Principal Elements Of The International Climate Change Regime

Legal scholarship on the climate change problem reflects two contrasting approaches to international law - what might be called a "hard" and a "soft" approach. The hard approach views international law essentially in domestic criminal law terms, as a command backed by the threat of sanctions, while the soft approach views international law in facilitative terms, as a means of fostering greater cooperation among countries. At the risk of oversimplification, the UNFCCC reflects a soft approach to the climate change problem, while the Kyoto Protocol reflects a much harder approach. Despite early hopes that the UNFCCC would include a clear commitment to stabilize or even reduce GHG emissions, it does not impose strong substantive commitments on countries - for example, targets and timetables on GHG emissions or common response measures such as carbon taxes or energy efficiency standards. Instead, it puts in place a long-term, evolutionary process to address the climate change problem that: (1) enunciates the regime's ultimate objective and guiding principles; (2) establishes an infrastructure of institutions and decision-making mechanisms; (3) promotes the systematic collection and review of data; and (4) encourages national action (Table 2).

Table 2. Key Provisions of the UNFCCC.





Reporting (' 'communication of information")

Adjustment procedure

Stabilize atmospheric greenhouse gas (GHG)

concentrations at a level that would prevent dangerous anthropogenic interference with the climate system, within a time-frame sufficient to: (a) allow ecosystems to adapt naturally, (b) protect food production, and (c) allow sustainable economic development (Article 2) Intra- and inter-generational equity; differentiated responsibilities and respective capabilities; special needs of developing country parties; right to sustainable development; precaution; cost-effectiveness; comprehensiveness; and a supportive and open economic system (Article 3) All countries - General commitments to: develop national GHG inventories; formulate national mitigation and adaptation programs; promote and cooperate in scientific research, education, training, and public awareness (Articles 4(1), 5, and 6) Developed countries (listed in Annex I) - Recognize that a return to earlier emission levels of CO2 and other GHGs by the end of the decade would contribute to modifying long-term emission trends, and aim to return to 1990 emission levels (Article 4(2)) OECD countries (listed in Annex II) - Commitments to fully fund developing country inventories and reports; to fund the incremental costs of agreed upon mitigation measures; to provide assistance for adaptation; and to facilitate, promote and finance technology transfer (Article 4(3)-(5)) Conference of the Parties (COP) (Article 7), secretariat (Article 8), Subsidiary Body for Scientific and Technological Advice (SBSTA) (Article 9), Subsidiary Body for Implementation (SBI) (Article 10), financial mechanism (Article 11) All countries - National GHG inventories; steps taken to implement the convention (Article 12(1)) Developed countries (Annex I) - Detailed description of policies and measures to limit GHG emissions and enhance sinks, and a specific estimate of their effects on emissions (Article 12(2)) OECD countries (Annex II) - Details of financial and technological assistance measures (Article 12(3)) Reassessments of the adequacy of commitments every 3 years, based on the best available scientific information (Article 4(2)(d)). First reassessment at COP-1 (Berlin, 1995)

Source: Bodansky (2001b).

The Kyoto Protocol represents a progression in the climate change regime towards a much harder approach, including quantified emissions limitation targets. Its provisions include:

• Specific emissions targets for each developed country party for the 2008 to 2012 "commitment period,'' aimed at reducing overall developed country emissions by 5% from 1990 levels.

• Various mechanisms to allow countries to achieve these targets in a flexible manner, including international emissions trading and the Clean Development Mechanism (CDM).

Basic Goals and Principles


The UNFCCC defines the regime's ultimate objective as the stabilization of atmospheric concentrations of GHGs at safe levels (i.e., levels that would ''prevent dangerous anthropogenic interference with the climate system''). Stabilization should be achieved within a time frame that: (1) allows ecosystems to adapt naturally; (2) ensures that food production is not threatened; and (3) enables sustainable economic development.45

Two features of this objective are noteworthy. First, it focuses on atmospheric concentrations of GHGs rather than emissions. Second, it addresses not only concentration levels, but also rates of change.

