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LULUCF: on the verge of a bad deal

Will the LULUCF roller coaster end in a train wreck? Last week was LULUCF week here in Bonn. It all started with a KP Chair intent on finalizing the LULUCF rules, despite the existence of enormous loopholes.  In particular, the approach to forest management accounting favoured by Annex I Parties would allow developed countries to increase their annual emissions without accounting for it. In Saturday’s contact group, the G77 and China presented a two-part proposal to try to limit the damage of this approach: a review process to allow independent scrutiny of how each developed country calculates its reference level, and the proposal for a cap on credits from forest management. The Group’s proposal includes an expert review that would have the power to make adjustments if the assumptions and methods of a country’s reference level were found to be flawed, if the projection contradicts historical data collected for the first commitment period, or if there are accounting inconsistencies that result in hidden emissions (e.g., not accounting for emissions from bioenergy use). The Group is clearly trying its best to close the loophole, but this effort is severely limited by a group of Annex I Parties who are uninterested in rigorous accountability and actual emission reductions.  Rather than Parties agreeing to an honest accounting framework, the G77 and China are being forced onto the back foot to develop partial fixes to limit the damage. Further evidence of this was provided in the follow-up proposal from Russia that it should have no cap on credits and no obligation to account for increased net emissions until the forest sink is wiped out. These talks are in dire need of some leadership from developed countries. ECO maintains that accounting must be based on comparisons to the long-term historical average before the start of the first commitment period (i.e., 1990-2007), and that the goal of LULUCF must be to reduce net anthropogenic emissions, not let them increase. And lest we forget our natural forest ecosystems, they must be protected! Unless Annex 1 Parties adopt fair reference levels based on historical average emissions, a cap on credits may be needed as a second-best solution for LULUCF rules that are on the verge of becoming even weaker.  But the cap should not be applied to debits; even as every effort is being made to exclude emissions from the accounting, it would be even more perverse to further limit a Party’s obligation to account for emissions by also capping debits. Finally, accounting for Forest Management must be mandatory. After bending over backwards to accommodate the national interests and aversion to real debits by Annex I Parties, voluntary accounting would simply ensure that no good could ever come of this framework.

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Ludwig is dismayed to hear that Parties are considering shortening the length of the sessional periods for 2014 and 2015 by up to 4 out of 11 work days.  Ludwig has long maintained that all that is needed is political will to get the job done, not time. However, if political will actually materializes, Ludwig is considering giving Parties a few days off to enjoy his forthcoming MRV for MRV Symphony!

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Next Steps for the LCA Text

Parties, observers and the media alike are avidly awaiting the unveiling of new LCA draft text this week.  ECO has hopes that the amendations really will be 'new and improved!' and, more saliently, to the text being adopted by Parties as the basis for negotiations.

In the spirit of starting negotiations with the best foot forward, we offer the following input:

Shared Vision

ECO recommends the inclusion of a temperature threshhold, a peak year within the next 5 year commitment period, as well as a long term global emission reduction target of 80% cuts on 1990 levels by 2050.  The text should include the earliest possible date for the review, to be completed by 2015 at the latest, taking into account the work of the IPCC and the most recent science.

The assessment of overall progress under paragraph 4 option 1 should stay in but should be supplemented with:

* A clause should be added to para 4 option 1 to trigger action based on the outcomes of the assessment of overall progress.

* A 5 year commitment period that is timed around IPCC reports.

Trust can be strengthened if a compliance clause is included with a process to deal with inadequate developed country mitigation and insufficient finance.


For developed country mitigation it is vital that science-based, top-down, economy-wide quantified emission reduction obligations are adopted rather the pledge-and-review approach proposed as an option. These targets should amount to at least 40% cuts on 1990 levels by 2020, primarily achieved through domestic efforts, and text to the contrary should be removed. The text on zero carbon emission plans must be maintained – these are a key way to demonstrate that developed countries have the policies in place to meet their emission obligations and a long-term vision to decarbonize their economies by 2050.

