Climate change is a global challenge and requires a global solution. Through analysis and dialogue, the Center for Climate and Energy Solutions is working with governments and stakeholders to identify practical and effective options for the post-2012 international climate framework. Read more


The European Union Emissions Trading Scheme (EU-ETS): Insights and Opportunities

Download the full White Paper here (PDF Format).

The European Union Emissions Trading System (EU-ETS) is a landmark environmental policy, representing the world’s first large-scale greenhouse gas (GHG) trading program, covering around 12,000 installations in 25 countries and 6 major industrial sectors. The EU-ETS offers an opportunity for critical insights into the design and implementation of a market-based environmental program of such size and complexity. In addition, key lessons based on actual experiences of emissions trading will include the cost of emissions reductions, the implications on competitiveness of sectors and firms, and the development of new technologies and efficiency opportunities.

This analysis discusses the background to the EU-ETS in the context of ongoing emission abatement efforts and policy initiatives to meet EU-25 member state targets under the Kyoto Protocol. The key elements of the EU-ETS are detailed, focusing on its timetable, sectoral coverage, methodology for distributing emission allowances, provisions for banking, opt-outs, opt-ins and pooling mechanisms, the procedures for monitoring and verification, and the compliance mechanisms.

The paper then turns to the current status of the EU-ETS, focusing on the ongoing national allocation plans, and discussing key remaining uncertainties, namely the readiness of all parties to trade, linkages to other trading programs, availability and use of project-based allowances, the impact of Russian emission credits, strategies of new Central and Eastern European member states, the compliance role of governments, progress in emissions reductions from sectors outside the EU-ETS, and finally the importance of expectations of future targets and prices.

This paper concludes with early conclusions from this first large-scale GHG emissions trading program. The EU-ETS is up and running with significant trading volumes; it looks set to deliver real (vs. BAU) but modest reductions; these reductions are focused on the power sector; and ongoing concerns remain regarding detrimental impacts on industry competitiveness and the impact of higher electricity prices. Key remaining challenges include the remaining implementation issues of this novel trading system, and to retain political support for the EU-ETS in the years ahead. Key insights from the EU-ETS will include the price, traded volume and cost-savings from GHG trading, the longer term implications of the EU-ETS for technology development and the progression of global climate change policies, and direct lessons for U.S. policy makers as they debate domestic GHG trading proposals.


Q & A: Kyoto Protocol

Why is the Kyoto Protocol entering into force now?

The Protocol enters into force when ratified by at least 55 countries accounting for at least 55 percent of developed country emissions in 1990. The first threshold was met in 2001 (128 countries have now ratified the Protocol). With Russian ratification, the second threshold was met. The Protocol enters into force, or takes effect, 90 days after the Russian government deposits its instrument of ratification with the United Nations. That happened on Feb 16, 2005. With entry into force, Kyoto’s emission targets become binding legal commitments for those industrialized countries that have ratified it (the United States and Australia have not). Also, the market-based mechanisms established under Kyoto, including international emissions trading and the Clean Development Mechanism, became fully operational.

Without the United States on board, how much impact will Kyoto have?

Kyoto sets emission targets for industrialized countries for the years 2008-2012, with the expectation of more stringent targets in the future. Kyoto’s initial targets aim to reduce industrialized country emissions about 5 percent below 1990 levels. Industrialized countries account for roughly half of global greenhouse gas emissions. Without the United States (the world’s largest emitter) and Australia, Kyoto’s limits apply to countries accounting for 32 percent of global emissions. Most experts and governments believe that much steeper emission reductions, 60 percent or greater, will ultimately be needed to avert serious climate change impacts.

Do countries plan to negotiate further emission reductions?

Kyoto requires that parties to the Protocol begin negotiating in 2005 toward a second round of commitments. It is unlikely that the industrialized countries that have ratified Kyoto will agree to more stringent targets post-2012 unless there is also stronger action by the United States and by major developing countries. One possibility is that the new round of talks will focus more broadly on ways to modify Kyoto or structure a successor agreement acceptable to all the major emitting countries.

What does this mean for U.S. business, particularly those corporations that have operations in Kyoto countries?

It is not clear what the effects of Kyoto ratification will be on U.S. businesses. International businesses operating in Europe, Canada, and Japan are already beginning to grapple with Kyoto policy environments. Many U.S. companies already believe that the United States will eventually regulate greenhouse gas emissions, and are taking actions to reduce their own emissions, to develop technologies that would help others reduce their emissions, and to help shape future U.S. climate policy. These activities are likely to continue, and perhaps accelerate, in light of Kyoto ratification.

What is the current Administration's climate change strategy and will it reduce the nation's greenhouse gas emissions?

On February 14, 2002, President Bush announced a new climate change strategy for the United States that sets a voluntary "greenhouse gas intensity" target for the nation, expands existing programs encouraging companies to voluntarily report and reduce their greenhouse gas emissions, and proposes increased federal funding for climate change science and technology development. Some elements of the Administration's strategy may provide additional incentive to companies to voluntarily reduce greenhouse gas emissions. However, the Administration's target - an 18 percent reduction in emissions intensity between now and 2012 - will allow actual emissions to increase 12 percent over the same period. Emissions will continue to grow at nearly the same rate as at present. What are the key elements of a prospective U.S. climate change program?

A number of policy options are available to secure emissions reductions, but to be effective and affordable, a long-term emissions reduction program must couple mandatory GHG reductions with technology development and market mechanisms. A comprehensive domestic strategy would couple short- and long-term measures that aim to (1) improve the tracking and reporting of GHG emissions; (2) promote new technologies and practices; and (3) provide a foundation upon which to secure both short-term and long-term emissions reductions. While each of these objectives can be pursued in a number of different ways, an effective strategy must address all three.