In large part, the regime's evolution will involve spelling out what this objective means: in particular, (1) what concentration levels and rates of change are ''safe''? and (2) what emission reductions are necessary to achieve these levels and in what time frame? While science can provide guidance on these questions (for example, about the effect of concentration levels on the climate system and ultimately on ecosystems), in the final analysis they will require political answers.


In addition to defining the regime's ultimate objective, the UNFCCC enunciates several guiding principles.46 These include:

• Equity - Countries should protect the climate system for the benefit of present and future generations, in accordance with their common but differentiated responsibilities and respective capabilities. Developed countries should take the lead in combating climate change and its adverse effects.

• Special needs - The special needs of developing countries, especially those that are particularly vulnerable or that would bear a disproportionate burden under the UNFCCC, should be given full consideration.

• Precaution - Lack of full scientific certainty should not be used as a reason for postponing action.

• Cost-effectiveness and comprehensiveness - Measures should ensure global benefits at the lowest cost; cover all relevant sources, sinks, and reservoirs of GHGs; and comprise all economic sectors.

• Sustainable development - Countries have a right to sustainable development. Policies and measures to protect the climate system should be appropriate for the specific conditions of each party and should be integrated into national development programs.

• International economic system - Countries should promote a supportive and open international economic system, and should not take measures that constitute arbitrary, unjustifiable, or disguised barriers to trade.

Most of these principles reflect more general principles of international law - for example, the principles of common but differentiated responsibilities, intra- and inter-generational equity, and precaution. The principle of common but differentiated responsibility and the right to sustainable development address developing countries' concern that the climate change issue might be used as a basis to limit their economic development. The UNFCCC specifically acknowledges that the GHG emissions of developing countries will need to grow.47 Similarly, precautionary measures are appropriate given the time lags in the climate system (by the time we unambiguously detect climate change, we may have already committed ourselves to substantial warming) and the possibility of non-linear responses and catastrophic harm.

The principles in the UNFCCC establish the general framework for the development of the climate change regime. They provide benchmarks against which to evaluate proposals such as targets and timetables and tradable emission allowances. But while the principles set the terms of debate for future discussions and negotiations, they do not determine directly what measures should or should not be taken. The precautionary principle, for example, does not specify the appropriate level of precaution or how much certainty is needed before taking action. Nor does the principle of common but differentiated responsibilities specify the basis or degree of differentiation. In practice, resolution of these difficult issues depends on a process of negotiation rather than on abstract principles.


The climate change regime includes three categories of commitments, which are applicable to different categories of countries:

General Commitments

The UNFCCC's general commitments apply to all parties, both developed and developing, and are intended to promote long-term national planning and international review. Without question, the most significant general commitment is to develop a national inventory of emissions by sources and removals by sinks of GHGs. These national inventories not only provide better information about countries' contribution to the climate change problem, but can help promote an internal process of learning. Other general commitments include provisions to formulate and implement national programs to mitigate and adapt to climate change, and to promote and cooperate in scientific research, exchange of information, education, training, and public awareness related to climate change.48 These commitments are general not only in their applicability to all countries but also in their content. They do not compel particular actions; rather, they reflect a "bottom-up'' approach, encouraging countries to undertake a more comprehensive and systematic review of existing policies, to better coordinate the activities of different national agencies, and to implement their own national programs to address climate change.

Targets and Timetables

In the 1980s, targets and timetables emerged as the preferred international method for controlling atmospheric pollution. While they constrain countries, they give each country flexibility to choose how it will meet its national target, whether by means of direct regulation, market mechanisms, or taxes. This flexibility has made them more politically acceptable than specific regulatory requirements.

From the outset of the UNFCCC negotiations, it was generally accepted that any quantitative limitations on GHG emissions would apply, at least initially, only to industrialized countries (listed in Annex I of the UNFCCC and generally referred to as "Annex I parties''49). Despite strong efforts by the EU and AOSIS to include a binding emission target, the UNFCCC include only a very nebulous, non-binding "aim" for industrialized countries to return their emissions to 1990 levels, apparently by the year 2000.50 As it turned out, most OECD countries proved unable to achieve even this modest aim. The principal exceptions were the United Kingdom and

Germany, both of which had lower emissions due to non-climate factors (in the case of the UK, the shift from coal to natural gas as a fuel source and, in Germany, reunification with East Germany).

