Annex I targets: A disappearing act

Although the emission cut pledges under the Kyoto Protocol by the developed countries and countries with economies in transition (Annex I Parties) seem significant, there are potential loopholes which negate these pledges.  Payal Parekh explains.

EACH new report that is released on climate change paints an even more dire picture than its predecessor in terms of the extent to which climate change is already underway and the associated impacts. The recently published Bridging the Emissions Gap report from the United Nations Environment Programme (UNEP) (2011) shows that the gap between what is necessary to have a likely (greater than 66%) chance of limiting global temperature rise to 2øC and what countries have pledged is growing.  The window for addressing climate change is effectively closing with each passing day of inaction.

Yet, there is little talk of increasing the ambition of mitigation targets by developed countries so that they are in agreement with science and principles of equity. Even worse, weak accounting rules mean that pledged emission reductions actually disappear through loopholes.

This article summarises the emission reductions pledged by developed countries and potential loopholes that would actually allow emissions to rise.

Annex I emission reductions

The aggregate pledge of Annex I Parties (developed countries and countries with economies in transition) that are Parties to the Kyoto Protocol is in the range of 13-18% below 1990 levels, much less than the emission cuts that are needed to stay below 2øC or 1.5øC and to be in line with the principles of equity and historical responsibility. The Annex I pledges are further weakened by a series of accounting rules, methodologies, and other technical means, often referred to as 'loopholes'.  The collective effect of these loopholes is to provide a way by which Annex I Parties can comply with their reduction targets without actually undertaking mitigation.

We present results from a recent analysis prepared by the Stockholm Environment Institute and published by the South Centre (Kartha 2011) with updates on the magnitude of certain loopholes from the Bridging the Emissions Gap report (UNEP 2011). Under the rules of the Kyoto Protocol, developed countries are free to use these loopholes strategically over the second commitment period.  The analysis shows that the loopholes could be larger than the pledges of Annex I countries. If a weak pledge-based approach riddled with loopholes is adopted, we risk a 4øC rise in global temperatures or higher, which will lead to much higher regional temperature rise in areas such as Africa and South Asia.

Below the loopholes are described in further detail.

Surplus allowances

During the first commitment period of the Kyoto Protocol many countries received surplus 'hot air' allowances based on inflated estimates of greenhouse gases they expected to release. Some countries' Kyoto targets were thus so weak that 'large amounts of surplus allowances have been and will be generated over the 2008-2012 period, even without any environmental policy effort' (Rogelj et al. 2010).  This surplus is estimated to be between 9 and 13 Gt CO2 equivalent (UNEP 2011, den Elzen et al. 2010), more than half a year's worth of emissions by all the developed countries put together. There is also a risk that surplus allowances could be generated post-2012, which could result in another loophole of 0.7 to 1 Gt CO2 e in 2020 (den Elzen et al. 2010). 

Land use, land-use change  and forestry accounting rules

Annex I Parties are pushing to include weak land use, land-use change and forestry (LULUCF) accounting rules that would allow them to increase their emissions. This could be achieved partly by allowing countries to set their own reference levels ('baselines') for their emissions. Some countries are also proposing that accounting for forest management remains voluntary, thereby allowing Annex I Parties to simply not account for any emissions increases. The size of this loophole could be between 0-0.6 Gt CO2 e/year subject to the final agreement on accounting rules (UNEP 2011). The cumulative (2013-2020) magnitude of the loophole could be as large as 4.8 Gt CO2 e.

Non-additionality under the CDM

Through the Clean Development Mechanism (CDM), developed countries can obtain carbon credits from projects in developing countries to 'offset' their emissions, so that developed countries can continue to pollute. Projects have to prove that they are 'additional' - that they could not be built without the extra financing through the sale of carbon credits. If this is not the case, the emission reductions are not real and there is actually an increase in emissions.

The number of emission reduction credits to award a project is calculated against a hypothetical baseline of what emissions would have been if a dirty alternative had been built. Setting the baseline too weak results in the over-crediting of emission reductions.

It has been estimated that 20% to over 50% (Schneider 2007, Haya 2009) of CDM projects are non-additional. Projected certified emission reduction credits (CERs) to be generated between 2013-2020 range from 3.5 to 7 billion (IGES Aug 2011, UNEP RISOE Sept 2011). Assuming that the percentage of non-additional projects is equivalent to the number of non-additional CERs, the loophole could be between 0.1-0.4 Gt CO2 e in 2020 and 0.7-3.5 Gt CO2 e cumulatively.

Double-counting of offsets

Due to the enormity of the climate crisis, developing countries will also have to contribute to mitigation efforts.  It is expected that developed countries will provide the full incremental costs for these emissions reductions through National Appropriate Mitigation Actions (NAMAs), but unlike offsets, the effort will be attributed to the developing countries themselves.

