COP 9 Milan

Ninth Session of the Conference of the Parties
to the UN Framework Convention on
Climate Change (COP 9)
Milan, Italy


December 1-12, 2003


Negotiations at COP 9 in Milan, Italy, produced modest progress on a handful of largely technical issues but remained essentially deadlocked on issues touching on the broader question of next major steps in the international climate effort.

The talks, known formally as the Ninth Session of the Conference of the Parties to the UN Framework Convention on Climate Change, came against the backdrop of continued uncertainty over the fate of the Kyoto Protocol.  During the first week of the COP, there emerged from Moscow another round of conflicting signals on the prospects for Russian ratification of the Protocol and, thus, its entry into force.  In Milan, nevertheless, most parties reaffirmed their strong support for Kyoto and remained publicly hopeful that Russia will ratify.

With the Protocol not yet up and running, and most parties not prepared for formal discussions of steps beyond 2012 (the end of Protocol’s first commitment period), the formal agenda in Milan was perhaps the lightest ever for a COP.  Among the few important outcomes were decisions on the technical rules for sinks projects in the Clean Development Mechanism and on guidelines for the operation of two funds to assist developing countries: the Special Climate Change Fund and the Least Developed Countries Fund. 

Nearly 100 ministers attended the high-level segment of the conference and participated in three loosely framed roundtable discussions that served largely as an opportunity to restate familiar positions.  Ministers spoke gingerly, if at all, to the looming questions of further action under the Framework Convention, seeking to avoid the kind of rancorous political debate that erupted last year at COP 8 when the European Union and some other industrialized countries called for a process to consider future steps, only to be rebuffed by developing countries, supported by the United States.

Still, strong differences over the question of next steps continued to shape the negotiating dynamic at the technical level.  On issues such as consideration of the Third Assessment Report (TAR) of the Intergovernmental Panel on Climate Change (IPCC), attempts to frame decisions in ways that could lead to formal discussion of next steps, led largely by the EU, were consistently resisted by other parties, including to one degree or another the United States, Saudi Arabia, China, and other developing countries.  The result in most cases was continued stalemate, with decisions only to discuss the issues further in future negotiations.

In both public statements and private remarks, delegates expressed a mix of deepening frustration with the negotiating process and new openness to alternative approaches both within and outside the UNFCCC framework.  Some worried that prolonged uncertainty over Russian ratification could dissipate what momentum remains in the process.  Postponing COP 10 until sometime in 2005, to allow more time for Russian ratification, was considered but rejected.  At the same time, there was growing acknowledgment of efforts being undertaken outside the UNFCCC process – including action at the state level in the United States – and growing recognition that future efforts must be pursued both within and outside the climate regime.  There were also tentative signs that some developing countries are closer to entertaining discussion of next steps.  Many delegates took note of a comment by China, in a session on technology transfer, that the purpose of the discussion was to “double the chances for developing countries to be more able and then willing to participate in mitigation actions in the future.”

With the formal negotiations so uneventful, many felt that the greatest value at COP 9 was the very full slate of side events highlighting national efforts and presenting new research and thinking on future approaches.  Many events drew standing-room-only crowds and delegates welcomed the infusion of fresh ideas. (A high-level forum of ministers and business and NGO leaders, cosponsored by the Center, can be viewed at http://cop9.str3.com/episode.aspx?id_episode=228&format=WM).

The United States, having rejected Kyoto, sought primarily to persuade other parties that its science and long-term technology initiatives represent a genuine effort to address climate change.  While some parties welcomed the U.S. initiatives, most remained unconvinced.  On negotiating issues, the United States was most active on sinks in the CDM (in order to ensure that the decision did not disadvantage genetically-modified organisms), the budget for the climate Secretariat, and the consideration of the IPCC TAR.  As in New Delhi, the United States was frequently aligned with Saudi Arabia and other developing countries, and against the EU, in opposing proposals that could lead in the direction of future commitments.

Following are the outcomes on key issues:

Sinks in the CDM

In the Marrakech Accords at COP 7, the parties agreed to allow afforestation and reforestation projects under the CDM, but did not agree on the detailed rules for such projects.  In Milan, the parties adopted a decision setting forth the modalities and procedures for sinks projects in the first commitment period (the treatment of sinks projects under the CDM for the second commitment period will be decided as part of the second commitment period negotiations).  The decision completes the last remaining issue relating to the Kyoto Protocol under the Buenos Aires Plan of Action.