The principal purpose of the Kyoto Protocol (Table 3) negotiations was to adopt binding emission targets for the post-2000 period. By the terms of the Berlin Mandate, these emission targets were to apply only to industrialized countries, not developing countries. Nevertheless, during the negotiations both before and after Kyoto, the United States continued to press for meaningful participation'' by key developing countries - for example, in the form of voluntary'' commitments to limit GHG emissions. In the

Table 3. Key Provisions of the Kyoto Protocol.

Aim Reduce Annex I country emissions by 5% from 1990 levels during the 2008-2012 commitment period (Article 3(1)) Commitments Specific emissions target for each country listed in Kyoto Protocol

Annex B for the 2008-2012 commitment period, generally defined relative to 1990 emissions: EU, other West European: -8% US: -7%

Japan, Canada: -6% New Zealand, Russia: 0% Norway: +1% Australia: +8% Iceland: +10%

Applies to ''CO2-equivalent'' emissions of basket of six GHGs (CO2, methane, nitrous oxide, HFCs, PFCs, and SF6) Institutions Same as FCCC, except decision making by Meeting of the Parties, which meets as part of FCCC Conference of the Parties (COP/ MOP) (Article 13)

Flexibility mechanisms Bubbles (Article 4) - Any group of Annex I parties may, when ratifying, agree to pool their assigned amounts and fulfill their emissions commitments jointly Joint implementation (Article 6) - Annex I parties may earn

''emission reduction units'' (ERUs) for investments in mitigation projects in other Annex I parties. ERUs are ' ' supplemental" to domestic action

Clean Development Mechanism (CDM) (Article 12) - Annex I parties may earn certified emission reductions'' (CERs) for emission reduction projects in non-Annex I parties Emissions Trading (Article 17) - Annex B countries may engage in emissions trading supplemental'' to domestic action Compliance COP/MOP to consider the question of compliance. Legally-binding consequences for non-compliance would require amendment of Kyoto Protocol (Article 18)

end, developing countries succeeded in resisting any new mitigation commitments and the Kyoto Protocol sets forth emission targets only for industrialized countries. Rather than establish a single uniform target, the protocol specifies individualized targets for each industrialized country for the 2008-2012 commitment period, ranging from an 8% reduction from 1990 levels for the European Union and a 7% reduction for the United States, to an 8% increase from 1990 levels for Australia and a 10% increase for Iceland.51 Because, without Kyoto, emissions in most Annex I countries would ordinarily increase due to economic growth, the actual stringency of the Kyoto targets may be significantly greater than the targets themselves would seem to indicate. For example, the United States has argued that, to achieve its target, it would need to reduce its emissions by about one-third from business-as-usual scenarios for the 2008-2012 period. Indeed, even Australia and Iceland, which were given growth targets, claim that their targets will be difficult to meet, given the expected growth in their emissions over the 1990-2012 period.

Kyoto Flexibility Mechanisms

In addition to setting specific short-term emission targets for the 2008-2012 period, the Kyoto Protocol establishes a long-term architecture for climate change mitigation commitments. Although critics of Kyoto usually focus on Kyoto's short-term targets, Kyoto's architecture may prove more important in the long run. Indeed, even if Kyoto ultimately does not survive, elements of its architecture are likely to make their way into any successor regime.

To a considerable degree, Kyoto's architecture reflects the flexible approach promoted by the United States from the beginning of the climate change negotiations. The nebulous emission target in the UNFCCC already incorporated this flexible approach to a limited degree by leaving open the possibility of trade-offs in emission controls both between different greenhouse gases (the ''comprehensive approach'')52 and between different countries (''joint implementation,'' hereinafter JI).53 However, in the period immediately following the adoption of the UNFCCC, developing countries and environmental groups objected to efforts by the United States to elaborate rules for JI, arguing that JI would be both inequitable and difficult to administer.54 Instead, COP-1 authorized only a pilot phase of JI, during which industrialized countries would not receive credits towards their UN-FCCC target of returning emissions to 1990 levels.

