Tag: AAUs

CAN intervention - CMP Agenda Item 5 - 1 December 2010

Submitted by Anonymous on December 2, 2010 - 4:46pm

Dear Chair,

My name is Irina Stavchuk of the National Ecological Center of Ukraine. I am speaking on behalf of the Climate Action Network.

We are concerned about the carry-over of surplus Assigned Amount Units (AAUs) from the 1st commitment period. Estimates place this surplus at 7 to 11Gt CO2e, or roughly one third of current 2020 emissions reduction targets pledged by Annex I countries. Thus, surplus AAUs have the potential to undermine the environmental integrity and effectiveness of the second commitment period of the Kyoto Protocol.

This problem can be addressed by replacing Paragraph 13 of Article 3. We advocate setting a stringent discount factor, so that the annual average level of emissions carried over is severely restricted. These limited number of AAUs that have been carried over may only be used domestically in surplus holding countries for compliance in the next commitment period.

Let's be honest: the huge Kyoto surplus in Ukraine and Russia arose from a mistake in the estimate of projected business-as-usual scenario and not due to the implementation of effective climate change mitigation policies.

If the issue of surplus AAUs is not adequately addressed, developed countries can continue on a business-as-usual pathway. CAN questions the continuation of international emissions trading as a mechanism after 2012 if the Kyoto surplus issue is not fully addressed.

There are no excuses for not addressing the issue of surplus AAUs here in Cancun.

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CMP agenda item number 5

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Time to Get Rid of All That Hot Air

Submitted by Anonymous on December 2, 2010 - 10:04am

ECO did some maths and was astounded to find that surplus Assigned Amount Units (AAUs) under the Kyoto Protocol range between 7 to 11 GT CO2 for the first commitment period. That’s well more than one-third of all 2020 emissions reduction targets currently pledged by Annex I countries! ECO thinks that is the definition of a wake-up call.
If all of those surplus AAUs are carried over to the second commitment period, the carbon trading game will be fixed in favor of higher pollution levels. That kind of magical accounting will look great on the books, but the planet will still be boiling. This is why the overflow of surplus AAUs is called ‘hot air.’
It’s no secret that hot air is due to an erroneous calculation of future expected emissions for Russia and eastern European countries such as Ukraine and not because of the implementation of effective climate change mitigation policies.
A minor rewrite of Paragraph 13 of Article 3 can easily get us out of this quagmire. ECO advocates setting a stringent discount factor so that the annual average amount of emissions carried over is capped. For compliance in the next commitment period, a limited number of banked AAUs should only be used domestically in countries holding surpluses.
Furthermore, legal provisions should be agreed that prevent the ‘laundering’ of first commitment period AAUs via the sale of second period AAUs. If hot air is not fully addressed, ECO questions the viability of international emissions trading as a mechanism after 2012.
What it comes down to is this: you cannot cheat the atmosphere. Instead of using magic accounting tricks with AAUs, Parties should concentrate on innovative approaches that reduce emissions in the real atmosphere.

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Anonymous's blog

Ukraine’s AAU  ‘Black Hole’