What actions has Congress taken to address climate change in the United States?

As the scientific evidence of climate change has mounted, so has congressional activity. The number of climate change-related legislative proposals increased from seven introduced in the 105th Congress (1997-1998) to 25 in the 106th Congress (1999-2000) to over 80 in the 107th Congress (2001-2002) to nearly 100 in the 108th Congress (2003-2004). Legislation to have the largest emitters of greenhouse gases (GHGs) disclose their emissions has passed the Senate twice. And in October 2003, the bipartisan team of Senators Joseph I. Lieberman (D-CT) and John McCain (R-AZ) won the support of 44 Senators in the first vote on their bill to cap U.S. greenhouse gas emissions.

The growing activity suggests that a bipartisan consensus is developing around certain legislative proposals, including measures to require the disclosure of GHG emissions, protect companies reducing GHG emissions from being penalized under a future GHG reduction program, and promote carbon sequestration. Addressing the challenge of climate change will ultimately require a more comprehensive set of approaches, however, including a mandatory program to reduce GHG emissions (such as the Lieberman-McCain bill), and efficiency standards to promote the use of efficient products and technologies. Enactment of such policy will no doubt be a longer-term proposition.

Are voluntary GHG reduction programs sufficient to control U.S. GHG emissions, or is a mandatory program necessary?

In response to the goal of the U.N. Framework Convention on Climate Change to stabilize GHG concentrations at a level that would prevent dangerous human interference with the climate system, the United States has instituted a number of programs since 1992. These include voluntary GHG mitigation programs, research and development, and a subset of energy policies that focus on energy efficiency and renewable energy. More than a decade of experience with these programs shows that while they have at times inspired significant action on the part of individual companies, these measures have not succeeded in reducing, or even stabilizing, total U.S. emissions. U.S. greenhouse gas emissions increased roughly 12 percent between 1990 and 2001, and are projected to increase another 12 percent by 2012. Voluntary programs can provide important experience for designing future efforts, but they cannot stimulate the broad engagement that will be necessary to achieve the level of emissions reductions that ultimately will be required. In order for the United States to achieve the significant GHG reductions necessary to address climate change, it must implement a mandatory GHG reduction program.

Why is it important for businesses to have a global climate change regime in place sooner than later?

In the absence of a global climate change regime, most companies will forge ahead with existing programs to reduce their emissions, encourage greater energy efficiency, begin a switch to less carbon intensive fuels, and continue to develop alternative energy technologies.

Looking Beyond Kyoto

Now that Kyoto has entered into force, attention must turn to strengthening the international framework for the years following Kyoto’s initial commitment period (2008-2012).  The overriding challenge is to forge an agreement that includes all the major emitting countries – both developed and developing – and begins significant long-term reductions in global emissions.  Among the core issues to be addressed are the nature of future climate commitments and whether they must be guided by a more specific long-term target.  Other central issues are equity, cost, the interaction between climate efforts and international trade, and how best to integrate climate concerns with the development needs of developing countries.

With a team of authors from developed and developing countries, we produced a series of “think pieces” examining these core issues in 2003. The draft papers were presented for discussion at workshops in China, Germany, and Mexico. The process engaged more than 100 experts, policymakers, and stakeholders from nearly three dozen countries.  The final report,  Beyond Kyoto: Advancing the International Effort Against Climate Change, was released at COP 9 in Milan, where it served as the foundation for a high-level forum with ministers and business and NGO leaders.

This initiative continued with the Climate Dialogue at Pocantico, a series of off-line discussions among 25 senior policymakers and stakeholders from 15 countries exploring options for next steps in the international climate effort. The dialogue provided an off-line opportunity for participants to consider specific options with the objective of identifying a set of options to be recommended for consideration by the broader policy community.

COP 10 in Buenos Aires

COP 10 Summary

The Full Text of COP 10 Decisions

List of Events Highlighting Kyoto's Entry Into Force

United Nations Framework Convention on Climate Change

Climate Change Activities in the U.S.: 2004 Update



History of Kyoto Protocol

The international response to climate change was launched in 1992, at the Earth Summit in Rio de Janeiro, with the signing of the U.N. Framework Convention on Climate Change.  The Convention established a long-term objective of stabilizing greenhouse concentrations in the atmosphere “at a level that would prevent dangerous anthropogenic interference with the climate system.”  It also set a voluntary goal of reducing emissions from developed counties to 1990 levels by 2000 – a goal that most did not meet.

Recognizing that stronger action was needed, countries negotiated the 1997 Kyoto Protocol, which sets binding targets to reduce emissions 5.2 percent below 1990 levels by 2012.  Although the United States has not signed on to Kyoto, more than 100 other nations have ratified it and many of the developed countries have begun efforts to meet their emissions targets.  The Protocol legally entered into force on February 16, 2005.

Read Previous COP Analyses

United Nations Framework Convention on Climate Change

Kyoto Enters Into Force

Kyoto Protocol

The Kyoto Protocol, an international agreement adopted in December 1997 in Japan, entered into force on February 16, 2005. The Protocol sets binding targets for developed countries to reduce greenhouse gas emissions on average 5.2 percent below 1990 levels, in order to address global warming. 

History of Kyoto Protocol

Looking Beyond Kyoto



Events Highlighting Kyoto's Entry Into Force

For a quick reference and comparison, view the international, national, and state emissions targets the Center compiled.

Climate Change: Beyond A Sideways Approach




JANUARY 14, 2005

Thank you.  I am delighted to be here – and I have to say it was awfully nice of the weather to clear up for my arrival. 

Of course, I am not here to talk about the weather.  I am here to talk about the climate.  And the difference, as we all know, is that climate is what you expect.  Weather is what you get.  And California has certainly gotten more than it expected or deserved these last few weeks. 

