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Slowing down climate change as fast as
possible should be first priority, not saving cash
By Paul Csagoly Heated negotiations between over 175 nations (or "Parties") which signed the United Nations Framework Convention on Climate Change (UNFCCC) continued last October in Bonn, Germany at "COP5." This time, much of the debate happened between developed and developing countries, the results of which will be of major importance to countries in Central and Eastern Europe (CEE) and the heat of the planet. At COP5, the Parties hoped to make sense of the three Kyoto mechanisms created during COP3 in Kyoto, Japan in December 1997. The Kyoto mechanisms are intended to help OECD and EU countries and nine countries from CEE and the Newly Independent States (NIS), all known as Annex 1 countries, in reducing the costs of reaching their emission reduction targets. Two of the three mechanisms allow Annex 1 countries to invest in emission-reduction projects in other countries. In return, investor countries get emission-reduction credits that they can deduct from their own national targets. The first, the Clean Development Mechanism (CDM), refers to projects financed by Annex 1 countries in non-Annex 1 countries. The second, Joint Implementation (JI), refers to projects financed by Annex 1 countries in other Annex 1 countries (including CEE). Activities Implemented Jointly (AIJ), a side mechanism, are pilot projects for testing JI activities. AIJ helps cut emissions and builds the capacity of recipient countries to be able to more efficiently receive foreign assistance and JI. However, funding countries cannot get credits for AIJ. Before COP5 began, the "Umbrella Group" (Australia, Canada, Iceland, Japan, Norway, New Zealand, Russia, Ukraine, US) pushed for ending the current AIJ phase, arguing that enough pilot projects had been done and that the JI phase should begin. Or AIJ could continue, as long as they started bringing credits to donor countries. Or even better, that credits should be awarded retroactively for all AIJ done since the signing of the UNFCCC. The "G77 Group" (developing countries led by China) objected, arguing that past AIJ efforts have been uneven, with few cases in G77 countries (only 5 in Africa altogether) and most in CEE/NIS countries (about two-thirds of all AIJ). Examples of AIJ in CEE countries include the modernisation of district heating plants in Bulgaria, residential energy efficiency projects in Estonia, and solar and biomass heating projects in the Czech Republic. This uneven past is understandable under the current system as only CEE/NIS countries can get investor countries credits for future JI activities - investors will get nothing for JI in G77 countries. However, investors would like AIJ and eventually JI in G77 too. Why? Because the more projects worldwide, the more likely that climate change goes down, the bigger the market for JI, the more chances they get for credits. As for G77 countries, their concerns about climate change are diminished by more pressing domestic problems such as possible famine. Nonetheless, they would not mind getting international financial assistance for their environmental work. To clarify, at COP5 it became clear that G77 countries have a major handicap. While all Annex 1 countries delivered national greenhouse gas emission reports to the UNFCCC Secretariat, only 13 non-Annex 1 countries fulfilled this reporting requirement. The main reason is their inadequate monitoring and reporting capacities. That is also a main reason behind why most refuse to volunteer for emission targets and join Annex 1 - because they can't set the targets unless they have a sufficient understanding of their current emissions. Hence, they would appreciate help in building their domestic capacities, and AIJ is one solution. But if the Umbrella Group gets its way under the current system, and AIJ becomes accreditable, all AIJ will go to CEE/NIS countries and the G77 will lose their chance. Thus, the G77 wants AIJ to remain non-accreditable, and once they've received some AIJ and built their capacities, they'll consider joining Annex 1 (which would then permit them to receive JI). As for CEE countries, they would begin receiving a disproportionately large amount of major AIJ or JI foreign investments soon if the Umbrella Group gets its way. So they are for it. The best answer should probably relate to what impacts climate change the most and fastest. Investing mainly in CEE/NIS countries to get numbers down now? Or building G77 capacity, bringing them into Annex 1 and expanding the JI marketplace later? It also depends on how much the Umbrella Group is willing to wait for guaranteed credits. As for COP5, future rules and guidelines for AIJ, JI and CDM were discussed again but not finalised. Parties have until this summer to submit modifications or opinions on the rules to the UNFCCC Secretariat. The use of AIJ, originally intended to continue only until 2000, has been extended. And investors hope to get official credits for JI by 2008. |
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