Implementation Measures

The Kyoto Protocol provides some guidance as to how the obligations under Article 3 are to be implemented by states parties. Article 2 of the Protocol provides a list of potential policies and measures that aim, generally speaking, at the enhancement of energy efficiency and promotion of sustainable agricultural practices. This list, however, is only illustrative. At the national level, each state party may select its own policies and measures provided that it produces the required results. The Meeting of Parties1, may provide for a coordination of the respective policies, if necessary, and thus strengthen the guidelines provided under Article 2 of the Kyoto Protocol.

Apart from providing for the reduction of greenhouse gas emissions either by limiting the emissions as such or by improving the capacity of sinks, the parties may take or provide for taking supplementary measures of implementation, namely joint implementation and emissions trading.

According to Article 4, Paragraph 2(a) and (b) of the Framework Convention, parties falling under Annex I may implement policies on the mitigation of climate change jointly with other parties and may assist other Parties in contributing to the achievement of the objective of the Convention.

The primary objective of a joint implementation is to reduce the total costs of meeting aggregate environmental standards.18 Apart from costs; joint implementation opens the possibility for groups of states—in particular members of an economic union — to undertake and to fulfil commitments collectively. Many international environmental agreements that apply fixed environmental standards require substantial reductions in total pollution emissions. This is true for the climatic change regime, the First and Second Sulphur Protocol, and the Montreal Protocol. The problem with this approach of applying fixed standards is that it imposes the same reduction obligation on countries with high and low environmental standards and with high and low abatement costs. It is questionable whether this is required under the objective of the agreements referred to. Since the prime objective of the respective agreements is to reduce emissions worldwide, as is the case with the Climate Change Regime as well as the Ozone Layer Protection Regime, the location of emissions reduction should be irrelevant. From the point of efficiency each unit of reduction should take

' The Kyoto Protocol distinguishes between the Conference of Parties of the Framework Convention and the Meeting of Parties of the Protocol.

1 Robin Mason, Joint Implementation and the Second Sulphur Protocol, Review of European Community and International Environmental Law, 1995, 296; Hans-Jochen Luhmann ct al.. Joint implementation; Projektsimulation und Organisation, 1997, 8 et seq.; Farhana Yamin, The Use of Joint Implementation to Increase Compliance with the Climate Change Convention, James Cameron/Jacob Werksman/Peter Roderick, Improving Compliance with International Environmental Law, 1996, 228 —230.

place at the place where it is cheapest and accordingly the marginal abatement costs are the lowest. Joint implementation may allow greater emissions reductions as compared to the reductions of the same cost given by traditional command-and-control approach to the regulation of pollution. It may further promote technical innovation and could help to reduce the problem of leakage.

Despite the theoretical benefits that may emerge from applying such a mechanism of joint implementation, its realization has met with resistance, as far as the Climate Change Regime is concerned, from the side of developing countries. To that end Article 4, Paragraph 2(a) of the Framework Convention is rather vague and requires further clarification before being implemented. According to Article 4, Paragraph 2(a) and (d) of the Framework Convention, joint implementation could only be undertaken after the Conference of Parties develop further criteria.19

From the wording of the provision there is no doubt that parties cannot undertake joint implementation deals with nonsigna-tory countries although from a purely economic perspective, there is no reason to exclude nonparties. For a truly global problem such as climate change, all opportunities for low-cost abatement should be exploited regardless of their location and status with respect to the Convention. However, it is politically desirable to restrict joint implementation in such a way as to encourage participation and adherence to the Convention.

However, the question whether developed countries should be allowed to undertake joint implementation together with developing countries was disputed under the Framework Convention. As far as the wording is concerned, joint implementation is meant to take place between developed countries only.20 The rationale of this restriction is that otherwise joint implementation might allow developed countries to avoid advancing and implementing the technological innovations required to meet environmental standards under the Framework Convention.21 However, despite a purely textual analysis of Article 4, Paragraph 2 of the Framework Convention, the objective of this provision which, vis-a-vis other provisions, emphasizes the common but differentiated responsibility of states parties and thus emphsizes the necessity to develop comprehensive strategies and the principle of cost effectiveness suggests a more flexible approach to joint implementation.

