Flexible mechanisms and second KP commitment period

Legal assistance paper

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Date produced: 11/12/2010

Does paragraph 6(b) of the AWG-KP outcomes draft decision on emissions trading (ET) and joint implementation (JI) allow a country like, say Russia, to not take on a target under the KP second commitment period, but to filter their hot air into the international trading systems?

Paragraph 6(b) relates to the application of JI and ET to a second commitment period.

The present rules relating to the eligibility of Annex I Parties to participate in JI and ET are set out in Decisions 9/CMP.1 and 11/CMP.11, respectively. The key feature, for the purpose of this query is that Annex I Parties must have calculated their assigned amount in accordance with Decision 13/CMP.1. This decision relates to the first commitment period only.
In order to calculate a Party’s assigned amount, that Party must be a party to the Kyoto Protocol and have a commitment inscribed in Annex B to the Kyoto Protocol.

So far as we are aware, the eligibility of the flexible mechanisms during the second commitment period has not yet been expressly specified. However, if they operate in the same way as they do for the first commitment period, any Annex I Party not taking on commitments (in Annex B of the Kyoto Protocol) during the second commitment period will be ineligible for participation in ET and JI.

In the first commitment period, Annex I Parties were deemed eligible to participate in ET and JI after 16 months from the date on which it submitted the information needed to establish its assigned amount. The rules also provide that an Annex I Party will continue to meet the eligibility criteria unless and until the Enforcement Branch decides that the Party does not meet one or more of the eligibility requirements, has suspended the Party’s eligibility and has transmitted this information to the Secretariat.

As such, if the CMP decides that those Annex I Parties which were eligible to participate in ET and JI at the end of the first commitment period will be automatically eligible for ET and JI in the second commitment period, an Annex I Party not taking commitments in the second commitment period would continue to be eligible for ET and JI until the items set out above have been satisfied.

From a practical point of view, however, a country with no assigned amount in the second commitment period (because it chose not to adopt commitments) would have nothing to ‘filter’ into the international trading system even if it remained eligible to participate in ET.