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.