LULUCF in 2011 - Guest Commentary in Point Carbon

--the following appeared as a guest commentary in Carbon Market Europe, Thomson Reuters Point Carbon on February 25, 2011--

Closing the deal on forest accounting
By Chris Henschel, national manager of boreal conservation, Canadian Parks and Wilderness Society

Mark it on your calendar: the UN climate change conference in South Africa this December will deliver an agreement on the accountability of industrialised countries for their emissions from forest management and other land uses (LULUCF).

Under current Kyoto rules, accounting for emissions for most land use activities is voluntary, potentially undermining the effectiveness of national emission reduction targets. Countries have been discussing and negotiating possible changes to the framework for three and a half years.

The only obvious outcome from December’s UN negotiations in Cancun was a decision to continue applying the same deinitions and guiding principles. Most LULUCF negotiators had felt that a deal was within reach and the lack of a full agreement on LULUCF was a signal that LULUCF has some outstanding political issues. Arguably the most important outcome of the meeting was an explicit recognition that the eventual LULUCF rules chosen would impact the attainment of more ambitious targets and that this impact must be understood. This leaves the door open wider for well-informed LULUCF choices consistent with the broader aims of the Convention and the Kyoto Protocol.

One of the central unresolved issues of the negotiations has been on the baseline that will be used to account for changes in emissions from forest management. This issue is fundamental because the determination of whether emissions have gone up or down depends entirely on where the baseline is set.

Most industrialised countries have said they want to set their own emissions ‘reference level’ and most have set theirs to be above historical levels. Parties agreed in Cancun to invite submissions and subject them to expert review. Although no decision has been taken to adopt the ‘reference level’ approach, the industrialised nations will be loathe to throw it out completely after investing effort in the review process.

The only option on the table that would make use of this is the ‘baseline’ approach set out by the African group, which would merge the proposed reference levels with a historical average, thereby increasing responsibility for emissions growth.

It would appear that only a major political re-orientation could steer a Durban outcome away from one of these two options.

A related issue that is not yet resolved is whether any cap or limit should be placed on the credits or debits resulting from the chosen forest management accounting approach.

It would be surprising if certain outcomes were not ultimately accepted after the informal discussions and accommodations that took place in Cancun:

• A new activity is likely to be added to the LULUCF mix: “rewetting and drainage.” This activity is meant to capture the impact on emissions of draining and restoring (re-wetting) peatlands.
• Countries likely will be able to account for carbon stored in wood products using default half-lives for paper, wood panels and saw wood. All wood product carbon in landfill will be treated on the basis of instantaneous oxidation to avoid a perverse incentive to dispose of wood.
• There seems a good chance that a mechanism will be developed to allow countries to limit the impact of emissions from extraordinary occurrences like fires beyond their control. The main outstanding issue here is the threshold of emissions that would trigger such a mechanism.
• If all the outstanding issues related to forest management are resolved, it is expected to become mandatory for a Kyoto second commitment period.
• Activities other than forest management will continue to be accounted for as they currently are, and will likely remain voluntary without a concerted political push for greater accountability.

The latest thinking on how to treat all of these issues can be seen in chapter 2 of the most recent ‘Revised proposal from the Chair’ in Cancun (FCCC/KP/AWG/2010/CRP.4/Rev.4 – Chapter II).

One large additional question that crept over the horizon in Cancun and will continue to rise in prominence in 2011: will these approaches, developed for use by industrialised nations, also be applied to developing countries in the context of negotiations falling under reduced deforestation (Redd+)? References to LULUCF in the Convention negotiating track suggest an increased blurring of the line keeping these issues separate. The fate of the Kyoto Protocol and the outcome of the ‘legal question’ about the binding nature of an agreement in South Africa may also have profound implications for the relevance of the LULUCF rules and to whom they will apply.

The Cancun Deal

The president of the conference has produced a draft decision text that is receiving rave reviews from country after country in the plenary. The Mexican presidency is being praised for its transparency, adeptness and openness and for producing a decision that has package between the two negotiating tracks (something until now elusive).

It is clearly lacking in ambition and by no means is the end result that is needed. But all are hailing it as the lifeline that was required to re-instill confidence in the process and the foundation for a path forward.

The outcome on LULUCF and the forestry negotiations is better than I expected earlier in the week. There are three key elements of this outcome for me:
* There was no agreement to lock in the logging loophole (reference levels);
* There is an acknowledgment of loopholes and of the need to consider their impacts on targets and ambition;
* Options to the reference levels persist in the text for next year.

Other details:
- The guiding principles from the Marrakesh Accords continue to govern the framework
- The same definitions still apply
- A decision on whether to have a cap on credits/debits and how to exclude emissions from force majeure events (i.e. extreme fire years)will be decided in time for next December
- Parties' proposed reference levels were inscribed in an appendix, but no final decision was made to account using these
- The submission, review and replacement process for reference levels was agreed
- No other decisions on substantive matters were made (e.g. accounting for emissions from other activities, how to account for wood products, etc.)