I am sure some of you saw the movie, The Day After Tomorrow, and it is hard not to think about it given the recent weather you’ve been having.  This is the film that dramatized the effects of climate change by releasing tornadoes in downtown Los Angeles and flooding all of Manhattan.  People called it left-wing propaganda, but I remember watching the movie and wondering why only Blue states were getting hit.

And then of course we have the new Michael Crichton book that you have probably heard about.  The book, which is climbing the bestseller lists as we speak, tells a fictional tale of how climate change itself is a fiction created by overzealous environmentalists so that they can enact draconian regulations on big business. 

The book is called “State of Fear,” and my only fear is that people will take seriously its absolutely wrongheaded portrayal of the problem of climate change. 

I hope all of you will join me in reminding people that Mr. Crichton’s specialty is fiction – even if he does include all sorts of graphs and charts in the current book to make it seem like a scientific tract.  This is the man who wrote such fantastical books as Jurassic Park, and it seems to me he has been hanging out with too many dinosaurs – people who are mired in the past and who simply cannot and will not accept the broad scientific consensus that we have a significant problem on our hands, and that there are practical and economically sound ways to tackle it. 

The point is– whether we are talking about the movie or the book:  They are both fiction.

In contrast to the book’s sensationalistic tone and style, your school’s emphasis on rigorous, interdisciplinary approaches to environmental problem-solving is something that is desperately needed in today’s world.  With so many complex and urgent environmental issues on the agenda at the local, national and international levels, your work here is essential.  And I applaud your interest in these issues and your commitment to solutions.

At the Pew Center on Global Climate Change, we are committed to solutions, too.  And today, I would like to talk for a little bit about some of the potential solutions to the problem of climate change.  More specifically, I want to talk about the nexus of technology and public policy – in other words, what policies do we need in order to unleash the global technological revolution that is necessary to protect the climate? 

I understand there is a hit movie in theaters right now that was filmed in the wine country around here. The movie is called Sideways – and, unfortunately, this is a title that could just as easily apply to current U.S. policy on climate change.  But in saying we are moving sideways, even that may be giving us too much credit.  Perhaps Backwards would be more appropriate. 

Clearly, we can do better.  And today I want to talk about how.  More specifically, I want to talk about a plan that the Pew Center is developing for U.S. action on the climate issue.  We call it our Agenda – and it is something we have been working on in concert with business and government leaders and others to lay out a responsible and practical policy course for the United States for the years to come.

But, before I talk about that, I want to talk briefly about what is at stake here.  And I want to paint a clearer picture of the problem we are trying to solve, the problem we must solve—that is, of course, global climate change. 

Just last month, the World Meteorological Organization reported that 2004 was the fourth hottest year on record – and that the last four years were among the top five. Of even greater concern was the news we learned in November about the arctic region.  This is the canary in the coal mine of climate change, the place where researchers have always said that the effects of this global problem will hit early and hard. 

And in November, we learned just how hard.  The report of the Arctic Climate Impact Assessment showed that the Arctic region is indeed undergoing dramatic and alarming changes.  The reason: It’s warming much more rapidly than previously known, at nearly twice the rate of the rest of the globe. 

And it’s important to remember that this isn’t a random, out-of-left-field report.  It is the result of an unprecedented, four-year scientific study of the region conducted by an international team of 300 scientists.  And its conclusions should be a wake-up call for all nations. 

According to the report, at least half the summer sea ice in the Arctic is projected to melt by the end of this century, along with a significant portion of the Greenland Ice Sheet.  The Arctic region is projected to warm by an additional 7 to 13 degrees Fahrenheit by 2100.  These changes will have major global impacts, contributing to sea-level rise and even intensifying global warming as the disappearance of Arctic ice masses means that more incoming solar radiation will be absorbed at the Earth’s surface instead of being reflected back. 

This is scary stuff.  And, the fact is, we don’t have to travel to the Arctic to see that climate change is already being observed, even if the impacts in that region may be more pronounced and are occurring at a faster rate.  Also in November, the Pew Center released a report showing some of the closer-to-home effects of climate change – effects right here in the United States.  Right now. 

For example, we are seeing a long-term trend toward an earlier spring, with earlier flowering and reproduction of plant and bird species. Butterflies here on the U.S. west coast are moving north and to higher altitudes in search of tolerable climate conditions, with some populations disappearing altogether from the southern end of their ranges.   And this is only the beginning. In addition to their potential to lead to future declines in the diversity of U.S. wildlife, these ecological changes are indicators that global warming is already upon us and that adverse effects to other systems, and ultimately our economy, are just around the corner. 

With warming for the next century projected to be two to ten times greater than the last, we’re heading toward a fundamental and potentially irreversible disruption of our ecology and natural systems, both in this country and around the world.

So what can we do?  Well, at this point, we have to accept that some climate change already is built into the system – indeed, it is already happening, as I have said.  But we do have the power to limit the scope and severity of climate change.  And what we need to do is stabilize greenhouse gases in our atmosphere at a level that will keep this problem from becoming a global crisis. 

According to the Intergovernmental Panel on Climate Change, stabilization means shooting for the magic number of 550 parts per million – that would be roughly double the pre-industrial level of atmospheric greenhouse gases. 

But to get to that level, we need to reduce global CO2 emissions by 55 to 85 percent below what is currently projected under a “business-as-usual” scenario.  Fifty-five to 85 percent.  Making this challenge even more daunting, energy demand around the world is growing at a breakneck pace.  We need to act now to come up with ways to keep global economies growing while curbing the growth in greenhouse gas emissions around the world.  And make no mistake: The United States, which is responsible for one-fourth of global emissions, needs to take the lead.