For developing countries, it is critical that substantial finance, technology and capacity building support is provided by developed countries to enable them to develop supported NAMAs and low carbon development plans.  Low carbon emissions plans (voluntary for the most vulnerable countries) should be retained as an opportunity to plan for sustainable low-carbon development and to help avoid double counting between supported NAMAs and offsets.

The text is missing a crucial overall element – a recognition of the gigatonne gap and new sources and sectors of emissions that can help bridge it.


There are a number of items in the adaptation text that are “no brainers” – and should be easily agreed:

* An adaptation framework that facilitates and ensures the provision of financial support.

* The establishment of an adaptation committee to assess the adequacy of financial support in relation to needs, and make recommendations to the COP for further action in the event of insufficient support.

* Needs and priorities for adaptation identified at the national level through in country plans; with planning, implementation and evaluation of adaptation to be transparent and participatory, involving stakeholders at all levels including vulnerable groups and communities.

An equally important piece, but one that ECO expects will remain bracketed, is recognition of the need for an international mechanism to address unavoidable loss and damage from climate change, through risk reduction and management, insurance and rehabilitation when adaptation is no longer possible due to the severity of impacts.


We look forward to greater clarity on the financial mechanism and its architecture in the text. The governance structure of the financial mechanism should allow for critical functions to be discharged, such as the establishment of a framework that will result in equitable distribution of resources between countries as well as a balance among financing of thematic issues.  In addition, we hope that the governance structure will result in the establishment of a registry that will map financial flows for climate in channels other than those under the authority of the COP, thereby enabling the financial mechanism to bring about a balance in the flow of funds through the multilateral COP controlled fund.

We also expect the new text to indicate a process for further discussion on new and innovative sources of climate funding including recommendations of the high level advisory group on climate finance. In addition, we would like to see greater clarity on the scale of public financing that will be made available to support developing country adaptation and mitigation activities.

Technology development and transfer

ECO applauds the scope of the technology chapter, which contains many essential elements for a deal in Cancun.  However, the brackets in paragraph 7(f) must be removed. The Technology Executive Committee must be empowered to address barriers to technology development and transfer.

The Climate Technology Centre and the Network are fundamental. Without these, any institutional structure set up by the UNFCCC will remain an empty shell, replicating the present failures of implementation of technology cooperation and sharing.

It is crucial that global research, development and demonstration be at least doubled. There has to be a global target around which national policy revolves and that gives a strong signal to the international market.


Thanks to the hard work of the Parties, the REDD text is already at a state ready for negotiations.


So far we have only a placeholder on bunkers referring back to the last text that was used in Copenhagen. That text is in reasonable shape, is a balanced representation of Parties' views, and should come back in as the starting point for negotiations.

We hope that the formal and informal consultative processes initiated by the Chair have yielded the input required to make these constructive changes to the LCA text.

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Elements toward a High-Performance MRV Framework

Welcome to this special supplement to ECO.  After a lively debate the first week of this session, we would like to  present elements of a balanced and comprehensive overview of the issues regarding MRV (monitoring, reporting and verification). While some would like to use the debate around MRV as an  opportunity to obscure their lack of ambition in other areas, we consider MRV as an essential element of a fair, ambitious and binding agreement including a dual obligation for developed countries and significantly enhanced actions by all countries. We believe Parties should aim to conclude negotiations on all elements of MRV at Cancún such that the requirements first set out in the Bali Action Plan are fully met and reflect the spirit of this new, innovative and collaborative approach to address the climate crisis.

To track the overall progress of emission reduction efforts, it is vital that accurate information be gathered and shared. This process – known as measurement, reporting and verification (MRV) – is fundamental to building trust amongst parties and ensuring environmental integrity.

MRV has emerged as a threshold issue in the negotiations on the road to COP 16.   Parties must agree in Bonn on a process to ensure that all the relevant guidelines are finalized by Cancún. This should include a mandate for the Chair to propose text on this issue at the August session based on submissions from Parties, as the current text on MRV is not sufficiently advanced.

