Activities undertaken under Articles 6 and 12 of the Protocol are eligible for credits toward national commitments if they result in net emissions reductions that are additional to any that would have occurred in the absence of the activity. In essence, this provision specifies that, for activities undertaken under Joint Implementation (JI) and the Clean Development Mechanism (CDM), "business-as-usual" emissions act as a baseline, and credits accrue when net emissions fall below this baseline.
This same approach-that is, defining a business-as-usual baseline and awarding credits only when the actual path of emissions falls below this baseline-could be used for Article 3.4 activities to provide rewards for improved behavior. Defining a meaningful business-as-usual path of emissions-a measurement of a counterfactual path that never exists-presents significant problems (see Section 5.2.3). The last sentence of Article 3.4 suggests the possibility of using different reference systems for the first and subsequent commitment periods. A business-as-usual baseline might be used when activities are used to meet commitments during the first commitment period, but a different reference system might be applied at the beginning of subsequent periods for which commitments have yet to be negotiated. For carbon sequestration, credits would accrue when the change in stocks over the commitment period is greater than the change in stocks for the business-as-usual scenario.
Business-as-usual is only one of a variety of baselines that might be chosen. Other possibilities include giving credit for any practice that improves on existing practice or for continuation of current levels of adoption of a mitigation practice that improves on some practices still in use; giving credit for any practice that improves on "standard management practice;" or using a performance standard so that any practice that exceeds the standard could receive credit. These baselines are not unique to the land-use change and forestry sector; they are listed (though not elaborated) here to emphasize that if a baseline is desired, there are several ways it might be defined.
Article 3.4 establishes that any decision on incorporation of additional activities "shall apply" in the second and subsequent commitment periods. It states that a Party "may choose to apply" this decision in the first commitment period. It does not stipulate that the activities will be governed by the same MRGs in the first commitment period as in subsequent periods; in fact, it implies the contrary by establishing that the "since 1990" rule will apply during the first commitment period but not necessarily during subsequent periods. Thus, in arriving at a decision regarding Article 3.4 activities, Parties may be able to prescribe different selection criteria, different activities, and different MRGs for individual commitment periods. It seems possible, then, to phase in over commitment periods either the breadth of activities included or the breadth of the accounting rules. This phasing-in could accommodate changes in available data, development of methodologies, or compatibility between commitments and opportunities for emission reductions.
Decisions yet to be made by the Parties will determine which specific forestry practices will qualify for inclusion under Article 3.3 (see Chapter 3). All practices not included under Article 3.3 will be eligible for incorporation under Article 3.4. Under the broadest definition of the term "activities," most practices that are excluded from Article 3.3 are likely to fall into the "forest management" activity. If "activity" is defined more narrowly, care will be required to ensure that practices that are defined out of Article 3.3 will be considered under Article 3.4. Even if there is a seamless fit between activities included under Article 3.3 and those included under Article 3.4, however, there will be an accounting misfit unless both activities are governed by the same MRGs. If a business-as-usual baseline is adopted for Article 3.4, for example, activities under Article 3.4 would likely generate fewer credits than under Article 3.3 for the same total change in carbon stocks, and it would be necessary to continue to distinguish between the two for accounting purposes.
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