Over the past year, as I have said, the Pew Center has been working to develop a comprehensive plan for U.S. action on this issue.  This Agenda is our attempt to develop and articulate a responsible course for addressing climate change. 

It is built on six years of Pew Center analysis and experience with leading businesses, and through dialogue with international leaders and experts.  And what we recommend in the Agenda is that the U.S. develop an Integrated National Climate Change Strategy.  That means a strategy that combines technology development with wide-ranging policies on issues from mitigation and science to adaptation. 

This last point, about adaptation, is a crucial part of what we have to do, because even if we push forward with an ambitious strategy to reduce greenhouse gas emissions, we’re already locked in to future changes in the global climate.  There is no way around it.  And these future changes will pose many challenges to ecosystems and natural resources, as well as human health and national economies.  We need to plan now for these changes so that our society and others are able to adapt. 

But adapting, of course, is not enough.  We also need to take serious action to limit the extent of climate change by reducing our emissions.  More than anything else, that will require a global technology revolution – and we need policies to make that revolution happen. 

While it’s true that technology normally advances over time on its own, it does not always advance in the right direction.  Also, we plainly do not have time to wait.  The challenge before us requires a much more deliberate, enunciated effort to develop policies that will help push and pull climate-friendly technologies to the market.  We need a guiding vision on the order of putting a person on the moon or developing a cure for cancer.  And we need to look at the full range of policy approaches that will get us where we need to be – from market incentives and public-private partnerships to a range of R&D efforts focusing on everything from basic research to deployment.

Perhaps the best way to look at the technology and policy challenge we face is on a sector-by-sector basis.  From manufacturing and electricity to buildings, agriculture, forestry and transportation, all sectors of the economy have important parts to play in reducing greenhouse gas emissions.  Let me talk briefly about just two: transportation and electricity. 

The transportation sector is responsible for more than a third of our greenhouse gas emissions, and a quarter of U.S. energy consumption. To reduce these emissions, the Pew Center's Agenda identifies a range of specific policies-all aimed at speeding the development and deployment of new technologies.  And what we need to do is focus on both short-term technologies such as hybrid gas-electric vehicles, as well as longer-term technologies such as hydrogen.  
Looking first at the short term, we can do a lot more on the issue of hybrids.  This is, in fact, a classic case of how smart policy can make a difference.  Yes, hybrid vehicles are selling.  But, despite their popularity, there is no way they will represent more than a small fraction of U.S. vehicle sales without government stepping in and creating a bigger market.  What can government do?  Well, we can do a lot more to step up consumer incentives for buying these low greenhouse gas emitting vehicles - and it is not just hybrids I am talking about but clean-diesel vehicles as well. 
We can also remove incentives in the law for purchasing inefficient vehicles such as SUVs - it is frankly hard to believe these incentives exist, given the energy and climate challenges we face.  And, last but not least, government can and should take steps to boost public-sector procurement of climate-friendly vehicles.  The goal is to create and expand the market - and government can help do that with its own purchases. 
Among the longer-term transportation technologies we need to be looking at are hydrogen, biofuels, and all-electric cars and trucks.  But every one of these technologies faces substantial barriers that the private sector is unlikely  to be able to resolve on its own.  We need to ramp up funding for research, design and deployment.  Just as important, we need demonstration programs.  Everybody talks about a hydrogen economy, but you need a hydrogen infrastructure to make it work.  And the government needs to work with industry to come up with demonstrations that will show what's feasible and practical - and how to do it right.  For example, it is absolutely essential that we find environmentally friendly ways of producing hydrogen - because if we merely use fossil fuels to do it, the climate problem does not improve; it actually gets worse. 
I have talked a lot about cars, but we need to look at other forms of transportation, too.   Air, rail, marine transportation, road freight - all of these are a part of the problem, and all of them must be a part of the solution.  In the Pew Center Agenda, we talk about the need for government to work with the International Civil Aviation Organization to adopt policies aimed at boosting the fuel efficiency of aircraft.  The bottom line is that there are countless ways to reduce emissions from this vital and growing sector.  Our challenge is to adopt policies that will ensure that those reductions happen sooner rather than later - when the damage may already be done.

People in California know what needs to happen.  Your state is on the verge of establishing tough but achievable standards for greenhouse gas emissions from cars.  You would be the first state to do this – and, if it happens, you’ll be charting a productive path forward for the rest of the country.  Because the fact is we need national standards like those proposed for California.  And, in the Pew Center Agenda, we recommend converting the United States' current fuel economy standards to a set of tradable standards based on greenhouse gas emissions.  If you are looking to protect the climate, focusing on emissions is the way to go.

Another sector where we can and must achieve significant progress is electricity, which is responsible for almost 40 percent of U.S. emissions.  And here I want to start by talking about coal.  In 2003, coal provided 51 percent of U.S. electricity.  Worldwide, it is the most abundant and widely distributed fossil fuel.  Given current rates of production and use, we have 200 years of reserve supply.  Whether you like it or not, coal is going to remain a major part of the energy mix for decades to come. 

And so our challenge is twofold: we need to come up with better, cleaner ways to burn coal; and we also need to do everything in our power to figure out how to capture and store the carbon that is produced when we do burn it.  There are technologies being developed that hold promise on both of these counts.  But, once again, these technologies will go nowhere fast if we don’t light a fire under them, so to speak, with government R&D and other policies.  We need tests to find out the practicality of geologic storage of carbon.  We need demonstrations so we can understand the ins and outs of CO2 injection underground.  We also need to build demonstration plants so we can learn more about coal gasification, which holds the promise of allowing us to burn coal with dramatically reduced carbon emissions.  

All of these are smart and necessary investments – not just for climate reasons but also because they can place the United States in a leadership position around the world so we can then export these technologies to other countries with significant coal resources, such as India and China. 

