ICAO 2013 Environmental Report - page 154

icao environmental report
market-based measures
Robin Rix
Background and Origins
The overarching international agreement on climate change,
the United Nations Framework Convention on Climate Change
(UNFCCC), was adopted in 1992 and entered into force in
1994. Its ultimate objective is the stabilization of greenhouse
gas concentrations in the atmosphere at a level that would
prevent dangerous human-induced interference with the
climate system. The Convention has been ratified by almost
all countries (195 Parties at the time of writing), which meet
annually to review the implementation of the Convention.
At their first meeting (COP1, 1995), Parties agreed that the
commitments under the Convention were inadequate for
addressing climate change, and they launched a process
to strengthen them. To guide this process, they agreed
that developed countries should take the lead in reducing
emissions, calling upon them to accept quantified targets
for their domestic emissions and to elaborate policies and
measures to meet those targets.
Kyoto Protocol
The outcome of the above process was the Kyoto Protocol,
which was adopted at the third meeting of the Parties
to the Convention (COP3, 1997) and entered into force
in 2005. The Kyoto Protocol establishes a legal framework
by which developed countries accept emission targets for
their domestic emissions for periods of time, known as
commitment periods. The Kyoto Protocol does not prescribe
emission targets for developing countries. Two commitment
periods have been agreed to date: a first commitment
period from 2008 to 2012, and a second commitment
period from 2013 to 2020.
Of the 195 Parties to the Convention, 193 are also Parties
to the Kyoto Protocol, the exceptions being Canada and the
United States. These Parties meet annually, concurrently with
the COP, to review the implementation of the Kyoto Protocol.
Market-based Measures
Three market-based measures were established under
the Kyoto Protocol.
The largest and best known of these measures is the clean
development mechanism (CDM), which provides for, first, the
registration of projects that reduce emissions in a developing
country and, second, the issuance of units equivalent to
the emission reductions achieved by these projects.
These reductions are measured as the difference between
(i) baseline emissions (
what emissions would have been
in the absence of the project), and (ii) actual emissions
what emissions actually were). These units may
then be transferred to other entities, most commonly to
counterbalance, or offset, their emissions. Units may be
issued for a crediting period of ten years, or for seven years
that may be renewed twice.
In addition to reducing emissions, the CDM was also designed
to assist developing countries in achieving sustainable
development. To confirm this, each project must receive a
letter of approval from its host country confirming that the
project helps it to achieve sustainable development.
Governance of the CDM is the responsibility of an
international regulatory body known as the Executive
Board. Its key duties include: the consideration of requests
for registration and issuance, the design and approval of
methodologies for determining baselines and measuring
emission reductions, and the accreditation of third-party
auditors who perform delegated functions such as reviewing
requests for registering projects and issuing units.
Robin Rix
He is the lead officer for strategy
development relating to market-
based mechanisms at the
United Nations Climate Change
Secretariat. Since 2009 he has
serviced the intergovernmental negotiations on the
future role of carbon markets and worked on initiatives
to strengthen and improve the existing international
mechanisms. He was previously a lawyer at Clifford
Chance in London, and holds law and undergraduate
degrees from the University of Toronto and a master's
degree in political science from the University of Oxford.
This article provides an overview of market-based measures
that have been established under the United Nations Framework
Convention on Climate Change (UNFCCC). It outlines the origins of
these measures, assesses current trends, and offers views on the
likely direction for these measures in the coming decade.
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