on Climate Change.
2. References in this Annex to articles are references to the Kyoto Protocol, unless otherwise indicated.
The Emissions Reduction Unit
3. Emission reduction units shall be denominated in units of one metric tonne of carbon dioxide equivalent (calculated using the global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5).
4. Each emission reduction unit shall be identified by a unique serial number that includes the Party of origin, the timing of issuance, and a project identifier.
Issuance and Transfer of Emission Reduction Units
5. The Party in which the project site is located shall issue emission reduction units and transfer them to Parties and/or authorized legal entities participating in the project. Emission reduction units shall be distributed among the project participants according to their agreement.
Parties’ Registries
6. A Party involved in a project under Article 6 shall maintain a national registry. A Party’s national registry shall contain records on holdings, transfers, and acquisitions of emission reduction units.
7. Information held by the registry shall be publicly accessible.
8. Any two or more Parties may voluntarily maintain their registries in a consolidated system within which each registry would remain legally distinct.
9. Transfers and acquisitions of emission reduction units shall be made by removing units (identified by serial number) from the registry of the transferring Party and adding them to the registry of the acquiring Party.
10. An emission reduction unit used by a Party to meet its obligation under Article 3.1 shall be retired by that Party, in which case such unit may not be further used; a record of all retired emission reduction units shall be kept by a Party in its registry.
Reporting and Verification
11. Each Party involved in a project under Article 6 shall include in its annual report
to the Secretariat under Article 7 information, in a standard format, inter alia on:
-- transfers and acquisitions of emission reduction units during that year, including, for each unit, the serial number and the Party’s registry to which it was transferred or from which it was acquired;
-- any emission reduction units (identified by serial number) that have been retired that year.
12.The information submitted to the Secretariat shall be reviewed in accordance with Article 8 and its guidelines and made public by the Secretariat.