Land use, land-use change and forestry projects under JI in theory and practice B. Schlamadinger and N. Bird Joanneum Research, Austria C. Streck and R. O’Sullivan Climate Focus, The Netherlands Z. Somogyi Forest Research Institute, Hungary UNFCCC TECHNICAL WORKSHOP ON JOINT IMPLEMENTATION Bonn, 13-14 February 2007 Contact: neil.bird@joanneum.at C.Streck@climatefocus.com

Outline JI LULUCF Permanence LULUCF Transactions Why AAU  ERU conversion is essential Examples Conclusions

JI LULUCF is more than afforestation / reforestation: Also possible: Reducing deforestation Revegetation Improving Cropland Management (CM) no-till agriculture Improving Grazing Land Management (GM) grassland restoration Improving Forest Management (FM) forest fire management enhanced regeneration after harvest etc.

Project that enhance removals Carbon stocks Time

Improved FM

Some potential types of JI projects CM: Switching to no-till management

Potential is limited during CP-1 Carbon stocks “slow in” CP-1 Further CPs? Time

Reducing emissions (“fast out”) Carbon stocks Reduction due to project activity CP-1 time

LULUCF JI projects to date Afforestation Project / Romania PCF 6 thousand ha - 3.08 million US$ - 1.6 Mt CO2 eq Chernobyl Reforestation / Ukraine BCF 15 thousand ha - 0.44 Mt CO2e by 2012 No project documents yet

Permanence risk CDM: buyer liability (tCERs, lCERs). Temporary credits have to be replaced in case there is a loss in carbon and at the end of a project’s crediting period JI: seller (country) liabitility ERUs (permanent credits) are transferred without passing any liability to the recipient country. The liability is with host country which has to account for the loss in carbon. Intentionally left blank to make the point that there are (almost) no projects

JI LULUCF transactions: What the Marrakech Accords say AAUs or RMUs can be converted into ERUs AAUs = emissions rights at national level (can be enhanced by reducing emissions / losses of carbon) RMUs = generated by increases in carbon stock within an Art 3.3 or Art 3.4 category Intentionally left blank to make the point that there are (almost) no projects

ITL only allows conversion RMUs  ERUs The current ITL rules reverse the decision of the COP/MOP to allow all LULUCF project classes under JI, by excluding the conversion from AAUs to ERUs This table says: RMUs must be converted for LULUCF JI activities, on the basis that: (a) LULUCF JI projects must conform to definitions, accounting, modalities and guidelines under Article 3.3 and 3.4 and (b) ERUs converted from RMUs cannot be carried over. Intentionally left blank to make the point that there are (almost) no projects

Why AAU  ERU conversion is essential (1) The following LULUCF activities will not be backed by RMUs Reduction of Art 3.3 deforestation Projects in category not elected as an Art 3.4 activity Projects in category elected under Art 3.4, but category turns out to be a net source (only known ex post!) All Track 2 JI, where RMUs will not be issued due to non-compliance in Art 3.3 / 3.4 reporting If Art 3.3 / 3.4 only accounted at end of commitment period, then no ERUs can be issued until that time. Thus, it is essential that AAUs can be converted into ERUs Intentionally left blank to make the point that there are (almost) no projects

Why AAU  ERU conversion is essential In addition: According to the MA, Track 2 JI does not require Art 3.3 / 3.4 reporting and RMU issuance Therefore, ITL ruling is in contradiction of Track 2 JI Intentionally left blank to make the point that there are (almost) no projects Note: No reference to para. (f)

Example 1: JI Project to reduce emissions from deforestation Great potential on per hectare basis (“fast-out”) Could be examples for RED mechanism No RMUs generated by Art 3.3 Deforestation Only if country produces RMUs in Art 3.3 AR, or Art 3.4 activities, has it the RMUs to convert into “avoided deforestation” ERUs. Thus, RED project depends on ability of country to generate RMUs under Art 3.3 AR, or Art 3.4 Intentionally left blank to make the point that there are (almost) no projects

Example 2: JI forest fire prevention project The project (under Art 3.4 FM) reduces emissions from forest fire Another part of the country experiences a drought which reduces forest growth, and thus, the country becomes a source under Art 3.4 AAU are consumed, no RMUs are produced no ERUs can be generated even though without the project the country would be more of a source. Projects are exposed to a country-wide risk Intentionally left blank to make the point that there are (almost) no projects

Conclusions JI offers potential to test LULUCF project types other than AR “ITL interpretation” poses a severe barrier; may eliminate most of this sector from the market Underlying cause seems to be the thinking LULUCF (“sinks”) = removals (ALWAYS) other sectors = emissions Possible solutions: “repair” the ITL rules Green Investment Schemes (but may exclude the private sector)

Further Reading Point Carbon - CDM & JI Monitor 24 January www.pointcarbon.com/CDM%20&%20JI/article20127-367.html Will Joint Implementation LULUCF projects be impossible in practice? Climate-L announcement 17.Dec.2006 lists.iisd.ca:81/read/?forum=climate-l Proposed workshop in Budapest in May LULUCF: Joint Implementation, Green Investment Schemes, and other domestic LULUCF activities by Annex I countries