This is how emissions from Land Use, Land-Use Change and Forestry fit into Kyoto and the global climate change negotiations

...This is the longest post you will ever see on this blog and it's not for the faint-of-heart!! This post is in response to people looking for an overview explanation of how forests, land use, and land-use change fit into Kyoto and specifically the on-going international negotiations.

It's called "LULUCF" (Land Use, Land-Use Change and Forestry) and that's usually enough to cause people to roll their eyes and tune out... but it's important! Here's two reasons why it matters:

• Greenhouse gas emissions: LULUCF is one of the major sectors that is included in the Kyoto Protocol; like the building sector, energy sector, waste sector, only different. It is an important political issue within the negotiations and will either contribute to or undermine the integrity of the Kyoto Protocol in the second commitment period (post-2012).
• Forest conservation: Forest accounting rules at the international level will create incentives for better or worse approaches to forest management, depending on how the rules are designed. For example, mandatory accounting of deforestation creates an international liability associated with this activity and therefore an incentive for conservation (how this works will become more clear as you read on).

Here's a little table of contents for this post:
1. Here's how it works, in a nutshell, or LULUCF accounting
2. Now it gets complicated, or LULUCF rules
3. The current negotiations
4. The negotiating process

1. Here's how it works, in a nutshell:

Accounting for emissions from the LULUCF sector is done differently than for all other sectors.

Step 1:
A country adds up all its emissions from all other sectors covered by Kyoto to come up with a national total to which its binding Kyoto reduction commitment will apply. Canada's national total in 1990 was 596 megatons of CO2/yr. This national total in 1990 is multiplied by the emission reduction commitment to give you the total amount of required emission reductions. Canada's target is - 6%. Six percent of 596 megatons is 36 megatons. Canada is then given an emission allowance of 560 megatons/yr (596 - 36, or 94% of its 1990 emissions) for the commitment period.

Step 2:
A country's emission allowance is then modified by the credits/debits generated by the LULUCF sector. So if Land Use, Land-Use Change and Forestry hypothetically produced an additional emission of 20MtCO2/yr during the commitment period, 20Mt would be subtracted from Canada's assigned emission allowance. Now Canada would only be allowed to emit 540 MtCO2/yr (560-20) in all the other sectors combined. BUT: Because vegetation and soils can also remove CO2 from the atmosphere, the LULUCF sector could also be a source of credits. So, in another hypothetical scenario, Canada's LULUCF sector might have instead produced a net removal of 20MtCO2/yr. In this case, the 20MtCO2 would be added to Canada's emission allowance and now Canada would be allowed to emit 580MtCO2/yr (560+20) in all the other sectors combined.

But wait - there's an exception here: due to uncertainty during Kyoto negotiations about the scale of credits that might be generated through LULUCF and concerns that countries might develop so many LULUCF credits that they didn't have to significantly reduce their fossil fuel emissions, a cap was placed on this crediting/debiting approach meaning that only a fraction of the emissions/removals can be claimed.


2. Now it gets complicated:
Another way in which the LULUCF sector is treated differently from other sectors is that it doesn't simply involve the simple counting of all emissions and removals to the atmosphere. Due to complexities and uncertainties of counting all carbon fluxes from all lands, only a subset of emissions/removals are accounted for - emissions/removals from certain activities.

The LULUCF sector is broken down into different activities, which are treated differently. All industrialized nations with Kyoto reduction commitments (called Annex-1 countries within the Protocol) must account for emissions from afforestation/reforestation (planting forests) and deforestation. There are several additional LULUCF activities for which accounting is voluntary: forest management, grazing land management, cropland management and revegetation. Can you imagine the problem with voluntary accounting? Countries only choose to account for these activities if they are getting credits. About half of the countries with Kyoto commitments have elected to account for forest management, and hardly any have elected to account for any of the other activities.


3. The Current Negotiations
LULUCF rules are currently being renegotiated for the second commitment period (post-2012). The only certainty so far is that the sector will continue to be available for countries to meet their Kyoto commitments.

In Bonn, countries agreed to a list of options for changing the rules. The list ranges from minimal rule changes needed for legal reasons (e.g. change the reference from 'first commitment period ' to 'second commitment period') (see 3.(a)(i) in the options paper) to substantive changes in rules (see 3.(a)(ii) and (iii) in options paper) to treating the sector like all others and counting all emissions and removals over all lands (see 3.(b) in options paper). This latter approach is called the 'land-based approach'.

My best guess is that the negotiations will probably land somewhere in 3.(a) territory with a small number of important changes.

Here's a summary of where different countries are coming from:

• Developing countries are resisting major changes to accounting, especially changes that would make it easier for inudstrialized (Annex 1) countries to generate credits.
• Industrialized (Annex 1) countries for whom this sector is really important (Canada, Australia, New Zealand) are putting forward various proposals to modify the rules to better fit their circumstances and make it easier to generate credits.
• The EU is generally calling for changes that tighten the rules in this sector.
• There is some soft interest and support for the land-based approach.

