Climate Change Expert Group Presentation to SBSTA 8 June 2014 Addressing double counting of mitigation for diverse contribution types Christina Hood (IEA)

2 Climate Change Expert Group OECD/IEA papers on UNFCCC emissions accounting options Concepts relevant pre- and post-2020

3 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers

4 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers

5 Climate Change Expert Group Which transfers matter for accounting? Two conditions under which transfers of mitigation matter for UNFCCC accounting: Could include credits (offsets), allowance units from domestic emissions trading systems, or non- market transfers “Used” by a Party as counting directly towards a contribution under UNFCCC Originating outside the boundary of that contribution (geographic, scope or temporal) +

6 Climate Change Expert Group Double counting of mitigation “Double issuance” = more than one unit issued for the same emissions reductions “Double selling” or “double retirement” = same unit used more than once towards emissions obligations “Double claiming” against pledges/targets = same mitigation claimed by two jurisdictions “Double coverage” of transferred mitigation by GHG and non-GHG targets leading to double counting

7 Climate Change Expert Group Double Counting Solutions Double Issuance Strong governance of mechanisms for environmental integrity Double Selling Robust registry/tracking arrangements Double claiming between GHG targets Understand by tracking/reporting transfers Prevent by rules/criteria GHG/Non-GHG double coverage Understand by tracking/reporting transfers

8 Climate Change Expert Group Double claiming example Emissions inventory total = = 200Mt If Party A DOES NOT account for export but party B DOES account for import, then declared total = = 190Mt Emissions 100Mt 10Mt Party A -10Mt Mt Mt Party B Inventory granularity?

9 Climate Change Expert Group What do Parties want to “prevent” ? 1.Prevent double counting in aggregate ex post reconciliation of total mitigation ?  track actual unit and non-market use Enables understanding of double claiming to prevent double counting of aggregate emissions reductions 2.Also prevent or limit double counting in ex ante estimates of expected mitigation ?  requires rules for market or non-market use  e.g. quantitative limits on use of transferred mitigation from jurisdictions that do not account for unit flows (i.e. limit double claiming)  e.g. GHG goals must account for unit flows (i.e. prevent double claiming)

10 Climate Change Expert Group Double counting via “double coverage” of GHG/non-GHG targets Party AParty BHow double counting could arise Quantified GHG target Renewable energy (capacity) If renewable energy target delivered in part by crediting mechanism (with units sold to Party A), could be double counting of mitigation. Renewable energy (transfers) Renewable energy (capacity) With trade of green certificates between Party A and B, there is potential for double counting if one Party accounts for the transfers and the other doesn’t. Quantified GHG target Production of clean electricity If electricity is exported from Party B to Party A via grid interconnection, the mitigation could be counted by both Parties. Understand by tracking/reporting transfers

11 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers

12 Climate Change Expert Group Multiple-year target 100Mt Mt 80Mt target Multi-year emissions target Annual unit purchases 2030 inventory Actual reported inventory emissions Multi-year target avoids risk that emissions in single target year are unrepresentative of general trend Facilitates use of market mechanisms

13 Climate Change Expert Group Single-year target 100Mt Mt 80Mt target 2030 inventory Actual reported inventory emissions Ex ante uncertainty over total emissions due to unknown path to target

14 Climate Change Expert Group Single-year target 100Mt Mt 80Mt target Ex ante uncertainty over total emissions due to unknown path to target Ex ante uncertainty amplified by use of units in target year Gets complex when we think about “vintages” of units 2030 inventory Actual reported inventory emissions

15 Climate Change Expert Group Options for use of mitigation transfers with single year targets Report unit use allows ex-post reconciliation poor ex-ante estimation Quantitative limit Reduces ex-ante uncertainty Target year vintage only Impractical (supply ongoing) Prone to gaming (Scneider et al.) Only units from ongoing action If units are retired for multi-year goals (e.g. domestic ETS), then ok Disallow Only continuous multiyear goals can use transferred mitigation

16 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers

17 Climate Change Expert Group Ex-ante clarity on expected total abatement and national goals 3. Avoidance of double claiming Ex post reporting of flows Provide ex ante estimate of expected flows GHG based contributions must account for flows, must be multi-year. Ex post reporting of flows Provide ex ante estimate of expected flows Quantitative limit on units issued by Parties with GHG goals that do not account for flows. Units in single-year targets must be reflective of continuous action Ex post reporting of flows* Provide ex ante estimate of expected flows Packages of rules for Parties “opting in” to use of market or non-market transfers 2. Enhanced clarity 1.Transparency Approach *flows = issuance, retirement, transfers, banking [PLUS: governance of systems, registry and tracking arrangements]

18 Climate Change Expert Group Thank you for your attention GHG or not GHG: Accounting for diverse mitigation contributions in the post-2020 climate framework Christina Hood Gregory Briner Marcelo Rocha