So that’s the story with coal.  But what about other energy technologies?  What about combined heat and power?  This is when you capture and use the waste heat generated along with electricity.  Want to know the overall efficiency of the U.S. electricity system – what we put in vs. what we get out? It’s 30 to 33 percent of input energy; that level has remained constant since the 1970s.  This is inexcusable when you consider that combined heat and power systems can boost efficiency to upwards of 80 percent.  Right now, these systems account for just 8 percent of U.S. energy supply, compared to 40 percent in Europe.  What policy steps can we take to promote combined heat and power?  Well, we can start by regulating utilities based on total energy output.  A lot of these are just common-sense solutions. 

Another promising energy technology is distributed generation, or DG.  This is when you  generate electricity close to the point of use. With distributed generation, you can reduce  CO2 emissions in a number of ways.  In fact, a major benefit of this technology is that you avoid so-called transmission and distribution losses; when electricity is moved over long distances, 7 to 8 percent of it is lost along the way.   With distributed generation, you can also use waste heat for combined heat and power in ways that you cannot in a large, centralized power station. So it can be more efficient in that way too.  But we need policies to make distributed generation more feasible -- for example, by allowing people to sell excess power back to the grid at a fair price.

Now, what about renewables?  If you are talking about climate-friendly sources of energy, you have to talk about renewables – wind, solar, hydropower, geothermal and more.  In the past, these technologies have cost significantly more than fossil fuels for the same energy output.  But over time we have adopted policies at the national, state and local levels that promote renewables – tax breaks, consumer incentives, portfolio standards that require utilities to generate a set share of their power from these sources.  California’s aggressive deployment policies in the 1980s helped bring the cost of wind power down to where it is today – close to the cost of fossil fuel generation in some markets.  Yet, the lack of policy leadership in the U.S. meant that we lost our leadership position in the wind field to Europe. 

So it is policy that has made these technologies more competitive, but policy needs to do more.  We need to do things like extending the wind production tax credit, creating renewable portfolio standards at the state, regional and/or national level, and investing more in research and development.  Given the energy security challenges we face in this country, not to mention the climate challenges, developing and deploying renewables should be at the top of our national agenda. 

Burning coal in clean ways.  Safely storing carbon.  Investing in combined heat and power and distributed generation.  And making renewables an integral part of our national energy mix.  These are critical energy challenges for the future – and they are not the only ones.  At the Pew Center, we have always been careful to remain “technologically neutral” – we will throw out the welcome mat for any and all technologies that can be part of the climate solution.  And, in our Agenda, we address the need for policies to encourage the development and deployment of everything from advanced nuclear power to new energy-efficiency technologies.  This problem is too big for any one solution. 

We need to look at an array of technologies, and at an array of policies as well.  We need strong R&D policies, government standards and codes, public infrastructure investments, public education programs, public-private partnerships and more.  And we also need to look at broader, technology-neutral policies as well – policies that can encourage action across all sectors of the economy.  Here I am talking specifically about the policy known as “cap and trade.” 

Cap-and-trade is the approach taken in the Climate Stewardship Act introduced last year by Senators Joseph Lieberman and John McCain.  Their bill attracted the support of 43 U.S. senators and prompted the first serious debate in Congress about exactly what we need to be doing to respond to the problem of climate change.

The reason cap-and-trade works is that it enables companies to reduce emissions as cheaply as possible.  We all know the example of how trading has worked to achieve cost-effective reductions in emissions of the pollutants that cause acid rain.  In fact, it was because of the United States’ successful use of trading to reduce sulfur emissions that our country insisted that trading be a central element of the Kyoto Protocol.  And now, inspired by Kyoto, the European Union is on the verge of launching the broadest emissions trading system ever established.

What’s more, right here in the United States, nine Northeastern governors, led by New York Governor George Pataki, are developing a multi-state regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants.  This effort is proceeding well, and we expect them to complete their work by this spring, with agreement on a model rule.

Now, it will probably be some time before we establish a national, economy-wide cap-and-trade system in the United States—the political support for it is not there.  But what might be possible is a series of interlinked trading systems – the east coast with Europe and perhaps with Canada and the west coast as well. Such a “bottom-up” system could be robust enough both to achieve some environmental benefit and to keep costs down.  And it would be a valuable learning experience for both sides on this issue, hopefully one that would show that taking action to protect the climate is both practical and affordable.

Of course, cap-and-trade is not the only broad policy that we need to think about.  We also need a climate-conscious energy policy for the United States.  In Great Britain, the government has developed an energy blueprint for the next 50 years that makes climate change a key driver of that country’s energy policy, along with price and security of supply.  The United States would be wise to follow suit. 

I have tried in these remarks to talk about what we need to do here at home in order to approach the climate issue in a serious way.  We need a robust, climate-friendly energy policy.  Incentives and requirements for clean technologies.  A cap-and-trade program to reduce emissions at the lowest cost.  But it is important to remember that we need to engage on this issue at the international level too.  Climate change is a global problem.  Even if we were to get dead serious about reducing our emissions tomorrow, we won’t get where we need to be unless all countries become a part of the solution.

In December, as many of you know, delegates from the United States joined representatives of other nations at a climate meeting in Buenos Aires.  The ostensible purpose of the meeting was to tie up any loose ends that remained before the Kyoto Protocol goes into force in February.  The Protocol, of course, is the international agreement that commits all of its signatory countries to specific targets for reducing their greenhouse gas emissions before 2012.  The Buenos Aires meeting also, it was assumed, would begin to lay the groundwork for the next steps in the international climate effort – in other words, what happens after 2012?