Given this skepticism about JI at COP-1, the incorporation of various flexibility mechanisms into the Kyoto Protocol only 2 years later - and their elaboration in the Marrakesh Accords - represented the triumph of what might be called (with only a bit of exaggeration), the US approach to climate change mitigation. Significant elements of this approach include the following:

• What flexibility - The Kyoto Protocol reflects the so-called comprehensive approach in two ways. First, the Kyoto targets apply to the CO2-equivalent emissions of a basket of six greenhouse gases (carbon dioxide, methane, nitrous oxide, and three trace gases), rather than to each gas individually, thereby giving parties flexibility in choosing the lowest-cost mix of gases to reduce. Second, parties may receive credit, up to specified limits, for the removal of carbon dioxide from the atmosphere through certain sink activities such as afforestation, reforestation, forest management, and agricultural lands management.

• When flexibility - The Kyoto targets apply not on a year-by-basis but to a 5-year commitment period running from 2008 to 2012. In addition, they allow countries to "bank" surplus emission reductions for application in subsequent commitment periods.

• Where flexibility - The most important, and most innovative, type of flexibility in the Kyoto Protocol is "where flexibility.'' During the negotiations both before and after Kyoto, the European Union and developing countries attempted to limit this type of flexibility, arguing that industrialized countries should achieve the bulk of their emission reductions at home, rather than pay for reductions elsewhere. At their insistence, the Kyoto Protocol includes language providing that emissions trading and JI should be "supplemental" to domestic action. But during the negotiations leading to the Marrakesh Accords, efforts by the European Union to define this supplementarity requirement in quantitative terms (by setting a "concrete ceiling'' on use of the flexibility mechanisms) proved unsuccessful. The Marrakesh Accords do not impose any quantitative requirement about how much a country must do at home to achieve its target.

The Kyoto Protocol includes three - and by some counts four - mechanisms to enable countries to achieve their targets wherever emission reductions can be made most cheaply.

• Emissions trading (Kyoto Protocol, Article 17): First, parties listed in Annex B of the Kyoto Protocol may trade parts of their "assigned amounts'' with each other. Emissions trading is a relatively new approach to environmental regulation even at the domestic level. The Kyoto Protocol represents its first significant application internationally. The protocol itself merely authorized the parties to develop rules for emissions trading. These rules were finalized in the 2001 Marrakesh Accords.

• Joint implementation among Annex I countries (Kyoto Protocol, Article 6): In addition to emissions trading, developed country parties may receive ''emission reduction units'' (ERUs) through investments in projects in other developed country parties that result in emission reductions that are ''additional'' to any that would otherwise occur. These ERUs are added to the emissions target of the acquiring state and subtracted from the target of the transferring state. Like emissions trading, the acquisition of ERUs must be ''supplemental to domestic actions,'' but, as noted above, this condition is not quantitatively defined in the Marrakesh Accords.

• Clean Development Mechanism (Kyoto Protocol, Article 12): The Kyoto Protocol establishes the ''Clean Development Mechanism'' (CDM), which will allow private and public entities to fund projects in developing countries, in order to generate ''certified emission reductions'' (CERs) that Annex I parties may use to meet their emissions targets. In essence, the CDM allows joint implementation between developed and developing country parties. The CDM is under the control of the meeting of the parties and is supervised by an executive board. Part of the proceeds from CDM projects will be used to cover the CDM's administrative costs, as well as to assist developing country parties that are particularly vulnerable to climate change. As with emissions trading and joint implementation, the modalities and procedures of the CDM are elaborated in detail in the Marrakesh Accords.

• Bubbles (Kyoto Protocol, Article 4): Finally, the Kyoto Protocol allows any group of developed country parties, prior to ratifying the protocol, to agree to pool their emissions targets. The European Union used this provision to establish a collective target for the EU as a whole, with a burden sharing agreement that reallocates the Kyoto targets within the EU.