What exactly is MRV? Here is ECO’s view:

Measurement includes both the collection and quantification of data.

Reporting involves regular, timely reports by parties using an appropriate format.

Verification refers to the technical assessment of the accuracy and reliability of reported information.

First, an overall caution: don’t confuse MRV with compliance! For developed countries, MRV serves as a building block to compliance, like teammates on a relay team.  MRV produces the information needed to determine a Party’s performance but leaves it to another process to keep score.


Developed nations became rich burning coal and oil – and emitting enormous amounts of greenhouse gases. According to the UN Human Development Report, rich countries are responsible for ‘about 7 out of every 10 tonnes of CO2 that have been emitted since the start of the industrial era’.

The guiding principle of the Convention, ‘common but differentiated responsibilities’ (CBDR), recognizes the vast differences among Parties with respect to their historical contribution and responsibility, as well as their respective capability – in other words, in accordance with this principle it is the developed countries that must act first.

The Bali Action Plan calls on Parties to agree to MRV of enhanced national and international action on mitigation.

This is firmly rooted in the CBDR principle.  It includes ‘measurable, reportable and verifiable nationally appropriate mitigation commitments or actions ... by all developed country Parties’, and ‘nationally appropriate mitigation actions by developing country Parties ... supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner’. Parties – and the world – have a common interest in the environmental effectiveness of measures taken to mitigate climate change.  MRV fundamentally involves gathering and reporting consistent, comparable and accurate information on these measures and their environmental outcomes.

Credible MRV can strengthen trust amongst the parties and confidence in the overall regime for climate response and enable a stronger collective effort.  But at all times we need to keep our eye on the ball.

ECO notes that the Bali Action Plan is part of a road map that envisions a science-based aggregate emissions reduction target and ambitious developed country reduction targets.   MRV without ambitious targets won’t get the job done.  And while MRV is a fundamental building block of compliance for developed countries, MRV for developing countries is about different commitments for different parties with different capacities and different responsibilities.

See the difference?  ECO would also like to recall for a few well-known Parties that Annex 1 countries already have well developed MRV rules and institutions, otherwise known as the KP.

Developed Country MRV

ECO shouldn’t have to remind anybody of the importance and history of  MRV of developed country action.  The system currently in use by most developed countries has some keystones that provide the foundation for the MRV system, and developed country MRV is a cornerstone of the international system – so don’t let that building fall apart!  Here are some key elements:

  • Annual emissions inventories which fully cover sources and sinks using consistent guidelines, rules and methodologies.
  • Frequent reporting -- developed countries should complete their 6th National Communication by 2012.
  • Accounting for progress of the country’s emissions against a common set of rules.
  • Transparent, independent and scientifically based assessments by expert review teams of whether or not emissions and accounting actually show what the developed country says.
  • Assessment of compliance against international commitments.

Let’s get one thing straight.  MRV does not equal compliance.  As we have pointed out time after time, reviewing progress towards a target is only the first step of ensuring compliance with legally binding commitments.  There has to be a process for dealing with problems detected by expert reviewers – and it can’t just be name and shame!

Compliance procedures for legally binding commitments, with a range of appropriate consequences, are vital to building an effective regime for addressing climate change.  This regime is not only important for assessing countries’ compliance with their commitments, but also for the consistency of carbon market rules to ensure environmental integrity.

Developed countries don’t have to start from scratch.  The world already knows how to MRV developed country commitments – they’re called Articles 5, 7 and 8.  Many years were spent negotiating the intricate details of the system, including the standardized methodologies and guidelines vital to effective MRV and the compliance procedures for developed country commitments.  After all that effort, it would be a waste to depart from these rules and procedures, instead of building on and improving them.

