Fate of Kyoto Protocol and CDM post-2020

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Date produced: 05/12/2019

Given that the Doha Amendment has not yet entered into force, and also in the event that this occurs in the remainder of 2019 or in the course of 2020,

1. What is the legal scenario once 2020 ends with respect to the continuity of the Kyoto Protocol in the absence of a third commitment period?

2. In the absence of a third commitment period under the Kyoto Protocol, what is the situation of the post – 2020 CDM and in that context, what are the functions of its institutions, in particular its Executive Board?

Advice :

1. What is the legal scenario once 2020 ends with respect to the continuity of the Kyoto Protocol in the absence of a third commitment period?

The Kyoto Protocol (KP) and the Paris Agreement (PA) are two legally autonomous regimes, both adopted “under” the UN Framework Convention on Climate Change (UNFCCC) by the Conference of the Parties, pursuant to Article 17 UNFCCC. Both instruments supplement the Framework Convention. On the relationship between both treaties Article 59 of the Vienna Convention on the Law of Treaties (VCLT) provides that:

“1. A treaty shall be considered as terminated if all the parties to it conclude a later treaty relating to the same subject – matter and:

(a) It appears from the later treaty or is otherwise established that the parties intended that the matter should be governed by that treaty; or

(b) the provisions of the later treaty are so far incompatible with those of the earlier one that the two treaties are not capable of being applied at the same time.

The earlier treaty shall be considered as only suspended in operation if it appears from the later treaty or is otherwise established that such was the intention of the parties. ”

The PA’s mitigation provisions were designed to take over from the KP’s second commitment period, which is to last up until the end of 2020. However, there is no provision in the PA (or COP decision adopting it) indicating that it was meant to supersede the KP and the provisions of both agreements do not conflict with each other to an extent that would make it impossible to apply both instruments at the same time.

Parties to the KP adopted amendments to the KP by decision 1/CMP.8 in Doha, in December 2012. The Doha Amendment establishes the second commitment period of the KP, which began on 1 January 2013 and will end on 31 December 2020. These amendments may never enter into force. The non – entry into force means that states parties to the KP no longer have binding emission reduction targets pursuant to the Protocol. But this does not affect the “validity” or “existence” of the treaty and its institutions.

The failure of the entry into force of the Doha Amendment has caused the operation of the KP to largely stall. However, it has no expiry date and will, therefore, continue to exist until such time as parties decide that it is formally terminated. Similarly, the mechanisms existing thereunder will continue to legally exist until the parties decide otherwise .

2. In the absence of a third commitment period under the Kyoto Protocol, what is the situation of the post – 2020 CDM and in that context, what are the functions of its institutions, in particular its Executive Board?

What will happen to the Clean Development Mechanism (CDM) and its institutions after 2020 is currently unclear. The future of the CDM and, consequently, its institutions, is subject to decisions by the parties to the KP and the PA over the coming months, and thus the question of whether the CDM will function after 2020 is less of a legal question and more of a factual matter. Certain countries, like Brazil, have voiced support for the CDM, but others, including some EU member states, have called for the CDM to end.

There is no provision in the KP terminating the CDM, and thus theoretically it could operate indefinitely. Some authors suggest that the K P created the CDM as a continuous mechanism which, without a further commitment period, will be restricted in its functionalities but would retain its core purpose (assisting developing countries with emissions reduction and sustainable development). Howeve r, t he CDM is no t directly recognised by the PA and therefore its activities cannot automatically be accepted under the new regime.

A continuation of CDM activities would require the Executive Board to also continue assuming its functions. The EB appea rs to have an open – ended mandate for the registration of CDM projects and issuing CERs, but it is also obligated to issue CERs always with reference to a specific commitment period – operating beyond 2020 could therefore become problematic. Complete certa inty can only be achieved through new official guidance issued by the CMP which it may publish at COP 25 in Madrid (2 – 13 December 2019). Until then, it seem s that the EB has no legal authority to keep issuing CERs beyond 2020 for new or existing project s. In fact, since the Doha Amendment establishing the second commitment period has not yet entered into force, the EB may not technically have the legal authority to issue CERs at this time either.

However, it seems likely that registered CDM activities can continue until at least mid – 2023; this is when the review process (and the ‘true – up period’) for the second commitment period is estimated to conclude, based on experiences from the first one. During that time, the CDM could continue to function as normal and perform all of its functions, which would theoretically allow for new projects to be registered. Furthermore, the 104th meeting of the Executive Board (9 – 12 September 2019) included the publication of a two – year business and management plan (MAP) for the CDM for 2020 – 21 . Among the main objectives of the MAP is to ensure an appropriate budget and effective management for the CDM so that it can resume operations until the end of the ‘true – up period’ of the second commitment period (2023) .

It is likely that the arrangements under Article 6 of the PA would not yet be operational at the end of 2020. If the CDM were to completely cease to exist at the end of 2020, this could therefore result in a gap in the global emissions reduction infrastructure. In this case, a temporary solution utilising the CDM could be needed until the SDM is available.

There are some further – not necessarily legal – issues associated with a potential continuation of CDM activities beyond 2020. The system was not designed to achieve global emissions reductions (but rather to offset them) and therefore cannot meet the requirement of Article 6.4 of the PA to achieve ‘an overall mitigation in global emissions’. Moreover, allowing the use of CDM credits to meet commitments after 2020, such as those under the Paris regime, would mean that the parties could be claiming reductions towards their NDCs without actually reducing their emissions. A drop in the price of carbon is also a potential risk if too many CDM credits are transferred under the new regime at once and supply overtakes demand (although they could also be banked for the future when scarcity returns to the market).