Accounting of Emissions and Accounting of Emissions and Assigned Amount under the Kyoto Assigned Amount under the Kyoto

ProtocolProtocol

Clare Breidenich

UNFCCC Consultant

OverviewOverview

Introduction to Kyoto Compliance Architecture

Role of reporting, review and compliance procedures in accounting of emissions and assigned amount Eligibility to participate in the Kyoto Mechanisms Accounting prior to, during and at end of commitment

period

LULUCF Accounting

Emissions side Assigned amount side

Projectedemissions

Annex Bassignedamount

Total Annex Aemissions

LULUCF activities

Mechanismsacquisitions

<=>

Compliance with Article 3.1 commitmentsCompliance with Article 3.1 commitments

Reporting ofquantitativeinformation

Compilation and Accounting Database(emissions, assigned amount information,

mechanisms eligibility)

Reviewprocess

ComplianceCommittee

COP/MOP

Reporting ofqualitative

information

Kyoto Compliance ArchitectureKyoto Compliance Architecture

International Transaction Log

Joint Implementation

CDM

National Registries

GHG National Systems

Role of reporting, review and Role of reporting, review and compliance procedures in compliance procedures in

accounting for emissions and accounting for emissions and assigned amountassigned amount

Reporting, review and compliance procedures Enable establishment, suspension and reinstatement

of mechanisms eligibility Verify that Party is accounting for emissions and

assigned amount correctly Result in official data for compliance purposes Enable determination of Parties’ compliance with

Article 3.1 commitment at end of commitment period

Kyoto Protocol accountingKyoto Protocol accounting

>=<

Emissions2008 - 2012

Secretariat compilation

and accountingdatabase

Article 3.1 complianceassessment

Review and compliance processes

National systems

Annex I Partysystems

Emissionsinventories

Reportingprocess

National registries

Kyoto Protocol units

Assigned amount

2008 - 2012

Eligibility requirements

Review Tasks related to accounting Review Tasks related to accounting

Review inventories, and where appropriate, recommend application of adjustments

Review transactions of Kyoto Protocol units and, where appropriate, recommend corrections

Review implementation of requirements related to mechanisms eligibility

Raise questions of implementation for consideration by the Compliance Committee All QUIs related to accounting considered by

Enforcement Branch

Inventory AdjustmentsInventory Adjustments

Intended to correct problems for purpose of accounting for emissions and assigned amount

Recommended by ERT when inventory incomplete or inconsistent with IPCC good practice guidance Party provided opportunity to correct problem Applied with consent of Party or by Compliance Committee

Always result in conservative estimate BY emissions reduced CP emissions increase

Adjustments to CP inventories may have consequences for mechanisms eligibility

Eligibility to Participate in the Kyoto Eligibility to Participate in the Kyoto MechanismsMechanisms

Kyoto Mechanisms eligibility requirementsKyoto Mechanisms eligibility requirements

Participation in Kyoto mechanisms dependent on compliance with specific methodological and reporting requirements: Party to the Kyoto Protocol Initial assigned amount established National System in place National Registry in place Annual Inventory Annual information on assigned amount, and

accounted correctly

Eligibility Requirements by mechanismEligibility Requirements by mechanism

Same six criteria apply, but consequences differ by mechanism: Emissions trading:

Must be in compliance with all requirements to transfer or acquire units

Joint Implementation:Track one: Must meet all requirementsTrack two: Must have national registry in order to

issue and transfer ERUs CDM:

Must meet all requirements in order to use CERs, tCERs and lCERs

Inventory eligibility requirementInventory eligibility requirement

Decision 15/CMP.1 specifies that a Party will fail to meet the annual inventory requirement if and only if: Inventory not submitted w/in 6 weeks of due date Omission of Annex A key source that accounts for 7% or more

of annual emissions Total adjustments to Annex A sources in a year of the

commitment period exceeds 7% of submitted emissions At any point in time, sum of adjustments across years of the

commitment period exceeds 20% compared to submitted An adjustments is applied in three consecutive years to key

source that accounts for 2% or more of Annex A emissions

Reporting requirements for eligibilityReporting requirements for eligibility

National Inventory Initial report, Annual reports beginning in 2007

All years from BY to most recent within 6 weeks of due dateAll sectors (Annex A and Convention LULUCF Tables) No omissions of Annex A sources of 7% or more

Beginning in 2010Submission of KP LULUCF Magnitude of adjustments for Annex A emissions apply

Annual AA information starting year after first transfer or acquisition of Kyoto Protocol units

If transfer in 2008, report in 2009

Process for establishing eligibilityProcess for establishing eligibility

Normal outcome of reporting, review & compliance procedures

Automatically eligible 16 months after submission of initial report, unless Enforcement Branch determines at an earlier date that Party fails to meet one or more of the requirements

Party remains eligible until and unless Enforcement Branch suspends eligibility

If suspended, Party can request reinstatement Directly to Compliance Committee Through the Review Process (expedited review procedures)

Accounting before, during and after Accounting before, during and after commitment periodcommitment period