Here's a list of some of the major issues at play in the negotiations:

• The 'land-based' approach has caused a lot of concern among environmental groups because, although it seems desirable to account for all emissions and removals from all lands, there is concern that inventories are not accurate enough to do this. The result could be accounting for large emissions and removals that are not real and that this would undermine the Kyoto Protocol. It probably doesn't make sense to embrace this direction at this time.
  
• There appears to be support for the idea of changing the way emissions/removals are accounted for. Right now there's a mix of two approaches: forest management, afforestation/reforestation/deforestation employ an accounting approach that involves looking at the total emissions in the commitment period and using this to generate the LULUCF credits/debits. If you're keen on jargon, this is called gross-net accounting. The second approach compares emissions in the commitment period to a 'business-as-usual' level of emissions, for example emissions in the base year (1990). This is called net-net accounting. This approach is employed for cropland management, grazing land management and revegetation (and for all other sectors). On the surface this idea sounds good, but because LULUCF emissions/removals simply generate credits/debits rather than being included in a country's total emissions, a country would never be required to reduce baseline emissions (you have to trust me on this one, or ask me to explain further). Gross-net accounting implies that no emissions from that activity are acceptable since all of the emissions in the commitment period from that activity count as a debit. This move to net-net accounting should probably only happen if this problem with net-net accounting can be fixed (e.g. through an emission reduction target for the LULUCF sector).
  
• A number of Annex 1 countries (Canada, Australia, New Zealand) are calling for carbon stored in harvested wood products to be accounted for. This means that countries would be able to generate credits for the carbon that is in furniture, houses, paper, etc. Right now 'forest carbon' can only be accounted when it is in forests, so cutting forests to make paper and wood products is treated as an emission. Regardless of whether or not this sounds like a good idea to you, there is a lot of carbon in wood products and starting to account for it under Kyoto would mean two things: first, countries would suddenly have credits for doing nothing different because this carbon pool is not currently being accounted for; second, it would remove the current incentive to keep carbon in the forests because this is the only place forest carbon is currently accounted for. I believe that we should not account for harvested wood products for these two reasons.
  
• One of the options is making all accounting mandatory. This is important and I can't see any real downsides because voluntary accounting ensures that it will only ever take place when credits are generated, thereby leaving emissions unaccounted for.
• It has been proposed that Annex 1 countries should be required to account for emissions from forest and wetland degradation. The principle is that all major sources of emissions should be accounted for, and this makes a lot of sense. Emissions from forest degradation are common in Canada - they result when primary, natural forests are logged, thereby converting them to managed forests that store less carbon.
  
• New Zealand has asked for a number of special accounting rules that would make it easier to generate and keep credits. I believe these should be resisted because they avoid accounting emissions now for removals that will happen in the future.
• The UN Framework Convention on Climate Change and its Kyoto Protocol both focus on addressing climate change resulting from human activity. Accounting for emissions/removals from forests presents a unique challenge because there are a lot of natural forces at play that affect the overall carbon balance (e.g. natural fires result in emissions and a warming climate can result in increased growth (removals)). The idea of separating emissions/removals resulting from natural effects from those resulting directly from human activities is called 'factoring out'. Until now, factoring out has been elusive. The IPCC concluded in 2002 that the state of science at the time was insufficient to develop practical and scientifically sound approaches to factoring out. How to factor out is a major discussion point again in the current negotiations. One option is to continue using caps; another is to move to net-net accounting (reasoning that some natural effects would exist in the baseline as well as in the commitment period so these would cancel out); another is using 'discount factors' that would limit emissions/removals from this sector; Canada has brought forward another approach that uses forest and climate models to predict what emissions would be under business-as-usual management so that the effects of new management activities can be measured. Factoring out is important but the right approach probably needs to be simple, transparent, and should be conservative (err on the side of not creating false credits).
  

4. The negotiating process

Countries will meet again in Accra, Ghana from August 21-27 to negotiate based on the list of options. Conclusions are meant to be made in Ghana, but it is unclear just how conclusive they will be. My guess is that there will be some narrowing of the list in Ghana and then a timetable and work plan will be agreed upon to finish the negotiations (the next major meeting will be in Poland in December). Countries have been emphasizing that the LULUCF rules need to be settled before they negotiate new emission reduction targets so they can know what to expect from this sector.

If you have any questions on any of this, please don't hesitate to email me. If you think I've got something wrong, let me know and I will fix it.

Welcome to the world of LULUCF!

Sources:

Background: I haven't included a lot citations in here because I have gathered the background knowledge from a lot of different places, but Volume 10, Issue 4, Pages 269-394 (June 2007) of Environmental Science and Policy, Options for including agriculture and forestry activities in a post-2012 international climate agreement is an excellent source to which I could probably trace all of the background material.

Options: The LULCUF accounting options being negotiated are in the options paper discussed above.

Country positions and options:
- Presentations made at an in-session workshop in Bangkok in March
- Official country submissions: Batch 1: Belarus, China, Iceland, New Zealand, Norway, Saudi Arabia, EU, Sri Lanka, Batch 2: Canada and Japan, Batch 3: Australia, Batch 4: Tuvalu.
- Presentations made at an informal dialogue in Iceland in April