The following negotiations in the Intergovernmental Negotiating Committee and the Conference of the Parties of the Framework Convention led to the establishment of a pilot phase of "Activities Implemented Jointly" to gain experience in cooperative projects to reduce emissions.22 The pilot phase permits Annex I

20Yamin (note 18), at 239 et seq. who distinguishes between joint implementation and assistance. In his article a detailed textual analysis of the respective provision is given.

21 Reinhard Loske/Sebastian Oberthur, Joint Implementation under the Climate Change Convention, 6 International Environmental Affairs (1994), 45; Daniel M. Bodansky, The Emerging Climate Change Regime, 20 Annual Review of Energy and the Environment (1995), 425 (at 452 et seq.).

"FCCC, Conference of the Parties, 1st Session, UN Doc. FCCC/CP/1995/7/Addl, Decision 5/CP.i, at 19 (6 June, 1995).

states parties to invest in emission reduction projects in non-Annex I states parties, but without taking emission reduction credits for such projects.23 Developing states parties may participate in this undertaking on a voluntary basis.24 The states parties agreed to decide by the end of 2000 on whether to continue this pilot phase and on whether emission reduction credits may be taken for such projects.21

The discussion on flexible means of implementation continued into the negotiations of the Kyoto Protocol.26 It provides for four mechanisms which, however, reflect the same philosophy.

Article 6 in combination with Article 3 of the Kyoto Protocol provides for the possibility of joint implementation among Annex I states parties. This allows states parties as well as participants from the private sector, if so authorized by the respective state party, to invest in emission reduction projects (reduction of sources or enhancement of sinks) in the territory of another Annex I state party and to apply emission reduction credits for those projects toward their national emission targets.2'' The precondition for acquiring credit for such an emission reduction is that the parties are in compliance with their measurement and reporting obligations under the Kyoto Protocol.28 The problem with this possibility may be the adequate verification of such joint implementation projects. The Conference of Parties is mandated to elaborate appropriate guidelines concerning verification and reporting.29

In addition, Article 17 of the Kyoto Protocol authorizes a target-based emissions trading system. The respective provisions need further elaboration. According to the Protocol, Annex B states parties may participate in emissions trading for the purpose of fulfilling their commitments under Article 3 of the Kyoto Protocol. The emission reduction units acquired will be credited to the acquiring State Party. The Conference of Parties under the Framework Convention is mandated to develop rules and modalities for emissions trading.

A further flexible means of implementing the obligations under the climate change regime is the possibility of burden sharing, as already envisaged under the Framework Agreement for members of the European Community. Article 4 of the Kyoto Protocol expands this possibility by providing for all Annex I states parties, including those acting within the framework of a regional economic integration organization, to fulfill their commitments under Article 3 of the Kyoto Protocol jointly.

23UN Doc. FCCC/CP/1995/7/Add. 1, Decision 5/CP.i,at 19 (6 lime 1995).

24 See for example the reports submitted one year later UN Doc. FCCC/CP/1996/14 and 14/Add. 1; FCCC/SBSTAA/1996/17 and FCCC/SB-STA/1997/INF. 1.

2'During the pilot phase it has become evident that activities implemented jointly face problems of a practical nature. In particular, it is difficult to establish the basis of reference (i.e., the emissions prior to the joint implementation ) and to verify the actual reductions to be credited; WBGU Study, Targets for Climate Protection, 1997, 27.

:"For details see Breidenich/Magraw/Rowley/Rubin (note 13), at 324 et sec],

27 Articlc 3, Paragraph 10 Kyoto Protocol.

28Article 6, Paragraph 1(c) Kyoto Protocol.

2V Article 6, Paragraph 2 Kyoto Protocol.

Finally, the Kyoto Protocol provides a fourth mechanism of flexible implementation. According to Article 12, Paragraph 3 (b) of the Protocol Annex I states parties may invest in emission reduction projects in developing countries. They may apply some portion of the reduction generated by such projects toward meeting their emission target under Article 3 of the Kyoto Protocol.30 In return, a given share of the proceeds of such projects will be used to finance adaptation to climate change in particular vulnerable developing countries.31 The mechanism, referred to as Clean Development Mechanism, is supervised by an executive board and subject to the guidance of the Meeting of Parties;32 the Meeting of Parties will, among others, designate operational entities to certify and track such projects.33

The Clean Development Mechanism constitutes a new approach; it combines financial assistance with the obligation to reduce greenhouse gas emissions in such a way that they mutually induce each other. The incentive for providing financial assistance is the partial accountability of the reduction for the donor and the incentive for setting up the project is the accountability of the other part of the reduction for the recipient state.

