Accounting schneider ccxg gf march2014

Accounting of Units: Pre-target Year Units, Single Year Targets, Double Counting: Issues and Options

Climate Change Expert Group Global Forum (CCXG) Paris, 18-19 March 2014 Lambert Schneider – [email protected]

Content

1.  Accounting of pre-target year units –  Accounting of units from early pre-2020 mitigation action in

a post-2020 climate regime: what are the implications? 2.  Single year targets

–  2020 mitigation pledges under the UNFCCC: what are the implications of using units towards these pledges?

3.  Double counting –  How can double issuance and double claiming be

addressed?

Accounting of pre-target year units (1)

Target achievement without pre-target year units


Target achievement with accounting of pre-target year units


Target achievement with accounting of pre-target year units

Accounting of pre-target year units (4) - Conclusions

•  With given mitigation pledges, using pre-target year units to achieve targets does NOT increase mitigation ambition but leads to: –  Higher cumulative GHG emissions, OR –  At best: the same cumulative GHG emissions

•  Using pre-target year units is only effective if –  Units are cancelled, i.e. not accounted towards any target

achievement (including KP targets); OR –  The ambition of 2020 / post-2020 targets is enhanced due

to possibility for accounting units from early action

Single-year targets (1)

Target compliance relying wholly on transferable units: Multi-year


Target compliance relying wholly on transferable units: Single-year

Single year targets (3) - Options

1.  Same vintage of units and targets –  Allowance vintage does reflect when reductions occur –  Only works if all countries have the same target time frame

and do not bank units: restricts emissions trading 2.  Limit on the number of units

–  Only reduces but does not address the issue 3.  Translate single-year targets in a multi-year path in

order to allow the use of units –  Fully addresses the issue

4.  Translate the number of units in the target year into a multi-year path for unit use in prior years –  Could address the issue of unit use, but could result in

higher cumulative emissions than multi-year targets


Option 4: Single-year targets with a multi-year unit path

Single-year targets (5) - Conclusions

•  Targets in a post-2020 climate regime should be continuous, multi-year targets –  Greater comparability and certainty of cumulative emissions –  Less vulnerable to changes in climatic/economic conditions –  Compatible with carbon market instruments

•  Options for single-year 2020 pledges: –  Option 3 (translation in a multi-year emissions path) is most

robust –  Option 4 (translation in a multiyear unit path) could be

considered as an alternative –  Other options do not seem practicable or robust

Double counting (1) Is it necessary to “prevent” double counting?

•  Considerable potential if units are used extensively –  For comparison: Europe achieved more than 50% of its

2008-2012 reduction under the KP with CERs and ERUs •  Consequences of not preventing double counting:

–  Disincentive to use international carbon markets –  Comparability of pledges –  Credibility of the climate regime –  Increased global GHG abatement costs

•  Quantifying double counting ex-post can be difficult •  Adjustment of pledges to “compensate” double

counting likely?

=> Preventing double counting is important

Double counting (2) – Important findings •  Main potential: double issuance and double claiming •  Key challenges:

–  Complexity due to many ways of double counting –  Coordination is required: Double counting likely if countries

and mechanisms use different approaches to address it •  But: it is possible to technically fix it! •  Addressing double counting requires:

–  Accounting rules, AND –  Carbon market design rules, AND –  Tracking and recording rules

•  Potential roles of the FVA: –  Establish common principles, rules or standards –  Define roles of host countries, mechanism operators, users –  International oversight of implementation

Double counting (3) – What matters most to prevent double counting?

Important: •  Common accounting

framework for units •  Common principles for

the design of mechanisms

•  Common rules for information attached to units

•  Procedures for reporting, review, and resolution of any non-compliance

Less important: •  Whether units are issued

under national / bilateral / multilateral governance

•  Unit transfers: –  Domestic / bilateral /

multilateral governance –  One or several unit types –  One or several registries –  Use of ITL or other

oversight –  Tracking unit flows

between countries

Thank you for your attention!

The underlying research is commissioned by the Federal Office for the Environment (FOEN) of Switzerland and will be published in two forthcoming SEI working papers: •  Single-year mitigation targets: Uncharted territory for emissions

trading and unit transfers http://www.sei-international.org/publications?pid=2487

•  Addressing double counting of emission reductions under UNFCCC http://www.sei-international.org/publications?pid=24796 (available by the end of March 2014)

Lambert Schneider – [email protected]