The only problem with the latter assumption is that the United States, which is not even a party to the Protocol, was opposed to any discussion of the future.  In a truly Orwellian quote, the lead U.S. negotiator at the meeting was heard to say, “We need to absorb and analyze lessons learned before committing to new actions.”  End quote.  New actions?  I didn’t know that we had committed to any old actions.  And it is hard to learn any lessons when you’re doing next to nothing. 

We might as well have had Michael Crichton as the head of our negotiating team.  At least he would have made it more interesting. 

In any case, the events in Buenos Aires underscore how far the U.S. has strayed since 1992, when President George H.W. Bush signed the United Nations Framework Convention on Climate Change.  This is the treaty where the nations of the world acknowledged that climate change was a problem and pledged to act – voluntarily, I might add – to reduce their emissions.  Even during the Clinton administration, despite signing the Kyoto Protocol, we clearly were not willing to own up to our global responsibility on this issue.

Climate change requires that we act at both the international and the national levels, and my goal today has been to give you some ideas and examples of the kinds of things we need to do.  Now, at this point I could wrap up by remarks by comparing what we need to do with what is actually happening.  And, I would start by talking about the relatively low level of investment in this issue on the part of the federal government.  I would then have to mention the Administration’s goal of growing our emissions.  And I would come back again to our reluctance to enter the debate on how we might move forward on this issue globally.  But I don’t want to leave you depressed, particularly given the fact that you have had such frightening weather these last few weeks. 

Instead, I will leave you with a look on the bright side of this issue.  Because, despite everything else, we have seen a few signs of progress in the past year.  One of these, of course, is the fact that the Kyoto Protocol is ready to enter into force in February – no matter what you want to say about it, this is an historic achievement.  And, in a related development that I already mentioned, we have seen the launch of the EU trading system for carbon dioxide – it is another historic achievement and, hopefully, the first of many such trading systems around the world. 

Next, I want to pay tribute to British Prime Minister Tony Blair, who has spent a good part of the past year touting climate change as one of two key issues he intends to work on as president of both the EU and G-8 group of industrialized nations. 

Yet another thing to celebrate is the work of many U.S. states to get a handle on this issue, even despite the lack of action in Washington.  I mentioned the work of the Northeastern governors on cap-and-trade.  And I also talked about what’s happening here in California with regard to motor vehicle emissions.  And there are many more stories from the states about people stepping up to their responsibility to act.  U.S. states are a large source of greenhouse gas emissions – California’s exceed those of Brazil.  And, while national policies are essential, we also need the states to do their part.  

Last but not least, I want to celebrate what is happening in many corners of the business community to address this problem.  Many of the companies we work with at the Pew Center are adopting voluntary targets for reducing their greenhouse gas emissions.  And, not only that, they are taking action to meet their targets by investing in new technologies, increasing efficiency, and developing energy-saving products, clean fuels, biomass energy, and more.

In closing, let me say that the forecast for the future needn’t be gloomy.  A lot is happening to address the climate change problem.  But we need to do a lot more.  And I encourage all of you to do what’s needed to make sure your state remains a leader in addressing this issue in the years ahead.  We need to show that solutions are within our grasp, that smart, forward-thinking policies can drive the development and deployment of new, low-carbon technologies, and that progress is possible. 

Climate change is the most important global environmental challenge we will face in the years ahead.  Don’t let anyone tell you it’s fiction.  You know better.  And it is going to be people like you who come up with the solutions we need. 

Thank you very much. 

Press Release: Moving the Debate Beyond Kyoto


Reports Offer Options, Insights on Advancing the International Climate Effort


Washington, D.C. – With the Kyoto Protocol about to enter into force, two new reports by the Pew Center on Global Climate Change examine key issues facing governments and stakeholders as they begin weighing options for strengthening the international climate change effort beyond 2012.

The two reports – Climate Data: Insights and Observations; and International Climate Efforts Beyond 2012: A Survey of Approaches – were prepared as background material for the Climate Dialogue at Pocantico, an ongoing series of discussions among senior policymakers and stakeholders from 15 countries on options for next steps in the climate effort. The reports were released today at COP 10 in Buenos Aires.

“Kyoto is a start, but ahead lies a far greater challenge: engaging all the world’s major emitters in a long-term approach that fairly and effectively mobilizes the technology and resources needed to protect the global climate,” said Pew Center President Eileen Claussen. “These new reports lay out a broad array of options for moving the international effort forward, and offer keen insights on the very real challenges we face in the coming negotiations.”

Climate Data: Insights and Observations, by Kevin Baumert, Jonathan Pershing, Timothy Herzog and Matthew Markoff of the World Resources Institute (WRI), draws policy-relevant observations from a comprehensive database of emissions, energy, economic and other data assembled by WRI and called the Climate Analysis Indicators Tool.

The report focuses largely on the 25 countries with the largest greenhouse gas (GHG) emissions. Among its findings:

  • A relatively small number of countries produce a large majority of global GHG emissions, and most also rank among the world’s most populous countries and those with the largest economies. The group includes almost an equal number of developed and developing countries, as well as economies in transition.

  • Per capita emissions and per capita income vary widely among the major emitters, a group that includes some the world’s richest and poorest countries.

  • The group of top emitters varies little whether counting only carbon dioxide (CO2) emissions from fossil fuel combustion, or CO2 from land use change as well, or other greenhouse gases; or whether looking at present, cumulative or projected emissions.

The report also looks at variations in carbon intensity, vulnerability to adverse climate impacts, and capacity to address climate change.

International Climate Efforts Beyond 2012: A Survey of Approaches, by Daniel Bodansky of the University of Georgia and Sophie Chou and Christie Jorge-Tresolini of the Pew Center, surveys and synthesizes more than 40 proposed approaches for strengthening international climate efforts beyond 2012.