The main issue has been how to address the non-permanence of sinks projects.  In particular, if a sinks project is destroyed – for example, a forest burns down – and the carbon that had been sequestered is re-released into the atmosphere, who should be liable:  the project developer, the host country, or the holder of the CERs?   The COP decision adopts the latter approach, by making CERs generated from sinks projects of limited duration.  The decision defines two types of sinks CERs:  tCERs (temporary CERs), which are valid for only one commitment period; and lCERs (long-term CERs), which are valid for the project’s full crediting period.  (Sinks projects can have a crediting period of either 20 years, with the possibility of two renewals up to 60 years total, or 30 years with no renewals.)

Both types of CERs must be used for the commitment period for which they were issued (i.e., they cannot be banked) and both must be replaced by another credit (an AAU, ERU, or CER) prior to their expiration.  Project participants can choose which of the two approaches to use.  In practice, the two approaches are similar.  On the one hand, tCERs will be reissued if a sinks project is still in existence; on the other hand, lCERs will need to be replaced before the end of the crediting period if monitoring indicates that the sequestration from a sinks project has been reversed.

The COP9 decision also addresses the issues of additionality, leakage, uncertainties and socio-economic and environmental impacts.  The latter was the most controversial, in particular due to efforts of some European states to exclude sinks projects involving genetically-modified organisms (GMOs).  Rather than ban projects involving GMOs, the decision requires that they be evaluated in accordance with the host country’s national laws, and that information on the species used be identified in the project design document (PDD).  The United States, concerned about the precedent of singling out GMOs, indicated it would file a statement with the Secretariat expressing its views on the decision.

The agreement also defines small-scale projects, which are eligible for fast-track approval, as those that result in net anthropogenic sequestration of less than 8 kilotonnes of CO2 per year, and are developed or implemented by low-income communities or individuals.  Modalities for small-scale projects, are to be considered at COP 10.

IPCC Third Assessment Report

Last June, the Subsidiary Body on Scientific and Technology Advice (SBSTA) agreed to complete its work on the TAR and initiate two new agenda items on scientific, technical and socio-economic aspects of (1) adaptation and (2) mitigation.  For this session, parties submitted detailed views on the elements, scope and priorities of the work to be undertaken under these two new agenda items.  However, due to fears by a number of countries (including the United States, China and Saudi Arabia) that some of the proposed elements were directed at negotiating new mitigation commitments, the SBSTA was unable to agree on any detailed elaboration of the new agenda items.  Instead, it simply agreed to hold a workshop on each of the new agenda items at its next session to explore the themes of “sustainable development, opportunities and solutions and risk.”

Special Climate Change Fund

After contentious negotiations, the COP adopted a decision providing guidance to the Global Environment Facility (GEF) on its administration of the Special Climate Change Fund (SCCF) – one of the two new Convention funds created by the Marrakech Accords (along with the least developed countries fund, discussed below).  The decision allows the GEF to make the SCCF operational.  The main controversy concerned funding for economic diversification to countries adversely affected by mitigation measures.  OPEC countries continued to press strongly for such funding, while the EU resisted.  The COP decision provides guidance only with respect to funding of technology transfer and adaptation activities.  The decision provides for the SCCF to also fund mitigation and economic diversification activities, but calls on countries to submit further views on these areas with a view to taking a decision at COP 10, effectively delaying actual funding of these activities for at least another year.

Least Developed Countries Fund

The COP also adopted a decision providing further guidance on the operation of the Least Developed Countries Fund.  The decision provides for supporting national implementation of adaptation plans on a “full-cost” basis, taking account of the level of funds available.

Program budget for 2004-2005

The Parties approved nearly US$35 million for program activities for the 2004-2005 biennium, and an interim allocation of nearly $5.5 million for Kyoto Protocol-related activities to be added to the 2005 budget if the Protocol enters into force.  The $35 million represents a 6 percent increase over the previous funding period, well below what the Secretariat had originally requested, and includes $3.3 million for Kyoto Protocol preparatory activities.  Because of its objection to funding any Kyoto-related activities, the United States indicated that it would reduce its contribution by its proportionate share (21 percent) of the $3.3 million.

Non-Annex I Communications

Developed countries continued to press for specific requirements on the timing and frequency of reporting by developing countries on their emissions and ongoing climate efforts.  The Framework Convention specifies the timing only of the first communication and leaves for a future decision the timing of subsequent communications.  The parties were unable to resolve the issue and carried it over to the next SBI meeting.

Date and Venue of COP 10

The COP accepted Argentina’s offer to host COP 10 in Buenos Aries.  Some parties advocated postponing the meeting until sometime in 2005 to allow additional time for Russian ratification, but the COP, adhering to the practice of annual conferences, scheduled it for late 2004.