A well-designed carbon accounting system would provide transparent, consistent,
comparable, complete, accurate, verifiable, and efficient recording and reporting
of changes in carbon stocks and/or changes in greenhouse gas emissions by
sources and removals by sinks from applicable land use, land-use change, and
forestry activities and projects under relevant Articles of the Kyoto Protocol.
Such data would be needed to assess compliance with the commitments under
the Kyoto Protocol. Two possible accounting approaches towards meeting these
requirements are outlined below, of which either one-or combination of the
two-could be adopted (see Figure 1). [2.3.1]
A "land-based" approach to accounting would take as its starting point the
change in carbon stock in applicable carbon pools on lands containing activities
included under Article 3.3 or accepted under Article 3.4. This involves first
defining the applicable activities, and in the next step identifying the land
units on which these activities occur. Next, the change in carbon stocks on
these land units during the relevant period is determined. In the land-based
approach, it could be difficult to factor out the impact on stocks of indirect
effects (see paragraph 44). Non-CO2 greenhouse gas emission estimates would
also need to be accounted for. Modifications could be made regarding, for
example, baselines, leakage, timing issues, permanence, and uncertainties.
Aggregate accounted CO2 emissions and removals are the sum of carbon stock
changes (net of any modifications) over all applicable land units over the
specified time period. [2.3.2, 3.3.2]
Figure 1: Accounting approaches.
An "activity-based" approach to accounting would start with the carbon stock
change in applicable carbon pools and/or emissions/removal of greenhouse gases
attributable to designated LULUCF activities. After defining the applicable
activities, each applicable activity's impact on carbon stocks is determined
per unit area and time unit. This impact is multiplied by the area on which
each activity occurs and by the years it is applied or the years of the commitment
period. Modifications could be made regarding, for example, baselines, leakage,
timing issues, permanence, and uncertainties. Aggregate accounted emissions
and removals are calculated by summing across applicable activities. Potentially
a given area of land could be counted more than once if it is subject to multiple
activities. If the effects of activities are not additive, this would result
in inaccurate accounting. In this case, the carbon stock would be especially
difficult to verify. Alternatively the Parties could decide that each land
unit could contain no more than a single activity. In this case, the combined
impact of multiple practices applied in the same area would be considered
a single activity. [2.3.2, 3.3.2,
4.3.3]
The land-based approach to accounting could start either with the start
of the activity or run for the entire commitment period, while the activity-based
approach would start when the activity starts or at the beginning of the commitment
period, whichever is later. Either accounting approach could end according
to decisions that the Parties might adopt. In the activity-based approach,
stock changes prior to the start of the activity would not be accounted, even
if they occur in a commitment period. [2.3.2]
Some activities must be persistently maintained to retain the stored carbon
stocks, and this may influence the accounting methods required. Conservation
tillage, for example, may increase carbon stocks on cropland if carried on
continuously, but where it is practiced for a time, then interrupted by a
year of intensive tillage brought on by, for example, a weather situation
or crop change, much of the previous multi-year gain in soil carbon can be
lost. Land-based estimates of the cropland estate should reflect the net effect
of those gains and losses over the full area during the accounting period
and give verifiable results, provided statistically representative sampling
procedures are in place. If activity-based accounting occurs without sampling,
it may report results inconsistent with actual stock changes during the accounting
period. [2.3.2]
For technical reasons, only emissions and removals of CO2 can be determined
directly as changes in carbon stocks. Methane emissions and removals cannot
in practice be directly measured as carbon stock changes, although CH4 and
N2O can be determined by other means. Methane and nitrous oxide emissions
from many land-use activities are included in Annex A of the Kyoto Protocol
(e.g., rice cultivation, enteric fermentation, and agricultural soils) and
in the Revised 1996 IPCC Reporting Guidelines for National Greenhouse Gas
Inventories, and therefore they will be captured in national inventories.
