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3

Accounting for non-permanence of carbon sequestration – options as contained in FCCC/SBSTA/2003/10/Add.3

Jens Mackensen(following presentation by Martina Jung, HWWA, Manila)

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3The negotiaton text offers three options for accounting of non-

permanence:

1) rCERs (removal Certified Emission

Reductions)

2) tRMUs (temporary Removal Units)

3) iCERs (insured Certified Emission

Reductions)

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3rCERs

• „Temporary“ credit

• Validity?

- (Only valid for CP in which it was issued) or- Expiry 5 (20) years after issuance

• Not bankable

• If carbon is lost upon expiry of rCER, it has to be replaced by other (temporal or permanent) credits

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3tRMUs

• „Temporary“ credit converted CER from forest CDM project (after 2% for adaptation fund subtracted)

• Validity?- Valid for actual Commitment Period, in which it was

issued

- End of subsequent CP to which it was issued

• Not bankable

• An expired tRMU can be replaced by a valid tRMU up to 7 (x?) times / CP (total of 35 years)

• Afterwards, tRMU has to be replaced by a permanent credit

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3iCERs

• (Permanent) CER, insured up to at least [Y] years after end of crediting period

• In case of GHG release (during verification period), insurance has to replace the respective amount of iCERs with other credits

• If insurance provider unable, Annex 1 country in possession of iCER is liable

• No liability after end of insurance coverage

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3Crediting Approaches

Advantages Disadvantages

rCER -accounts for non-permanence-Relatively easy to understand

tRMU -accounts for non-permanence

-rather complicated-renewal limited

iCERIf insurance coverage far beyond crediting period

-Non-permanence (partially) accounted for

-Insurance not available for such long-term

iCERIf insurance coverage NOT far beyond crediting period

-not accounted for non-permanence-insurance not available to developing countries

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3Carbon accounting

1. Total stock change

2. Average stock change

3. Delayed total stock

J.44. The certification report shall constitute a request to the Executive Board for issuance of [CERs] [rCERs] [or ICERs] equal to the verified amount of net anthroponic greenhouse gas removals by sinks achieved by the afforestation and reforestation project activity under the CDM [during the [verification] period] [since the start of the project].

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3Carbon stock accounting:Total stock change, advanced crediting

t0 t1

Certification and issuance

time

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rCER

- t1: here end of 1st Commitment Period (could be earlier)

- rCERs valid for CP in which certification has taken place

- Problem: risk of carbon release afetr t1 (full amount has not neen stored for t1-t0)

rCER

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t0 t1

Certification and issuance

time

carb

on

- t1: here end of 1st Commitment Period (could be earlier)

- rCERs valid for CP in which certification has taken place

- If release after t1, but amount of rCERs represent sequestration in t1-t0

- Economically unattractive

Carbon stock accounting:Average stock change, advanced crediting

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3

time

-If total stock change of t1

maintained , full issuance of rCERs at t2

-Amount of rCERs represents real storage (risk of early release avoided)

-Economically unattractive, because income flow very late

Carbon stock accounting:Total stock change, delayed crediting

t0 t1

Initial certification

carb

on

t2

rCER

Certification and issuance

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3Crediting periodThree options

1) Maximum of [Y] years, renewal of at most [X] times

If original baseline still valid, starts with project activity

Not beyond 31st December 2003

2) See above OR [A maximum of] [5] [X] years

3) A maximum of [5] [X] years

In forestry environmental and socio-economic benefits are expected to be larger for longer crediting periods

Investor interests/investor security ?

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3Definitions – Threshold date

Keep 1990

-consistency, firmness

-don‘t reward deforestation

- natural regeneration needs time

- documentation possible

- historic emissions

Change to 2000

- more suitable land available

- more soc.-env. benefits

- documentation easier

- more geographic equityShifting date (10 years)