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Chapter 5 defines a project as a planned scheme that integrates one or more types of activity, aimed at reducing GHG emissions or enhancing GHG sinks in the LULUCF and related sectors. A project is confined to a specific geographic location, time period, and institutional framework to allow GHG impacts to be adequately monitored and verified. Although Parties are free to select the projects they wish to report under Articles 6 and 12, Article 3.3 requires that the effects of ARD activities "shall" be reported everywhere they occur within the country. The approach to reporting any additional activities adopted under Article 3.4 is to be decided by the COP.
An important relationship exists between Article 6 projects and Article 3 activities. Article 3.11 requires Parties that host Article 6 projects to subtract from their assigned amounts all emissions reduction units (ERUs) transferred to other parties. If an Article 6 project in the LULUCF sector does not consist only of Article 3.3 or 3.4 activities, the host Party will not be able to make an adjustment to its assigned amount corresponding to the ERUs transferred by the project. Furthermore, because Article 6 projects must provide a reduction or removal that is "additional" to any that would otherwise occur, Article 3.3 or 3.4 activities used in such projects must be additional to business-as-usual.
Any ambiguities about what is an applicable activity under Articles 3.3 and 3.4 would raise an important compliance question. An international verification system would have a reasonable chance of detecting unreported decreases in stocks but might have considerably more difficulty identifying whether this decrease resulted from an applicable activity. Governments and private entities have a greater incentive to report activities that give rise to removals than those that give rise to emissions. Removals contribute to the fulfillment of obligations, whereas emissions make fulfillment more difficult. This factor may lead the Parties to resolve any ambiguities about what may be an applicable activity by overreporting activities that result in removals and underreporting activities that result in emissions. For the purposes of compliance, the Parties may want to adopt a rule that presumes that decreases in stocks result from applicable activities and increases in stocks do not result from such activities, unless the Party concerned demonstrates otherwise. Alternatively, for each activity, Parties might be required to specify in advance-as well as monitor and report on-the land base to which the activity could potentially apply. Parties would be required to report all increases and decreases occurring on these specified land bases.
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