We have heard many times that the United States not only rejects the need for compliance procedures, it also does not wish to have common accounting methodologies.  Considering that the US was a leader in developing the KP rules on MRV and compliance in the first place, this is uncomfortable, ironic or both. Parties agreed in Bali on a dual obligation of developed countries MRV for both mitigation and support.  Within that framework, an MRV system for financial support must be able to answer key questions such as whether or not funds are:

(1) new and additional;

(2) allocated in a balanced manner between adaptation and mitigation;

(3) equitably distributed between countries and in particular, prioritized for the most vulnerable countries;

(4) respond to developing country needs for the required levels of financing;

(5) establish clear criteria and indicators (such as the work that the EGTT has done on performance indicators); and

(6) are reliable.

We aren’t there yet, but there are some building blocks which can be used.  The current system of MRVing climate finance from developed countries is decentralized and fragmented, and as a result does not completely meet the six criteria above. Parties must make significant improvements to the existing system by adopting common measurement, reporting and verification rules under the UNFCCC that create a comprehensive and comparable picture of finance from both developed countries and multilateral development banks.  Also needed are transparency and comparability on non-financial actions (which is important for technology and capacity building), as well as private financial flows to extend the current MRV system  implementation for public financial flows.

Developing countries have a critical need to adapt to and mitigate climate change – a need that cannot be met solely with their own resources. Support from developed countries is crucial and needs to be comparable, transparent, accurate, efficient and timely.  Implementing such a system will ensure that resources flow to essential needs and

build much-needed trust. While a reporting process is being finalized, all developed countries must be as transparent as possible in the delivery of fast track climate funds to developing countries, including through regular reporting.

Non-Annex I MRV

We need a strong compliance mechanism and strong MRV for developed countries for their dual obligations of reducing emissions and providing support.  But in addition, we also need to have progress on non-Annex I reporting and review, noting that review should respect national sovereignty and not be used as a back-door manoeuvre to force binding emissions reduction targets on them.

Let’s start with the reporting. Most developing countries should submit greenhouse gas (GHG) inventories every two years and a full national communication at least once in each 5-year commitment period. These reports should receive full financial and technical support by developed countries, including fast start funding. LDCs and SIDS should, as far as feasible, do this work voluntarily with appropriate developed country support. GHG inventories can be included in a biennial update on national communications that outlines new developments in the country.  The most updated guidelines of the IPCC should be used for  these inventories.

Now let’s move to the issue of verification. GHG inventories along with supported NAMAs should be verified internationally, while unsupported actions should be verified domestically according to international guidelines negotiated and developed by the COP.

International verification of inventories is fundamental for assessing whether the world is on track with overall emissions reduction and temperature targets.

For supported NAMAs, international verification must be linked to MRV of support to assure that adequate support for financial costs, technical needs and capacity building are provided. Developing countries will need time and support to develop robust inventories.  Don’t forget, it took time for the quality and timeliness of many developed country inventories to improve, and these improvements were facilitated in large part by the expert review process.

In-country reviews are likely to be the most helpful, and this option should be open to developing countries.  The output of expert review teams should feed into a facilitative process that ensures the provision of further technical, financial or other assistance as needed. In anticipating a paradigm shift towards a low carbon economy, developing country parties (except for LDCs and SIDS, who should be able to opt in) should elaborate indicative or aspirational low-carbon action plans (LCAPs). These plans, which will only be possible with developed country finance and support, should outline a low carbon strategy for mitigation and adaptation.

Dear Brollies...