These measures do not yet fully describe the implementation measures to be taken by industrialized states. Additionally, the developed states parties as listed in Annex II of the Framework Convention have to provide "new and additional financial resources to meet the agreed full costs incurred by developing country parties in complying with their obligation" (Article 4, Paragraph 3 of the Framework Convention). In consequence thereof Article 11 of the Framework Convention established a fund.

This mechanism is meant to cover the costs for developing countries which are states parties to fulfil the obligation under Article i2 to prepare national inventories and environmental plans to implement the provisions of the Convention. Additionally, developed countries will provide financial resources needed by developing country parties to meet the full, agreed incremental costs of implementing the various obligations undertaken. The latter also covers assistance to developing countries in adapting to the adverse effects of climate change if steps taken under the Convention fail to abate global warming adequately.34 These costs are of a different nature and treated differently. According to Article 12, Paragraph 1 of the Framework Convention, the Parties are inter alia obliged to furnish an inventory of sources and sinks of greenhouse gases. For the establishment of this inventory and all other reporting activities mentioned in Article 12 Para 1, the agreed full costs of developing country parties are to be met by "Annex II Countries." All

30 Certain emission reductions obtained as early as in the year 2000 may be used to assist in achieving compliance in the first commitment period (Article 12, Paragraph 10 of the Kyoto Protocol).

31 Article 12, Paragraph 8 of the Kyoto Protocol.

32 Article 12, Paragraphs 4 and 7 of the Kyoto Protocol.

"Article 12, Paragraph 5 of the Kyoto Protocol.

34 See in particular Laurence Boisson de Chazournes, The United Nations Framework Convention on Climate Change: On the Road Towards Sustainable Development. R. Woifrum, Ed., "Enforcing Environmental Standards: Economic Mechanisms as Viable Means?" 1996,285-298.

other activities mentioned in Article 4, Paragraph 1 of the Framework Convention will be financed in accordance with Article 4, Paragraph 3 of the Framework Convention. The wording of Article 4, Paragraph 3 of the Framework Convention provides for the reimbursement of incremental costs in full for such measures that have been agreed upon between a developing country party and the fund.33 This means that establishing which costs have to be reimbursed requires an assessment procedure on different levels. First of all it has to be determined which measures the respective state would have taken to establish the baseline. The provisional Secretariat of the Framework Convention and the Council of the Global Environment Facility have suggested the criterion of "environmental reasonableness" in this connection,36 which states that the respective Party should not be punished with a high-level baseline considering the advanced standards applied by that party. In further steps it has to be agreed upon that the intended measures fall under Article 4, Paragraph 1 of the Framework Convention and that, in concreto, they are acceptable. Under this system, the responsibility concerning the protection of climate is the common responsibility of all parties to the Framework Convention.

The financial assistance to be provided by developed states parties reflects the following principle. As emphasized in the Preamble of the Framework Convention, the protection against climate change is the obligation of all states; however, the responsibilities are differentiated. This means that developed states parties have to contribute more to achieve the objective of the regime against climate change than other states parties. This is so for two reasons. Industrialized countries have—and this is equally expressed in the Preamble of the Framework Convention—contributed more to climate change than developing states parties. For that reason it is now up to them to provide remedies by limiting their emissions and by providing technical and financial assistance to developing countries. To a certain extent this reflects the polluter-pays principle. Additionally, account has to be taken of the fact that developed contries can afford to provide more to the common goal than developing countries. Hence the financial regulations are to be considered to be based on the principle of distributive justice.

Article 4, Paragraph 7 of the Framework Convention establishes a clear link between the obligations entered into by developing contries and the commitments accepted by developed states parties. According thereto the developing countries' implementation of their obligations depends on the effective implementation by developed country parties of their commitments. In other words, only if new and additional financial resources are provided will the developing countries collectively live up to theirs. Hence, providing such resources is a means of achieving the implementation of the regime on the protection against climate change on the side of developing country parties.

^This formula constitutes a compromise, see: Rudolf Doi/er, Die internationale Konvention zum Schutz des Klimas und das allgemeine Völkerrecht, Festschrift Bernhardt, 1995, 957 (967); D. Bodansky, The United Nations Framework Convention on Climate Change, Yale Journal of International Law 18 (19931,451-492.

36 Bodanksy (note 35), at 524.

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