One other outcome to note is that the negotiators came to an informal agreement on how to define and create a new activity for peatland management ('draining and re-wetting'). I suspect this didn't come into the final decision because many other issues couldn't, but it appears it is ready to formally decide next year.

Next year will be interesting...

The 11th Hour (literally)

It's 11 o'clock on Thursday night and the forestry negotiators are locked in a room behind me trying to hammer out an agreement.

By all reports it's going slowly. But only those content to settle for a 500 Megatonne loophole would say it's going well.

There is a lot of momentum at the 'technical' level. Almost everyone seems content to stitch up this deal.

There are a couple of wild cards on the table. How long will Tuvalu hold out with its principled objection? How long will the African Group hold out with its compromise? What will Ministers do? Will they rubber stamp rules that allow forestry emissions to increase without penalty?

My task now is to hang around outside this room and find out what I can when they finish. Then, we will have to react quickly to influence the political decision that will follow these technical negotiations.

Will Tuvalu's Tactical Moves Still Save the Day?

The 1.5 hours of negotiations on LULUCF planned today didn't happen.

The Island Nation of Tuvalu insisted on discussing concerns about process and getting assurances that its views would not be ignored.

The conventional wisdom is that a decision on LULUCF rules is needed here so countries can get on to the business of setting economy-wide targets. To most, this means there must be no delay and the decision must be made quickly. But Tuvalu appears ready to take a stand that it won't be blackmailed into accepting rules with low environmental integrity. If this is what is happening, good for Tuvalu! We will utlimately all benefit.

Africa Propose Compromise

I should apologize to anyone whose appetite I whet the other day with the teaser about a proposal from the African Group that I haven't followed-up sooner. It's been very busy here as always.

The proposal is a compromise that modifies the reference level approach by combining it with a historical average of data from the first commitment period. This proposal would cut the logging loophole in the second commitment period roughly in half while still giving all Annex I Parties at least part of the ‘break’ on emissions they have been looking for. It’s only a partial fix with its own short-comings, but it is an interesting compromise that could hold some promise for a deal in Cancun, if developed countries are really looking for one.

My sense is that they are not. They feel to close to getting everything they have been asking with the logging loophole.

I should also tell you that things are very much up in the air on the LULUCF negotiations in general.

The Ministers have arrived but without at manageable text on LULUCF for them to work with. There is an extra informal (closed door meeting) tomorrow morning to try to come to some agreement on the text that will be given to Ministers. The key oustanding question is still how Tuvalu's new proposal to go back to the old rules (with some tweaks) will be incorporated.

The best thing about the Tuvalu proposal was the requirement for countries to have to account for any conversion of forests to plantations or primary forests to secondary!

Whet Your Appetite Post

I'm sitting at the computer pool outside the last scheduled closed session of negotiations on accounting rules for land use, land-use change and forestry.

The time is ticking for these negotiators who have worked on and on for 3 and a half years to produce a draft decision that may still not be ready for Ministers as they begin to arrive. The idea is that Ministers must be given clear, simple choices to negotiate. They would quickly be lost and bogged down in the details and complexities of LULUCF.

As of yesterday there was no option that looked politically acceptable to all. And the only decent option for the environment had been roundly rejected by developed countries (Tuvalu's proposal from earlier this year to account for any change in logging emissions from the recent past - called 'net-net' accounting).

We learned yesterday that the facilitators of the negotiations were producing a new draft decision today that would include a 'compromise' being proposed by the African Group (of countries). I suspect they are in there discussing it right now.

This post is to whet your appetite for the news when they emerge...what has Africa put on the table? Is it really grounds for compromise? Is it an acceptable environmental outcome?

Prospects Grim in Cancun

It's end of day 3 in Cancun. As always, it's been a frenzied three days.

The negotiations began along the well-worn path of the last year: developed countries refining the new rules and processes they would use to avoid accountability for emissions from logging and other land uses like croplands.

Then things got interesting.

The island state of Tuvalu, as steadfast in its abhorrence of the 'logging loophole' as we are, put a whole new package on the table. It basically throws out everything that countries have been negotiating on for the past three years - no reference levels (loophole), no credit for carbon stored in wood products (loophole), no special provision for excluding emissions from fires (possible loophole).

The quid pro quo for this tossing out the window of all things bad and troubling in the negotiations is that accounting for everything would remain voluntary. It's hard to get excited about this approach, but easy to comiserate with the apparent desperation caused by the singular focus of developed countries on anything but accounting for emissions from land use.

It's still shocking how, in this convention on climate change and emission reductions, there is no preoccupation with emission reductions from land use - they can go up as long as the practices are 'sustainable'!

It's really not clear where things will go from here. There are now three options on the table on the basic accounting approach, all of which have entrenched opposition. And, ironically, the one thing everyone seems to agree on is that they want an agreement here in Cancun!

Meanwhile, small informal groups of negotiators have been locked behind closed doors trying to hammer out an agreement on the how to deal with natural disturbances and carbon stored in wood products.

Tomorrow may bring more surprises...