While walking past the copy machine in the Maritim, ECO spotted a teacher's note intended for the 'Brollies' (Australian slang for the small tent-like device called an 'umbrella' designed to shield oneself from rain and other realities).  It read as follows: Dear Brollies . . . You're good at the 3 R's (reading, [w]riting and [a]rithmetic), although you could improve on your maths.  But your marks are not adequate at all on avoiding dangerous climate change.  So this term, it's time to focus on the 3 C's – a Common Position leading to Common Rules and Strong Compliance. You have often lamented in class that any consolidation of commitments cannot be based on a 1992 world.  Well, Brollies, it cuts both ways.  The regime cannot afford to be based on a pre-1997 version of industrialized country commitments, yet your Umbrella Group submission in the LCA contact group on the MRV of Non-Annex I mitigation actions seems to suggest just that. Developed countries undertake commitments and they must be complied with.  That is what leadership looks like.  Merely reviewing progress toward a target isn't sufficient.  Perhaps you should review the study plan for this term: Transparency in the developed country context isn't just about building trust amongst Parties, but also to detect when they aren't fulfilling their commitments.  It is clear that the current regime lacks a robust early warning system for non-compliance (Canada, please stop hiding behind the umbrella). A policy review process could assist in enhancing the regime, but it can't be the end of the story.  Strong compliance with legally binding commitments is crucial to building a regime for avoiding dangerous climate change. The question must be put: What happens if expert reviewers detect a problem?  (And the answer can't be 'nothing'!) To assess compliance, common accounting and reporting standards are needed.  This applies just as much to calculating emissions reductions as it does to the support provided by industrialized countries.  It's encouraging that you Brollies can come to a common position, so it shouldn't be a big step to agree common rules.  There is plenty of material to draw from and improve upon (for example, look in your Kyoto lesson plan)! If you are questioning the need for common accounting and reporting rules, please refer to the fast start financing reports published by the US (at the April MEF session) and the EU (both at and before this session).  While the depth and quality of reports are welcome, other Brollies must follow suit and report on the state of your fast-start financing.  This includes defining the terms and revising the relevant National Communication guidelines for reporting on financial, technological and capacity building support. Remember, progress on MRV rules will be key to ensuring a successful outcome in Cancun.  However, this means detailed progress on all fronts: Annex I emission reduction commitments, Non-Annex I nationally appropriate mitigation actions and support for them provided by you and the non-Brollie Annex I countries. You're making some progress, but to pass this term, remember that your grade depends on all 3 Cs:  a Common Position leading to Common Rules and Strong Compliance.  The final exam is in Cancun, so don't fall behind in your work going forward! /signed/ Professor M.R.V.

Bangladesh Launches Climate Change Resilient Fund

Bangladesh signed an agreement to set up a Climate Resilient Fund with the UK, Sweden, Denmark and the EU at a ceremony featuring Dr. Hasan Mahmud, State minister, Ministry of Environment and Forest, and ambassadors from the contributing countries in Dhaka on 31 May. Connie Hedegaard, EU Commissioner for Climate Action was also present. The total amounts initially pledged are over $100 million which will be used to implement the Bangladesh Climate Change Strategy and Action Plan (which includes both adaptation and mitigation actions). 'This is a pathbreaking example for an innovative new approach in national climate action,' said Dr. Saleemul Huq, senior fellow of the International Institute for Environment and Development.  'This is a developing country taking the lead on national climate action with coordinated support from other countries, and showcases a new paradigm based on transparency for both donor countries and citizens'. The Climate Resilient Fund will consist of contributions from developed countries and supplement the $100 million already allocated in Bangladesh's national budget for implementing its Climate Change Strategy.

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Focusing on Sources: the AGF Workshop

Making progress on long-term finance is key to unlocking progress on an ambitious package in Cancun.  The upcoming Advisory Group on Climate Finance (AGF) workshop is a chance to clarify questions about the role of the panel and how it connects with the UNFCCC negotiations. Last September, UN Secretary-General Ban Ki-moon's first proposed a high level panel at the UN General Assembly.  Early this year, the Secretary-General followed through on his commitment.  In establishing the AGF, he set a path toward agreement on sources of scaled up financing under the UNFCCC to meet the need for climate action in the developing world.  The panel brings together high-level finance officials and Heads of State, who normally aren't closely engaged in the climate negotiations, to make recommendations on climate finance to the UNFCCC. Nevertheless, ECO believes that we can't leave the discussion on sources entirely in the hands of the AGF until just before Cancún.  In order to get a meaningful decision in Cancún on sources of scaled-up financing, the LCA must immediately resume the discussion of innovative sources be informed along the way by the analysis and recommendations of the AGF. To jump-start this exchange, since time is very short, Parties should put the best ideas on innovative sources of public finance into the LCA text now.  These include bunkers mechanisms and/or levies, Special Drawing Rights, a Financial Transaction Tax, and international auctioning of AAUs, all backed up through national commitments to assessed contributions. And here's a special note to developed countries:  For those who might be a little reluctant to press for new and additional funding from your Treasuries each year, remember that innovative sources could provide a substantial boost to reach the annual $100 billion milestone by the end of the decade that you pledged in Copenhagen.