Initial AccountingInitial Accounting

Submission and review of initial report leads to Establishment of initial assigned amount in tonnes of CO2 eq Determination of Party’s eligibility to participate in each of the

Kyoto mechanisms Recording of parameters for LULUCF accounting

Possible adjustments to BY emissions, and consequent reduction in initial assigned amount

Following review & resolution of any QUIs by compliance committee, data recorded in CAD and provided to ITL Registry can now issue AAUs If eligible, can begin transferring and acquiring Kyoto Protocol

units

Annual Accounting Annual Accounting 2007 – 2009 2007 – 2009

Submission of annual report voluntary under Kyoto, but… required for full eligibility to participate in the Kyoto Mechanisms Convention inventory AA information, when applicable

Inventories not subject to adjustment during this period

Party’s holdings of Kyoto Protocol units recorded annually in CAD, after review & resolution of QUIs Compliance with mechanisms eligibility requirements updated

as necessary and provided to ITL

Eligible Parties continue to transfer and acquire units

Reporting of assigned amount info Reporting of assigned amount info

Decision 15/CMP.1 requires information on its aggregate holdings and transactions of Kyoto Protocol units in its annual report. begin submitting this information the year after it first

transfers or acquires units (probably in 2009)

Decision 14/CMP.1 adopted Standard Electronic Format (SEF) for reporting Kyoto Protocol units Information from national registry Summary of holdings and transactions of Kyoto

Protocol units for previous calendar year

SEF TablesSEF Tables

Aggregate holdings of Kyoto Protocol units at the beginning and end of the previous calendar year by unit type and account type.

Summary of transactions Internal transactions (issuance, cancellation,

retirement, etc.) Transfer to and acquisitions from other registries

Expiration and replacement of tCERs and lCERs

Cumulative additions to and subtractions from assigned amount to date

PartySubmission yearReported yearCommitment Period

AAUs ERUs RMUs CERs tCERs lCERs AAUs ERUs RMUs CERs tCERs lCERs

3.3 Deforestation

Replacement for non-submission of certification report

AAUs ERUs RMUs CERs tCERs lCERs

Table 2 (a). Annual internal transactions

Other cancellation

Article 12 afforestation and reforestation

Article 3.3 and 3.4 issuance or cancellation

Transaction typeArticle 6 issuance and conversion

3.3 Afforestation and reforestation

3.4 Cropland management3.4 Forest management

3.4 Grazing land management

Subtractions

Party-verified projectsIndependently verifed projects

Additions Unit type Unit type

Retirement

Retirement Unit type

Transaction type

Sub-total

Replacement for reversal of storage

3.4 Revegetation

Replacement of expired tCERs Replacement of expired lCERs

Example SEF TableExample SEF Table

Annual Accounting 2010 – 2013Annual Accounting 2010 – 2013

Annual reports mandatory: Convention inventory + KP LULUCF Accounting for annually elected LULUCF activities SEF information Changes in national systems and registries (3.14 info required, but not relevant for accounting)

Adjustments May be applied for Annex A emissions May be applied for annually accounted LULUCF

activities

Annual Accounting 2010 – 2013 Annual Accounting 2010 – 2013

Information recorded annually in CAD: Annex A emissions & any adjustments applied For annually accounted LULUCF activities,

Net emissions/removals and any adjustments applied Accounting quantity

Holdings and transactions of Kyoto Protocol units Compliance with mechanisms eligibility requirements updated

as necessary

Registry must issue or cancel units for annually accounted LULUCF activities each year

Eligible Parties continue to transfer and acquire units

Annual Accounting 2014Annual Accounting 2014

Annual Report Final inventory data for commitment period (Last

chance to recalculate emissions & removals) Accounting for CP-accounted LULUCF activities

Information recorded in CAD Total Annex A emissions for commitment period

Indicates total quantity of units to be retired Final accounting quantity for all 3.3 and 3.4 activities

(annual and CP accounting)

Annual Accounting 2014Annual Accounting 2014

After review and compliance procedures complete for all Parties, ‘true-up period’ begins Exact date to be determined by COP/MOP decision

Registry must undertake final transactions of Kyoto Protocol units

Transfers & acquisitions of KP UnitsAll issuance/cancellation for CP-elected LULUCF

activitiesRetirement of sufficient units to cover total Annex A

emissions

2015 Accounting2015 Accounting

True-up period report AA information for 2014 calendar year + true-up period in 2015 All units retired for commitment period All units that Party wishes to ‘carry-over’ to next commitment

period Review tasks

Total Annex A emissions ≤ retired units? Check units available for carry-over

Compliance determination: Deduction of units at 1.3:1 for excess emissions Suspension of transfer rights for non-compliance

Following review and compliance procedures Registry can initiate carry-over of valid units Any Party found in non-compliance must cancel units from 2nd

commitment period accounts

Summary of Information required Summary of Information required in Annual Reportsin Annual Reports

Reporting Element 2007 2008 2009 2010 2011 2012 2013 2014 2015(True-up report)