In addition to brief summaries of each proposal, the report provides an overview of key issues in the design and negotiation of future international efforts, and describes how the various proposals seek to address them. The issues include: the form and forum of negotiations; the time frame of a future agreement; the type and stringency of climate commitments; burden-sharing; and adaptation. The report also outlines criteria for assessing different options from a policy and a political perspective.

“It’s clear from this report that lots of smart people are thinking creatively about the best ways to strengthen the international climate effort,” said Claussen. “Working with policymakers and stakeholders through our Climate Dialogue at Pocantico, the Pew Center is committed to advancing this critical debate and arriving at fair, practical solutions.”

The Climate Dialogue at Pocantico provides an off-line opportunity for 25 senior policymakers and stakeholders to consider specific options for next steps in the international effort. Members, who participate in their personal capacities, include policymakers from Australia, Brazil, Canada, China, Germany, Japan, Mexico, Tuvalu, the United Kingdom, and the United States; NGO representatives from India, Switzerland and the United States; and senior executives from Alcoa, BP, DuPont, Eskom, Exelon, Rio Tinto, and Toyota.

The first and second sessions of the dialogue were held in July and October 2004. A third session will be held in February 2005, and a final session in May. The objective is a set of post-2012 options to be recommended for consideration by the broader policy community.

The full text of these and other Pew Center reports is available at


The Pew Center was established in May 1998 by The Pew Charitable Trusts, one of the United States’ largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is an independent, nonprofit, and non-partisan organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

COP 10 Summary

Tenth Session of the Conference of the Parties (COP) to the U.N. Framework Convention on Climate Change

December 6-17, 2004
Buenos Aires, Argentina

At their tenth annual Conference, COP 10 in Buenos Aires, parties to the UN Framework Convention on Climate Change prepared for the imminent entry into force of the Kyoto Protocol, and skirmished again over the terms for possible consideration of next steps in the international climate effort.  In two weeks of talks, negotiators tied up loose ends on technical aspects of the Protocol, produced a modest new “Buenos Aires Work Programme” on adaptation, and agreed to convene a “Seminar of Government Experts” in May that provides an opening for discussing possible future efforts but explicitly “does not open any negotiations leading to new commitments.”

The Tenth Session of the Conference of the Parties came against the backdrop of Kyoto’s impending entry into force. With Russia’s ratification in November, the Protocol is set to take effect on February 16, establishing the first binding international commitments to limit greenhouse gas emissions and an international emissions trading system to promote cost-effective reductions. 

Following U.S. rejection of Kyoto in 2001, the annual COPs had been marked by deep uncertainty over the fate of the Protocol. While Kyoto’s resurrection by Russia provided some air of relief in Buenos Aires, at least for the Protocol’s supporters, that mood quickly gave way to a new anxiety: whether it will be possible to strengthen the international effort beyond 2012 (the end of the first commitment period under Kyoto).

A central issue in Buenos Aires was whether countries were prepared to create a space within the formal process to even begin considering the question of next steps.  Technically at least, Kyoto’s entry into force requires negotiations starting in 2005 toward a new round of climate commitments.  But in negotiations under Kyoto, the United States would be only an observer, not a party.  In informal settings, delegates from both developed and developing countries show increasing interest in “post-Kyoto” approaches that could lead the international effort in new directions.  The European Union has been the principal advocate of exploring possible next steps within the formal process.  With European industry worried about the competitiveness impacts of Kyoto’s emission targets, EU governments want to show they are engaging other countries in discussions to broaden and extend commitments post-2012.  Traditionally, developing countries have opposed any moves that could lead to new commitments for them.  But at COP 10, the G-77 negotiating group split, with China, India and the OPEC countries maintaining a hard-line position, at least officially, but some members open to more forward-leaning language.  The United States, meanwhile, came to Buenos Aires adamantly opposed to any discussion with a view to the future.

The compromise decision on the May seminar makes no direct reference to the post-2012 period, and makes clear the seminar is not a path to negotiating new commitments.  But its language does provide an opening for parties to begin exploring alternative paths forward.

Among the key outcomes at COP 10:

Seminar of Governmental Experts

At COP 8 in New Delhi, the EU had proposed the launch of a new process to consider future commitments, only to be rebuffed by the United States and developing countries.   In Buenos Aires, the host Argentine government advanced a more modest proposal: a Seminar of Governmental Experts to “analyze future actions by the international community to confront the challenges of climate change,” and to report to COP 11. 

The EU sought to go further, proposing a report from the seminar “with a view to taking a decision on further steps at COP 11.”  The United States, however, sought to contain the seminar “to an information exchange on practical implementation of existing national policies.”  It proposed that  “issues of future negotiations, frameworks, or mandates” be explicitly excluded, and that there be “no written or oral report.”  The G77 and China offered a similar proposal.

Over the course of the second week, a compromise began to form around language borrowed from the Delhi Declaration adopted at COP 8, with the seminar now described as an exchange of views on “actions relating to mitigation and adaptation to assist Parties to continue to develop effective and appropriate responses to climate change.”  However, differences remained as the final day of closed-door negotiations stretched through the night.  The draft presented the following morning, when talks moved back into the open, was promptly opposed by India, which proposed an amendment stating explicitly that the seminar was not a path to negotiating future commitments for developing countries.

China, Saudi Arabia and other OPEC countries supported India’s proposal, but two other developing countries – South Africa and Tuvalu (representing small island states) – supported the text as presented.  The EU, Canada, Japan, Russia, Australia, New Zealand, and Norway also supported the text as presented.  Brazil said it could “live with” the text.  The United States was silent.

With no compromise after 90 minutes of open debate, the issue went back to informal consultations among Argentina, India, Brazil, the United States and the EU.  Their compromise text, accepted by the full COP, states: “Proceedings of the seminar will be made available by the secretariat to Parties for their consideration, bearing in mind that this seminar does not open any negotiations leading to new commitments.”