This is not the case, however, for emissions of these gases related to forestry
activities and projects, which are not included in Annex A, although some
of these forestry activities are discussed in the 1996 Revised IPCC Guidelines
for National Greenhouse Gas Inventories. If the net emissions of CH4 and N2O
are not considered, the full climate impact of forestry activities may not
be reflected in the accounting system under the Kyoto Protocol. The treatment
of CH4 and N2O emissions under Article 3.3 may deserve further consideration
and clarification. For agreed activities, Article 3.4 leaves open how net
greenhouse gas emissions will be accounted for in meeting the commitments
under Article 3.1 of the Protocol. [2.3.2, 3.3.2]
Relevant carbon pools could include aboveground biomass, litter and woody
debris, below-ground biomass, soil carbon, and harvested materials. The impact
on these different carbon pools may vary significantly between activities
and types of projects. While methods exist to measure all carbon pools, to
date monitoring is not routinely performed on all pools and the costs vary
significantly. A conservative approach that would allow for selective accounting
of carbon pools to reduce monitoring costs could be to include all those pools
anticipated to have reduced carbon stocks while omitting selected pools anticipated,
with a sufficient level of certainty, to have unchanged or increased carbon
stocks. Similar approaches could be used for fluxes of non-CO2 greenhouse
gases. Under this approach, verifiability would mean that only increases in
carbon stocks and removal by sinks that can be monitored and estimated could
potentially be credited. [2.3.7, 3.3.2,
4.2.1]
Accounting for LULUCF activities under Articles 3.3 and 3.4 includes different
types of uncertainties, including measurement uncertainty, uncertainty in
identifying lands under Article 3.3 or 3.4, and uncertainty in defining and
quantifying baselines, if any. This uncertainty can be accounted for in several
ways. One approach is to extend the application of good practice guidance
in the choice of methods and handling of uncertainty in estimates which has
been developed by the IPCC for other inventory categories. Another approach
could be to adjust estimated stock changes in a conservative way-understating
increases and overstating decreases in stocks. The latter option could allow
tradeoffs between monitoring costs and the potential to receive increased
carbon credits or reduced debits, but would not be consistent with established
principles for estimation of emissions and removals in greenhouse gas inventories.
[2.3.7]
Changes in carbon stocks in wood products could potentially be accounted
as part of the activity that is the source of the wood products or as an independent
wood products management activity. If management of wood products is treated
as an additional activity under Article 3.4, then it may be necessary to exclude
wood products from accounting under other Article 3.3 or 3.4 activities to
avoid double-counting. Once wood products are in trade, they would be difficult
in most instances to trace. The current IPCC default approach assumes that
the wood product pool remains constant over time, and therefore does not account
for it. However, if this pool is changing significantly over time, a potentially
important pool may not be accounted for. [2.4.2, 3.3.2,
4.5.6, 6.3.3]
Enhancement of carbon stocks resulting from land use, land-use change, and
forestry activities is potentially reversible through human activities, disturbances,
or environmental change, including climate change. This potential reversibility
is a characteristic feature of LULUCF activities in contrast to activities
in other sectors. This potential reversibility and nonpermanence of stocks
may require attention with respect to accounting, for example, by ensuring
that any credit for enhanced carbon stocks is balanced by accounting for any
subsequent reductions in those carbon stocks, regardless of the cause. [2.3.6,
3.3.2]
Contiguous commitment periods under the Kyoto Protocol would avoid incentives
in subsequent periods to concentrate activities that reduce carbon stocks
in time periods that were not covered. [2.3.2]
Policies by governments or other institutions (e.g., land tenure reform
and tax incentives) may provide a framework and incentives for implementing
LULUCF activities. Changes in markets may also affect the economic conditions
for land use, land-use change, and forestry activities. The ability to measure
the impact of these conditions and incentives will depend, in part, upon the
carbon inventory and monitoring system in each country. However, it may be
very difficult for countries to assess the relative impact of policies by
governments or other institutions compared to other human and natural factors
that drive changes in carbon stocks. [2.3.5, 5.2.2]
Natural variability, such as El Ni�o cycles, and the indirect effects of
human activity, such as CO2 fertilization, nutrient deposition, and the effects
of climate change, could significantly affect carbon stocks during a commitment
period on lands under Article 3.3 or 3.4. The spatial distribution of the
emissions and removals of greenhouse gases due to these factors is uncertain,
as is the portion of them that may enter the accounting system. These emissions
and removals could be potentially large compared to the commitments in the
first commitment period. This could be a significant issue in the design of
an accounting framework. [2.3.3]
The Kyoto Protocol specifies that accounting under Article 3.3 be restricted
to "direct human-induced land-use change and forestry activities, limited
to afforestation, reforestation, and deforestation" occurring since 1990.
