Submission on surplus and carry over of AAUs  AOSIS  AFRICA  BRAZIL Quantitative illustrative examples of the impacts-UNFCCC

Assumptions and conditions Calculation of surplus from the first commitment period GHG inventory data from the most recently reviewed inventory submission 2011 submission (base year – 2009 data) Initial assigned amount for the first commitment period Inventory submission data for 2008 for the accounting of the LULUCF sector (Article 3, paragraphs 3 and 4) Assigned amount for the second commitment period determined from QELROs set by Parties or included in FCCC/TP/2010/3/Rev.1 Assigned amount

13 bis. All banked units are addressed- CERs, ERUs, AAUs –PPSR 13 ter. After the end of the subsequent commitment period (CP2), a Party may use, for the purpose of its compliance assessment, any carried over units up to a quantity which is equal to [5] % of the difference between the Party's inventory emissions in 2008 x [5][8] and its assigned amount for the current commitment period, if that assigned amount is lower than the Party's inventory emissions in 2008 x [5][8], & only up to the extent of the Previous Period Surplus Reserve. Key elements: Eliminates surplus for Parties that have brought forward CP2 QELROs above current emission levels PPSR units may only be used toward domestic compliance assessment, and only if actual emissions at end of CP2 are above 2CP assigned amount Provides incentive to take QELROs below current emissions, because the deeper the target, the greater the access to the PPSR Measurement points are clear and known inventory; 2CP assigned amount AOSIS: Submission on surplus and carry over of AAUs

Quantitative implications Total surplus supply from CP1 if 100% carried over to CP2 (after subtracting deficits of some countries in CP1) for Annex I as a group is roughly 10 GtCO2eq; 6 Gt for CP 2 Parties that will have QELROs Total demand for compliance in CP2 for Annex I as a group is roughly 11 Gt, BUT demand is only 1 Gt if "new surplus" is created in CP2 At 5%, the AOSIS proposal would allow use of PPSR of 0.3 Gt for Annex I Parties as a group; 0.1 Gt for CP2 Parties

13 quarter. Parties with special circumstances re LULUCF fluctuations may retire up to an amount specified in Annex C, or the 1%, whichever is higher, or an alternative proposal based on ring-fencing LULUCF surplus. Elements: Par 13. Surplus AAUs can all be carried over but are placed in a special reserve, provided that: The Party is participating in 2CP The Party's QELRO is lower than its 2008 inventory  if the emissions of such a Party in the CP1 are less than its AA for that period under this Article, this difference shall, on request of that Party, be transferred to a PPSR for the concerned Party as surplus AAU. Any CERs and ERUs transferred from the CP1 shall similarly be placed in the PPSR. 13 bis. Parties may trade 2% of this PPSR per year. 1% of revenue to be spent on domestic mitigation; 1% of AAUs to be transferred to the Adaptation Fund 13 ter. If Parties are short of AAUs for compliance at the end of 2CP, up to 1% of a Party's AAU total for 2CP can be retired from this fund for compliance purposes, provided adequate units remain in the fund. 13 quinqies. Any unused units at the end of the second commitment period should be cancelled. AFRICA: Submission on surplus and carry over of AAUs

Brazil: Submission on surplus and carry over of AAUs 13. If the emissions of a Party included in Annex I in a CP are less than its AA under this Article, this difference shall, on request of that Party, be carried-over to the subsequent commitment period, as follows: a. If the AA of a Party included in Annex I for the CP1 is less or equal than that Party’s emissions in 2007, multiplied by five, the difference between the AA for that Party for the CP1 and its average emissions from 2008 to 2012, multiplied by five, shall be deemed the Previous Period Surplus Reserve, if positive. b. If the AA of a Party included in Annex I for the CP1 is greater than that Party’s emission in 2007 multiplied by five, the difference between that Party’s emissions in 2007 multiplied by five and its average emissions from 2008 to 2012, multiplied by five shall be deemed the PPSR, if positive.

13 ter. After the end of the CP2, the units of a Party included in Annex I PPSR may be added to its AA. 13 qua. The difference between the AA of a Party included in the Annex I and the emissions of that Party in the CP2, deducted, when applicable, from the units transferred to its cancellation account, in accordance with Article 13 bis, may be carried-over, if positive, to the subsequent CP. 13 bis. The difference between the AA of the CP2 for a Party included in the Annex I and the emissions in the last year of the CP1 multiplied by [five][eight] shall be transferred to the cancellation account of that Party.