Financial and Technology Transfer

Even if industrialized countries were to succeed in phasing out their GHG emissions, this would not solve the climate change problem, given the growth in emissions in large developing countries such as China and India. A long-term solution to the climate change problem requires addressing these countries' emissions as well.

Rather than imposing requirements on developing countries to limit emissions, the UNFCCC provides a carrot, in the form of commitments by OECD countries (listed in Annex II) to provide financial and technical assistance to developing countries.55 The UNFCCC explicitly acknowledges that developing country actions to limit emissions will depend on the adequacy of this assistance.56

Unlike ordinary development assistance, the financial and technological assistance required by the UNFCCC could be viewed as a form of North-South partnership; its fundamental purpose is to benefit the global environment by averting climate change, not to benefit developing countries themselves. Nonetheless, the UNFCCC's provisions regarding financial assistance are quite weak, and neither require Annex II parties to provide specific amounts of assistance nor provide for mandatory assessments. The UNFCCC requires OECD countries to provide full funding only for the costs of developing country inventories and reports. And, even with respect to these costs, the UNFCCC does not require any particular country to contribute any specified amount. Financial assistance for other mitigation measures depends on approval by the Global Environment Facility (GEF) and covers only a project's ''incremental'' costs (i.e., the additional costs relating to climate change mitigation). Meanwhile, assistance for adaptation has been limited thus far to capacity building and demonstration projects.

The amount of assistance provided pursuant to these provisions has been quite modest - particularly compared to the expectations (and, in some cases, demands) of developing countries. During the post-Kyoto negotiations leading to the Marrakesh Accords, developing countries renewed their efforts to obtain greater financial assistance. But, although the Marrakesh Accords establish three new climate-related funds, it is unclear whether this will lead to a significant increase in the actual funding provided.

Adequacy of Commitments and Adjustment Procedure The UNFCCC acknowledges that its limited obligations may be inadequate, and that the regime will need to evolve in response to new scientific information. Accordingly, it establishes a process to reassess its commitments, modeled on that of the ozone regime, which has led to progressively stricter international regulation of ozone-depleting substances (Gehring, 1994). The first such review of commitments took place in 1995 and led to the initiation of the Kyoto Protocol negotiations. By requiring periodic reassessments of the UNFCCC's commitments on the basis of the best available scientific information, the UNFCCC creates channels for scientific developments to influence the policy process.


When the climate change issue first emerged as a policy issue, some leaders felt that it required the development of supranational institutions, with authority to adopt and enforce regulatory standards.57 At the 1989 Hague Conference, 17 heads of state called for the establishment of new institutional authority'' to address climate change, with non-unanimous decision-making powers. This radical proposal was never pursued in the UNFCCC negotiations, however, and the UNFCCC instead relies on more traditional types of international institutions, which are essentially intergovernmental rather than supranational in nature, and play a primarily coordinating and facilitative role. (Table 4)

Conference of the Parties/Meeting of the Parties

The annual Conference of the Parties (COP) serves as the UNFCCC's supreme body,'' with authority to examine the convention's obligations and institutional arrangements, to supervise its implementation, and to develop amendments and protocols.58 Among its functions, it provides a permanent forum for discussion and negotiation, keeps countries' attention focused on the climate change problem, and helps build a sense of community. Moreover, by permitting environmental and industry groups to attend as observers, it gives them a forum for making inputs and exerting pressure.

Although the COP has no explicit regulatory powers (unlike its analogue in the ozone regime, which can tighten regulatory measures on ozone-depleting substances by a 2/3 vote), its other decision-making authority is broad. COP-1, for example, initiated the new round of negotiations that led to the Kyoto Protocol, established a pilot phase of joint implementation, adopted reporting and review procedures, designated a permanent secretariat, and defined the roles of its subsidiary bodies. Similarly, COP-7 adopted the Marrakesh Accords. The COP's decision-making authority makes its voting rules vital, and countries have not yet been able to reach agreement on this question. Some countries insist that consensus should be required for important decisions such as the adoption of protocols, while others prefer a 2/3 or 3/4 voting rule for all substantive matters so that a small minority of countries cannot block agreement. Until the COP is able to resolve this question, consensus decision making will continue to be the default rule, given the UNFCCC's requirement that the COP's rules of procedure themselves be adopted by consensus.

