Land Use, Land-Use Change and Forestry

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4.6.4. Banking of Emissions Offsets

Article 12.10 of the Kyoto Protocol permits any certified emissions reduction from the year 2000 (8 years prior to the first commitment period) to be used to achieve compliance during the first commitment period under the CDM. This provision could have the effect of encouraging participation by non-Annex B countries and stimulating early implementation of activities that reduce emissions. Recognizing the slow rate at which biomass activities sequester carbon compared to the high rate at which they can discharge carbon, as well as the associated advantages of early implementation of improved land-management activities, the Parties could choose to permit this sort of banking for early credits under Article 3.4 activities. This strategy might encourage early adoption of sustainable land-management practices; it would also create additional credits that would permit Annex B countries to more easily meet their commitments in the first commitment period.

4.6.5. Capturing Both Increases and Decreases in Carbon Stocks

Article 3.4 permits Parties to choose whether to include these additional activities in meeting commitments during the first commitment period. Without appropriate guidance or the adoption of a full and symmetrical accounting system (see Chapter 2 and Figure 4-5), a Party might be able to select projects or activities that provide a net sink for carbon without accounting for those that are a net source. This type of selection could encourage adoption of desirable land-management activities in some places with no net gain for the atmosphere if countervailing choices are made elsewhere.

A partial solution to this potential problem would be to adopt any additional activities allowed for credit under Article 3.4 through a single decision that required acceptance of all activities or none in one package. This approach could ensure that a Party that chose to apply the decision to the first commitment period would have to account for the net effect of all of the additional activities. A full accounting approach for all changes in carbon stocks would also avoid this problem.

4.6.6. Adjusting Credits from Changes in Carbon Stocks

The Kyoto Protocol currently treats all GHG flows equally, in CO2-equivalent units: A ton of carbon is a ton of carbon, whether it is from fossil fuel combustion or is sequestered by reforestation. An alternative approach would be to treat different flows of carbon differently by giving partial, limited, or exaggerated credit for some carbon flows with respect to others or by putting a cap on the credits or debits available from a particular sink or source. Four reasons have been suggested for choosing to treat different flows of carbon differently:

One could choose an adjustment factor that is greater or less than 1 to encourage sequestration in the biosphere or to discourage it with respect to other mitigation strategies. Such an approach could be applied to provide differential encouragement for different activities. A system might be designed to reward improvements with respect to uncertainty, permanence, or leakage. For example, providing credits at the 90-percent confidence level for estimates of changes in carbon stocks would reward improved accuracy in measurement with additional credits (Canada, 1998). There is a risk that valuing different carbon flows differently could lead to outcomes that are not economically efficient or environmentally optimal.

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