For activities that involve land-use changes (e.g., from grassland/ pasture
to forest) it may be very difficult, if not impossible, to distinguish with
present scientific tools that portion of the observed stock change that is
directly human-induced from that portion that is caused by indirect and natural
factors. [2.3.4, 3.3.2]
For those activities where only narrowly defined management changes under
Article 3.4 are involved (e.g., conservation tillage) and the land use remains
the same, it may be feasible to partially factor out natural variability and
indirect effects. One approach may be to subtract the stock changes on comparison
plots where there have been no changes in management practice from changes
measured on plots with modified management activities. In most cases experimental
manipulation or paired plots can be used for this purpose, but they are likely
to be expensive to apply over large areas. Ecosystem models can also be used
but need further improvement to decrease uncertainties. Verifiability could
be assisted by the application of a combination of models and measurements.
[2.3.4, 4.3.4]
Baselines could be used in some cases to distinguish between the effects
of LULUCF activities and other factors, such as natural variability and the
indirect effects of human activities, as well as to factor out the effects
of business-as-usual and activities undertaken prior to 1990 on carbon stock
accounts and net greenhouse gas emissions. If the concept of a baseline was
to be applied in national accounting for activities under Article 3.4, there
are many options, which include: (i) the stock/flux change that would have
resulted from "business-as-usual" activities; (ii) the stock/flux change that
would have resulted from the continuation of 1990 activity levels; (iii) the
stock/flux change that would result in the absence of active management; (iv)
performance benchmarks or standard management practice; and (v) the rate of
change of stocks/fluxes in 1990. The first three of these baseline options
may involve the use of a counterfactual scenario. One difficulty with the
use of counterfactual baselines is verification. [2.3.4,
4.6, 4.6.3.3]
Accounting under the terms land-use change and forestry in Article 3.7 will
determine which emissions and removals of carbon will enter the 1990 base
year or period for some countries. If the land-use change activities giving
rise to these emissions and removals are not included under Article 3.3 or
3.4 during the commitment periods, then the inventories of countries subject
to this clause in Article 3.7 would not be calculated on the same basis as
their 1990 emissions base year or period. [3.3.2]
If different accounting rules are adopted for relevant Articles of the Kyoto
Protocol, additional decision rules may be needed to determine which accounting
rule applies to land that, over time, is subject to multiple types of activities.
For example, one set of accounting rules could be given primacy in cases where
more than one set could potentially apply and double-counting might result.
[2.3.2, 3.3.2]
Leakage is changes in emissions and removals of greenhouse gases outside
the accounting system that result from activities that cause changes within
the boundary of the accounting system. There are four types of leakage: activity
displacement, demand displacement, supply displacement, and investment crowding.
If leakage occurs, then the accounting system will fail to give a complete
assessment of the true aggregate changes induced by the activity. Although
leakage is in many cases a negative effect, situations, such as the demonstration
effect of new management approaches or technology adoption, may occur where
the emissions reductions or removals of greenhouse gases extend beyond the
accounting system boundaries (positive spillover effect). For some activities
and project types, leakage may be addressed by increasing the spatial and
temporal scale of the accounting system boundaries (i.e., by including areas
where changes in removal and emissions of greenhouse gases may be induced).
However, leakage may extend beyond any activity accounting boundaries (e.g.,
beyond national boundaries). Leakage is of particular concern in project-level
accounting, but may also occur with activities under Articles 3.3 and 3.4.
[2.3.5.2, 5.3.3]