Because membership in the Kyoto Protocol is quite different than the UNFCCC, Kyoto provides for a Meeting of the Parties (MOP)59 to decide on Kyoto Protocol issues. Although not authorized to adopt new commitments, the MOP would have quite significant powers, including the authority to revise the rules governing emissions trading, the CDM and credit for carbon sinks.

Table 4. Climate Change Institutions.





Negotiating Committee

Conference of the Parties/ Meeting of the Kyoto Protocol Parties


Subsidiary Body for Scientific and Technological Advice

Subsidiary Body for Implementation

Financial mechanism

Inter-Governmental Panel on Climate Change

Global Environment

Facility Clean Development Mechanism

INC Established December 1990 by UN General

Assembly. Negotiated the FCCC. Now replaced by the FCCC Conference of the Parties (COP).

COP/MOP Established by FCCC Art. 7. ''Supreme body'' of FCCC. Meeting of the parties (MOP) of Kyoto Protocol will be held in conjunction with COP (Kyoto Art. 13). Functions: regular review of FCCC implementation; decisions necessary to promote effective implementation; adoption of amendments and protocols. Meets yearly.

Established by FCCC Art. 8. Administrative functions in support of COP and other Convention institutions. Located in Bonn. Established by FCCC Art. 9. Composed of government experts. Provides assessments of scientific knowledge, reviews scientific/ technical aspects of national reports and effects of implementation measures. Established by FCCC Art. 10. Composed of government experts. Reviews policy aspects of national reports; assists COP in assessing aggregated effect of implementation measures.

''Defined'' by FCCC Art. 11. Operation entrusted to GEF on interim basis.

IPCC Established in 1988 by WMO and UNEP to provide assessments of the science, impacts and policy aspects of climate change. First Assessment Report in 1990; Second Assessment Report in 1995; Third Assessment Report in 2000.

GEF Established by World Bank, UNDP, and

UNEP in 1991. Restructured in 1994.

CDM ''Defined'' by Kyoto Art. 12. Under the control of the COP, and supervised by an executive board.


Source: Bodansky (2001b).


At COP 1, the parties decided that the interim secretariat initially established for the INC should become the UNFCCC secretariat, providing general administrative and policy support to the COP and its subsidiary bodies. Over the past dozen years, the secretariat has grown substantially in size. During the negotiations, it served a primarily administrative function. But since the UNFCCC's adoption, it has played an increasingly important role in organizing the UNFCCC's review processes and serving as an information clearinghouse.

Financial Mechanism

Apart from targets and timetables, the financial mechanism was perhaps the next most contentious issue in the UNFCCC negotiations. The large donor countries insisted on using the GEF to provide climate assistance - an institution created in 1991 at their instigation and which, through the World Bank, they dominated - while developing countries favored creating a new institution under the control of the COP. Article 11 of the UNFCCC represents a compromise between these positions. Rather than create a new fund, it entrusts the GEF with the operation of its financial mechanism on an interim basis and gives the GEF authority over individual funding de-cisions.60 But it gives the COP authority over the financial mechanism's policies, program priorities, and eligibility criteria.

In 1994, in response to demands by developing countries and environmental groups for greater transparency and ''democracy,'' representatives of 73 countries participating in the GEF agreed to restructure it. The restructured GEF is functionally autonomous from the World Bank and is governed by a 32-member council, evenly split between developing and developed country representatives. The decision-making rules require the concurrence of both developing and donor countries for all substantive decisions.