Since emissions reductions from both offsets and NAMAs will take place in developing countries, the accounting of these reductions is extremely important. In the case of NAMAs it is clear that the effort will be attributed to developing countries.  In the case of offsets, it is essential that only one party claim the emissions reductions due to the offsets. If both the buyer (developed country) and the seller (developing party) count these emissions reductions toward their goals, then this is a clear case of double-counting. Unfortunately there is little clarity in the negotiations as to whether and how double-counting can be avoided.

A recent study by the Stockholm Environment Institute estimates that double-counting would increase emissions by 0.6-1.6 Gt CO2 e in 2020 based on assumptions on demand and supply of offsets (Erickson and Lazarus 2011).

International aviation and shipping

Currently emissions from international aviation and shipping are not accounted for under the Kyoto Protocol, even though they are substantial. As such, Annex I Parties' emissions from this sector can continue to increase without affecting compliance with their emission reduction commitments. Based on projections from the international aviation and shipping authorities, growth in emissions from Annex I Parties is estimated to amount to a loophole of 0.4-0.9 Gt CO2 e in 2020 (Terry 2010).

Aggregate loopholes

These accounting loopholes, taken together, could more than negate the pledges of Annex I countries. Taking the estimates of the 'conditional' (high) Annex I pledges, emission reductions amount to roughly 3.8 Gt CO2 e in 2020 (UNEP 2010). The loopholes together add up to approximately 3.3-7.4 Gt CO2 e in 2020. If we assume that Annex I pledges are at the high end of the spectrum, we find that pledged emission reductions are significantly lower even when applying the lower end of the loophole estimates and actually disappear when applying the higher end (see figure below). 

Conclusion

If developed countries are serious about fulfilling their responsibility to lead in the fight against climate change, they need to put ambitious targets on the table that are in line with the science and do away with loopholes.  There is no plan(et) B. Every passing day of inaction closes the door further on preventing catastrophic climate change. Unfortunately those countries failed to do their part in Durban - the pledges remain low and uncertain.                                           

Dr Payal Parekh is a climate and energy expert who was in Durban.

References

den Elzen, M. et al. (May 2010). Evaluation of the Copenhagen Accord: Chances and risks for the 2øC climate goal. Netherlands Environmental Assessment Agency (PBL). Available at http://www.ecofys.com/en/publications/23/.

Erickson, P. and Lazarus, M. (2011). The implications of international greenhouse gas offsets on global climate mitigation. Stockholm Environment Institute Working Paper WP-US-1106. Available at http://www.sei-international.org/mediamanager/documents/Publications/SEI-WorkingPaper-Erickson-ImplicationsOfInternationalGreenhouseGasOffsets-2011.pdf.IGES (2011). IGES CDM Project Database, 1 August 2011. Available at http://www.iges.or.jp/en/cdm/report.html

Haya, B. (2009). Measuring emissions against an alternative future: fundamental flaws in the structure of the Kyoto Protocol's Clean Development Mechanism. Energy and Resources Group Working Paper ERG09_001. Available at: http://erg.berkeley.edu/working_paper/2009/ERG09-001.pdf

Kartha, S. (2011). Annex 1 pledges, accounting 'loopholes', and implications for the global 2øC pathway. South Centre Policy Brief. Available at http://www.southcentre.org/index.php?option=com_docman&task=doc_download&gid=2081&Itemid=182.

Rogelj, J. et al. (2010). Copenhagen Accord pledges are paltry. Nature 464, 1126-28. Available at http://dx.doi.org/10.1038/4641126a.

Schneider, L. (2007). Is the CDM fulfilling its environmental and sustainable development objectives?  An analysis of the CDM and options for improvement. ™ko Institut. Available at http://www.oeko.de/oekodoc/622/2007-162-en.pdf.

Terry, S. (2010). Integrity Gap - Copenhagen Pledges and Loopholes. Sustainability Council of New Zealand. Available at http://www.sustainabilitynz.org/news_item.asp?sID=214.

UNEP (2010).  The Emissions Gap Report - Are the Copenhagen Accord Pledges Sufficient to Limit Global Warming to 2øC or 1.5øC? Available at http://www.unep.org/publications/ebooks/emissionsgapreport/

UNEP (2011). Bridging the Emissions Gap. Available at http://www.unep.org/publications/ebooks/bridgingemissionsgap/UNEP RISOE Pipeline Analysis and Database 1 September 2011. Available at: http://cdmpipeline.org/

*Third World Resurgence No. 255/256, November/December 2011, pp 46-48