Introduction to registry systems

under Article 7.4 of the Kyoto Protocol

Pre-sessional consultations on registries

Bonn, 2-3 June 2002

Andrew HowardUNFCCC secretariatahoward@unfccc.int

2

Scope of presentation

• Kyoto Protocol compliance

• Registry system requirements

- registry structures

- transactions

- features for integrity and transparency

Based on document FCCC/CP/2001/13/Add.2:

• Decision 19/CP.7 on Article 7.4 (pages 55-72)Para numbers in this presentation refer to this decision

• Decision 17/CP.7 on the CDM (see pages 41-43 on the CDM registry)

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Compliance with Kyoto Protocol targets

Emissions

Sin

k ad

ditio

ns

Target

Ann

ex B

targ

et

Party A is a net buyer …

Sin

k ad

ditio

nsEmissionsTarget

Ann

ex B

targ

et

Party B is a net seller …

Mec

hani

sms

subt

ract

ions

Mec

hani

sms

addi

tions

4

Accounting units (paras 1-4)

Assigned amount unit (AAU)• Based on the Annex B target (Articles 3.7/8)

AAU

CER Certified emission reduction (CER)• issued into the CDM registry as a result of CDM projects

ERU Emission reduction unit (ERU)• converted from AAUs or RMUs as a result of JI projects

Removal unit (RMU)• Based on carbon sequestration in sinks (Articles 3.3/4)

RMU

All units denominated as 1 tonne of CO2 equivalent:

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CDM registry(operated by

the executive board)

A registry is a standardized electronic database for recording and tracking of units (ERUs, CERs, AAUs and RMUs) (para 19)

National registries(operated by Annex I Parties)

Annex IBulgaria

Annex IRussia

Annex ICanada

Annex IGermany

Tracking the units through the registry system

CER

Transactions ERU

AAU

Transaction log(operated by the secretariat)

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National registry account types (para 21)

CanadaHeld by the government

Party accountHeld by companies, organizations or individuals (if authorized by the Party)

Legal entity a/c

Legal entity a/c

Units transferred here to count towards compliance

Retirement a/c

Units transferred here to compensate for net emissions from sinks or to strengthen targets

Cancellation a/c

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AAU and RMU issuance (paras 23 and 25)

Bulgaria

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

Calculation of assignedamount (Articles 3.7/8)

AAUAAUAAUAAU

Calculation of net sequestration (subject to limits!)

(Articles 3.7/8)

RMURMURMURMU

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Transfers and acquisitions under emissions trading (para 30)

Canada

Party account

Legal entity A

Legal entity B

Germany

Party account

Legal entity A

Legal entity B

CER

RMU

ERUAAU

9

Retirement and carry-overs (paras 34 and 36)

>=<

Emissions 2008 to 2012

Compliance assessment

Units in retirement account

Units in retirement accounts not transferable

Russia

Party account

Legal entity A

Legal entity B

Retirement a/c

Unused units carried-over in holding accounts to the next commitment period

(paras 36)

Retirement(para 34)

RMU

CERERU

AAU

10

ERU issuance (para 29)

ERU

Germany

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

Russia

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

JI project(conversion

of AAUsto ERUs)

Verification by host Party (track 1) or

independent procedure (track 2)

AAUERU

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CER issuance (into the CDM registry)

CDM project

Certification of emission

reductions by an operational entity

CERCERCERCER

Participants’request

CERCERCERCER

Canada

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

CDM registry

Pending account

Share of proceeds (for adaptation and

admin costs)

Bolivia account

India account

12

Cancellation of units to strengthen targets (para 33)

What: Cancelled units are removed from the system and cannot be used for compliance

Who: schools, NGOs, individuals, etc

Units in cancellation accounts may not be transferred or retired

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

Germany

RMU

CERERU

AAU

13

Features for integrity and transparency

• serial numbers• account numbers• the transaction log• accessible information

--------------------------> to keep track of the units-------------------------> to identify the accounts-----> to ensure the integrity of transactions

-----------------> to maintain transparency

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Unique serial numbers for units (para 24, 27 and 29)

AAU

RMU 01 CA 2 3 003752 000

ERU 01 PL 3 0 078625 033

CER 01 BO 4 0 047691 046

Party of originLULUCFactivity

Uniquenumber

Projectnumber

Unit type

01 CH 1 0 314782 000

Commitment period

Number formats are not yet specified - these are examples only

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Account numbers (para 22)

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

Canada

Unique numberParty

CA 001

CA 002

CA 003

CA 485

CA 486

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Message exchange: International transfer (para 38-43)

Account in national registry of Party A

Transaction log(automated checks)

Account in national registry of Party B

Confirmation

4

Confirmation

4Proposalresponse

2

Proposalresponse

2

Proposal1

Proposal

1

Transactionrecord containing:- trans. number- trans. type- serial numbers- account numbers

1

Instruction / transfer3

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Message exchange: Domestic issuance (para 38-43)

Account in national registry of Party A

Transaction log(automated checks)

Confirmation

4Proposalresponse

2

Proposal

1

Transactionrecord containing:- trans. number- trans. type- serial numbers- account numbers

1

Issuance

3

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Potential discrepancies (para 42)

The transaction log conducts automated checks for:• units improperly issued or duplicated units• units previously retired/cancelled• units not carried over from the previous commitment period• eligibility of Parties / legal entities• infringements on the commitment period reserve• infringements on the limits for carbon sequestration

The transaction log ensures the integrity of all transactions

Each unit is held in one account at a time

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Publicly accessible information (paras 44-48)

• Account information (account type, holder, representative, etc)

• JI and CDM project information (on national registries and the CDM registry respectively)

- name

- location

- reports / documentation

• Information on holdings and transactions, including on cancellations and retirements

• List of legal entities authorized by the Party (national registries)

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Registries development beyond COP7

Technical standards on the exchange of data between national registries, the CDM registry and the transaction log

… a decision at COP 8 (Nov 2002)

… completed by COP 10 (Nov 2004)

Establishment of the transaction log by the secretariat

… before 1 Jan 2007

Establishment of national registries by Annex I Parties

… interim registry by COP 8?

Establishment of the CDM registry by the CDM executive board

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www.unfccc.int

Andrew HowardUNFCCC secretariatahoward@unfccc.int

Introduction to registry systems under Article 7.4 of the Kyoto Protocol