Thus far, GEF financing has focused on assisting developing countries with preparation of their initial national reports under the UNFCCC. Since the GEF's mandate permits it to fund only those ''incremental'' costs of a project that produce global environmental benefits (and hence are ineligible for ordinary World Bank lending, which focuses on the local benefits of projects), an important question is, which costs should be considered ''incremental''? The World Bank has favored limiting GEF assistance to ''net incremental costs'' - that is, the difference between the total costs of a project and its local benefits. Developing countries and environmental nongovernmental organizations, in contrast, have argued that the GEF should provide assistance for the full costs of projects to implement the UNFCCC;

this would permit funding of no regrets'' strategies, which have a negative net cost. Since determining which costs produce local as opposed to global benefits is nearly impossible, in practice the issue must be worked out flexibly and pragmatically, on a project-by-project basis, through negotiations between the GEF and the country concerned.

Intergovernmental Panel on Climate Change

Until now, the IPCC has served the crucial function of providing collective appraisals of scientific knowledge. Although questions continue to be raised occasionally about the IPCC's role, the IPCC has, in general, walked the tightrope between governmental ownership and professional autonomy, thereby maintaining both political and scientific legitimacy. On the one hand, its intergovernmental character has given governments a sense of ownership and stake in its work, leading them to accept its assessments as authoritative. On the other hand, it has managed to maintain its autonomy as a scientific body and thereby its scientific credibility - a point substantiated by the National Academy of Sciences' endorsement of the IPCC results in a 2001 report on climate change science requested by the Bush Administration.

Implementation Mechanisms

The development of a strong reporting and review procedure for industrialized countries has been one of the principal achievements of the climate change regime. Reporting and review serve several functions. First, they put pressure on countries by holding them up to domestic and international scrutiny. Second, by improving transparency, the review process helps build confidence among parties that others cannot free ride'' without being caught. Third, reporting and review serve an educational function. By sharing information, countries can benefit from each others' experiences. Finally, reporting and review produce useful information for assessing the effectiveness of the UNFCCC and the need for further commitments.

National Reporting

Under the UNFCCC, Annex I parties are required to submit annual GHG inventories and periodic national reports ( communications of information'') containing detailed information on their climate change policies together with projections of how those policies will affect emissions. Developing countries must also submit national reports, but have considerably more latitude concerning timing.

The annual GHG inventories are the backbone of the national reporting process. They help improve understanding of the sources and sinks of GHGs and provide a baseline for evaluating the UNFCCC's implementation and effectiveness. In addition, under the Kyoto Protocol, national inventories will provide the basic data used to evaluate the compliance of Annex I parties with their emission targets. In order to be eligible to use the Kyoto flexibility mechanisms, Annex I countries must show that their ''national system'' to produce emission inventories meets certain minimum conditions of reliability.

International Review

Under the UNFCCC, national reports by industrialized countries are subject to international review by teams of experts nominated by the parties (and certain international organizations) and selected by the UNFCCC Secretariat. The review mechanism is intended to be non-confrontational and facilitative in nature, and has two components:

1. In-depth reviews of each national report to promote individual accountability and enhance comparability. These in-depth reviews are like outside audits; they examine the reliability, consistency, accuracy, and relevancy of national reports by reviewing key data points, verifying methodologies, and comparing assumptions across countries and with international sources. Under the Kyoto Protocol, this review system will be beefed up considerably in order to provide objective assessments of a state's compliance with its Kyoto emissions target.

2. A synthesis report, which compiles and aggregates the data in the various Annex I country reports, to determine their overall progress in implementing the convention.

Dispute Resolution/Compliance System

As a cooperative, forward-looking instrument that attempts to encourage and facilitate rather than coerce national action, the UNFCCC does not include a robust dispute settlement mechanism. It includes a boilerplate dispute settlement provision, calling for the settlement of disputes by negotiation, conciliation, and, if both sides agree, arbitration or the International Court of Justice (UNFCCC Article 14). But this type of procedure, found in virtually every international environmental agreement, is seldom used - in part because global environmental disputes do not have the bilateral character of traditional international disputes.

The Kyoto Protocol would establish a much more robust compliance system, including a standing compliance body with two branches, one focused on facilitation and the other on enforcement.61 In the event that a country does not comply with its emission target, the Kyoto compliance system provides for the excess tons to be subtracted (at a penalty rate) from the country's emission target in the next commitment period.

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