The final decision frames the seminar as “an informal exchange of information” on measures governments are undertaking to implement their existing commitments and on ways they can “continue to develop” their climate efforts.  The seminar will be held either immediately before or after the annual meeting of the UNFCCC Subsidiary Bodies and will be co-chaired by a developed country and a developing country government expert.


The second major focus of the negotiations was a set of issues encompassing both adaptation to the adverse effects of climate change, a key concern for least developed countries and small island states, and adaptation to the impacts of mitigation efforts, the principal concern of OPEC countries.  The result was a series of modest steps packaged as the Buenos Aires Programme of Work on Adaptation and Response Measures.

The agreement further specifies the means for implementing the decision on adaptation measures reached at COP 7 in Marrakesh.  On adaptation to climate impacts, the Buenos Aires Programme spells out activities to improve data collection, strengthen training and in-country capacity, undertake pilot projects, and promote technology transfer; and calls for three regional workshops and an expert meeting over the next two years to help identify adaptation needs and concerns.  On adaptation to response measures, the decision calls for expert meetings on ways to promote economic diversification in oil-producing countries.

The decision also requests the Subsidiary Body for Scientific and Technological Advice (SBSTA) to develop a five-year work program to further advance work on adaptation to climate impacts.

Kyoto Protocol

COP 10 also wrapped up the final loose ends relating to implementation of the Kyoto Protocol, including:

  • Sinks in the CDM – The COP approved simplified procedures for qualifying small-scale afforestation and reforestation projects under the Clean Development Mechanism (CDM).  The simplified rules apply to Kyoto’s first commitment period, and are intended to reduce transaction costs and facilitate approval and implementation of small-scale sinks projects (those removing less than 8 kilotonnes of carbon dioxide per year).
  • Sinks activities in Annex I countries – The COP approved “good practice guidance” for forestry and other land use activities under articles 3.3 and 3.4 of the Kyoto Protocol.  The guidance is to be used by parties in reporting on sequestration activities in their emissions inventories.  It allows parties to use statistical sampling techniques to estimate their GHG removals by sinks activities, rather than examining each specific land area where sequestration is occurring.
  • National accounting and reporting – The COP adopted two decisions relating to accounting and reporting procedures under the Kyoto Protocol.  One relates to national registries, which will be used to track transfers of emission units among countries.  The other decision establishes a standard electronic format for reporting by parties of their holdings of the various types of emissions allowances and credits.

Venue for COP 11/MOP 1

COP 11 will be the occasion of the first COP/MOP – the Conference of the Parties convening in parallel with a Meeting of the Parties to the Kyoto Protocol.  With no countries formally offering to host the meeting, the COP decided it would be held in Bonn, where the UNFCCC secretariat is based, unless an alternative venue is offered and accepted by February 1.  Canada and Egypt were reported to be considering offering to host the meeting.

The full text of COP 10 decisions is available on the website of the UNFCCC Secretariat.

Our Reports Released at COP 10

We released two new reports in Buenos Aires on December 13:

The papers were developed as input to our Climate Dialogue at Pocantico, an ongoing series of discussions among senior policymakers and stakeholders from 15 countries on options for next steps in the international climate effort.

Beyond Kyoto: Advancing the International Effort Against Climate Change

COP 10: Buenos Aires

Tenth Session of the Conference of the Parties
to the UN Framework Convention on Climate Change (COP 10)

Buenos Aires, Argentina
December 6-17, 2004

Full Summary of COP 10

Climate negotiators gather in Buenos Aires, Argentina, on December 6-17 for COP 10 – the Tenth Session of the Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC).

COP 10 convenes as the international climate change effort enters a critical transitional phase.  In November, Russia ratified the Kyoto Protocol, the final step needed to bring the treaty into force.  The protocol establishes binding greenhouse gas emission limits for the 30 industrialized countries that have ratified it and an international emissions trading system.  Kyoto’s entry into force also sets the stage for negotiations beginning in 2005 toward future climate commitments. 

With few major issues due for decision, COP 10 serves largely as an opportunity to assess progress and consider the challenges ahead.  The broad theme of the high-level segment attended by Ministers is the 10th anniversary of the UNFCCC’s entry into force.  Ministers will engage in panel discussions on: the Convention after 10 years – accomplishments and future challenges; impacts of climate change, adaptation measures and sustainable development; technology and climate change; and mitigation of climate change – policies and their impacts.  Ministers are not expected to adopt a ministerial declaration.

One possible outcome is agreement to organize a seminar in 2005 to begin exploring possible next steps in the international effort.  Other issues include efforts by developing countries to accelerate assistance for adaptation to climate change; the treatment of sinks in the Protocol’s Clean Development Mechanism; and the treatment of emissions from marine and aviation fuels.


We held a side event on Monday, December 13, to present two new papers: Climate Data: Insights and Observations; and International Climate Efforts Beyond 2012: A Survey of Approaches.  The papers were developed as input to our Climate Dialogue at Pocantico, an ongoing series of discussions among senior policymakers and stakeholders from 15 countries on options for next steps in the international climate effort.  Speakers at the side event included dialogue participants Gao Feng, Acting Director General of the Department of Treaty and Law in the Chinese Ministry of Foreign Affairs, and Michael Zammit Cutajar, Ambassador for International Environmental Affairs for Malta.

Other useful links:

United Nations Framework Convention on Climate Change

Beyond Kyoto: Advancing the International Effort Against Climate Change        

Climate Change Mitigation in Developing Countries: Brazil, China, India, Mexico, South Africa, and Turkey

Read Previous COP Analyses

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

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. 

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