Convention Inventory ● ● ● ● ● ● ● ●

KP LULUCFInventory

● ● ● ● ●

SEF & AA information

○ ● ● ● ● ● ● ●

Calculation of AQ for Annual LULUCF activities

● ● ● ● ●

Calculation of AQ for CP LULUCF activities

●

3.14 Information(not relevant for accounting)

● ● ● ● ●

Units Retired ●

Units for carry-over ●

Accounting for LULUCF Activities Accounting for LULUCF Activities under Articles 3.3 and 3.4under Articles 3.3 and 3.4

General approach to LULUCF AccountingGeneral approach to LULUCF Accounting

Accounting frequency for each 3.3 activity and each elected 3.4 activity indicated in Party’s initial report For annually elected activities, Party must issue or cancel units

corresponding to net removals or net emissions from that activity following review and compliance procedures in each of years 2010 – 2014

For commitment period elected activities, Party must issue or cancel units corresponding to net removals or net emissions over the entire commitment period following review and compliance procedures in 2014 only

Parties report Emissions and removals (in KP CRF tables) reported annually,

regardless of accounting frequency for the activityCalculation of the ‘accounting quantity’ only when activity is

accounted

The Accounting Quantity for LULUCF activitiesThe Accounting Quantity for LULUCF activities

Represents the cumulative obligation to issue or cancel units to date for a given CP year A negative AQ indicates cumulative net removals

issuance of RMUs A positive AQ indicates cumulative net emissions

cancellation of units

For CP-elected activities, AQ will be calculated and reported only once in 2014

For annually-elected activities, AQ will be calculated and reported annually and will capture all emissions and removals to date (E.g. 2011 AQ will be based on net emissions and removals in 2008 and 2009) Will capture any recalculations of estimates for previous CP

years

Issuance and CancellationIssuance and Cancellation

AQ to be calculated by Party, in accordance with sinks accounting rules and checked by ERT Any adjustments applied to emissions and removals

for an activity will be result in modification of accounting quantity

AQ will be recorded in CAD and provided to ITL

Party’s national registry can then issue or cancel units Quantity of units to be issued or cancelled at any

point in time depends on AQ, and quantity of units previously issued or cancelled

Relationship of AQ to issuance & cancellationRelationship of AQ to issuance & cancellation

Submission Year

Inventory Year

Net Emissions &

RemovalsAccounting

Quantity Action

2010 2008 -15 -15 Issue 15 RMUS2008 -152009 -15 -30 Issue 15 RMUs2008 -152009 -152010 -15 -45 Issue 15 RMUs2008 -152009 -152010 -152011 -15 -60 Issue 15 RMUs2008 -102009 -102010 -102011 -102012 -10 -50 Cancel 10 units

2011

2012

2013

2014

Example Calculation of LULUCF AQsExample Calculation of LULUCF AQs

BY 2008 2009 2010 2011 2012 Total

A. Article 3.3 activities

A.1. Afforestation & Reforestation -75A.1.1. Units of land not harvested since the beginning of the commitment period -10 -10 -10 -10 -40 -40A.1.2. Units of land harvested since the beginning of the commitment period -35

Unit A -2 -2 -5 -3 -12 -12Unit B -4 10 -3 -6 -3 -3Unit C -4 -3 -2 15 6 0Unit D -3 10 0 -4 3 0Unit E -5 -5 -5 -5 -20 -20

A.2. Deforestation -30 200 0 -10 160 160B. Article 3.4 activities

B.1. Forest Management (if elected) -60 -80 -60 -40 -240 -150

FM cap 65 -65

3.3 offaset 85 -85

B.2. Cropland Management (if elected) -2 -10 -10 -10 -6 -36 -8 -28

B.3. Grazing Land Management (if elected) 5 -2 -3 -3 -4 -12 20 -32

B.4. Revegetation (if elected) 0 -3 -3 -5 -5 -16 0 -16

GREENHOUSE GAS SOURCE AND SINK ACTIVITIES

Net emissions/removals (1) Accounting limits

Accounting

Quantity (2)

(Mt CO2 equivalent)

Reference Manual on accountingReference Manual on accounting of emissions & assigned amount of emissions & assigned amount

Why Reference Manual? Rules for implementation of the Protocol are

scattered across numerous decisions Many questions from Annex I Parties regarding

requirements for implementation of the Protocol Need to facilitate a common, consistent approach by

experts and institutions involved in supporting and assessing implementation – Parties, ERTs, Compliance Committee, Secretariat

Available November, 2007?

Reference Manual ContentsReference Manual Contents

Overview of Kyoto Protocol and Principal Commitments Particular focus on requirements and systems that relate to

accounting of emissions and assigned amounts

Process for accounting for emissions and assigned amount prior to, during and after commitment period

Requirements for participation in the Kyoto Protocol mechanisms Eligibility criteria procedures for establishment, maintenance, suspension and

reinstatement of eligibility

Detailed chapters on requirements related to accounting of emissions and assigned amount