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The 4Qs of Adaptation

Stressed negotiators hurrying into today's adaptation focused LCA contact group need not worry if they have arrived somewhat unprepared.  ECO is pleased to provide the four answers that have the potential to make a difference. On response measures (Q1), this question should be considered off-topic because the Bali Action Plan (adopted even by 'Friends of Response Measures') clearly gave the response measures a home under the pillar of mitigation. In any case, seeking compensation for reduced oil sales is holding the millions of people hostage who are suffering from climate change and in dire need of adequate support to cope with its adverse effects. On institutional arrangements (Q2), here's a summary, really just a soundbite, on the adaptation framework.  It should facilitate and ensure the provision of financial support by developed to developing countries. It would not organise funding disbursement; however, the adaptation committee would recommend further action to the COP if insufficient funding undermines the scale of support required under the adaptation framework. It would do so by linking up with the Kyoto Adaptation Fund Board as well as other proposed institutions tasked with finance disbursement such as the Copenhagen Green Climate Fund. On loss and damage (Q3), Annex I Parties should answer this question: What would you do if your country, its lands and the livelihoods of your people were becoming untenable or even starting to disappear under water or sand.  How would you face damages so substantial they are beyond your ability to adapt?  Parties should set up the international mechanism to address unavoidable loss and damage from climate change, through risk reduction and management, insurance and rehabilitation – against internationally established baselines -- adaptation is no longer possible. In Cancún, Parties should establish such a mechanism and operationalise at least the insurance component, while agreeing to launch the rehabilitation component at COP17, using the year in between to study and develop its modalities. On matching adaptation with support (Q4), our longstanding view is that developing countries should receive regular flows of grant finance through the financial mechanism and its operating entities in support of adaptation efforts. Needs and priorities should be identified through in-country, transparent and participatory adaptation planning, implementation and evaluation. Adaptation strategies can be disseminated consistently at the international level to support the continuous influx of finance, but there is no need for an 'adaptation registry'.

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Ludwig hears that an Annex I country that hasn't ratified the Kyoto Protocol has been complaining that they can't take part in a KP discussion on its target.  He reckons the solution to that is quite simple – the Protocol is still open for ratification.  All they have to do is sign on the dotted line.  Ludwig is certain that all parties would work with considerable efficiency to expedite that process.

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Planning Now for the Low Carbon Future

Amidst the many vital matters being discussed in the LCA, there are two key ideas already enshrined in the current text -- zero carbon action plans (ZCAPs) for all developed country parties, and low carbon action plans (LCAPs) for developing countries (except the most vulnerable countries). By agreeing to begin planning their pathways to complete decarbonization, developed countries can demonstrate that they have the policies and measures in place to meet their emission reduction commitments and the long term vision for decarbonizing their economies by 2050. LCAPs will provide developing countries the opportunity to plan for sustainable low-carbon development, showcasing their efforts and providing clarity on which actions are counted as domestic, carbon market and CDM respectively, to avoid double counting.  An elaboration of proposed actions requiring support would also help to match these actions with funding, capacity building and technology from developed countries.  And it should be strongly stated that without support from developed countries in the first place, low carbon planning will be impossible for developing countries. ECO applauds the Chair for including low and zero carbon development in the discussion text, and encourages delegates to show their support

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