Submitted by Anonymous on June 8, 2010 - 1:31am

While it has long been known that ‘black holes’ suck in light, physicists are still debating where it goes. Similarly, it seems Ukraine sucks in money from carbon trading and the government is having trouble finding where that has all gone. For the last two months, Ukraine has actively searched for 320 million Euros it received from selling hot air AAUs to Japan and Spain for emission reduction projects. The investigation is still ongoing, but Ukrainian President Victor Yanukovich has already announced, ‘the money was stolen by the previous Government’. Whatever the truth may be, the current government has confirmed to Ukrainian NGOs that, so far, not a single project was financed from these funds. Ukraine got the money under the international emissions trading mechanism by selling 30 million tonnes of hot air credits to Japan in the spring of 2009 and a further 3 million credits to Spain. Although Ukraine claims it has set up a Green Investment Scheme regulation to prove that money goes only to emissions reductions projects in a transparent and efficient way, in reality there is no access to information on project selection procedures and the subsequent use of the money. There is also a big scandal in Ukraine about a proposed AAU trading contract between the Ukrainian Government and what appears to be a New Zealand limited partnership, Tawhaki International LP, involving 50 million AAUs. According to a media investigation of this deal, the owners of the company are Ukrainian citizens, one of whom is a former  UNFCCC negotiator. ECO thinks it outrageous that Ukraine still insists on the right to bank all the unused AAUs from the first commitment period into the future, given that it seems unable to properly regulate its carbon trading or ‘green’ the projects. To make things worse, their post-2012 target includes – you guessed it – even more hot air. Our message to Ukraine is: the UNFCCC is not the place to cheat. It is the place for you to help solve the global climate crisis! The Ukrainian NGO Working Group on Climate Change has urged all Annex I parties not to buy any more hot air from Ukraine until it reviews its national regulations and assures the money is used in a transparent and efficient way. Under the current scheme neither the population nor the economy, and certainly not the climate, will see any benefit. Hot air trading creates another kind of black hole too – sucking away the will of Annex I countries to actually cut emissions. A new AAU surplus must be avoided in the next Kyoto Protocol commitment period. Reduction targets for any Annex 1 country – not only those presently owning surplus AAUs like Russia and Ukraine – must be substantively lower than current baseline emission estimates. As for the AAU surplus, carryover between the first and second commitment periods could have the following legally binding restrictions:

AAU surplus may be used domestically in surplus holding countries for compliance in the next commitment period, but subject to a dynamic discount factor.
The discount factor must be set so that no more than 10-20% of the annual average level of first commitment period emissions is carried over in countries with an AAU surplus.
An annual quantified limit on selling off carried-over AAUs has to be agreed, and legal provisions should prevent the laundering of first commitment period AAUs via the sale of second commitment period AAUs.
AAUs must not be used at all for compliance in domestic cap and trade systems in Annex I countries.
Surplus-holding countries should commit to climate friendly investment of the revenues from AAU surplus selling through transparent and internationally monitored Green Investment Schemes and/or to funds supporting developing country Parties. This can be legally enshrined in a post 2012 agreement.

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Bonn 2 - 2010

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Banking of AAU Surpluses Considered Harmful

Submitted by Anonymous on June 8, 2010 - 1:28am

The unrest in Ukraine is not the first instance of controversy over the use of AAUs. A recent story involves  Hungary, which sold nearly 2 million CERs to a Hong Kong firm that had already been used for compliance under the EU ETS. Instead of retiring CERs from its registry when companies surrendered them, Hungary retired some of its large surplus of AAUs instead, so that it could re-sell the CERs. This is not itself illegal and is a more attractive option than directly selling AAUs, as CERs fetch slightly more money and are encumbered by fewer restrictions on the revenue from their sale. However, if practised on a large scale, such laundering risks seriously undermining the carbon price in the EU ETS through contamination of the scheme with cheap hot air AAUs, which also have lower environmental integrity than CERs. Decreasing the carbon price in this way will in turn lead to less domestic emission reductions in Europe. To avoid this, the EU’s 27 Member States have agreed not to sell used CERs, but the practice is proving difficult to track. Other stories abound. In late 2009, Environment Minister Maciej Nowicki of Poland resigned amid press reports of a disagreement with the Prime Minister over the use of revenue from selling AAUs worth 25 million euros to Spain. Ironically, Nowicki acted correctly, allocating the cash to Green Investment Scheme-backed projects, as Polish law requires. But leaked reports of a meeting, later denied by the government, alleged that the Prime Minister objected to this. Meanwhile the Slovakian government saw three environment ministers lose their jobs during 2009 in relation to an opaque deal with a US-based company. You get the picture. ECO simply offers all this as further evidence as to why no banking of AAU surpluses should be  allowed.

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CAN Intervention - KP Opening Intervention - 1 Jun 2010

Submitted by admin on April 9, 2010 - 8:09pm

CAN_KP_intervention_opening_plenary_1June2010_final_for_delivery.pdf

Thank you Mr Chair, Distinguished delegates, Clearly, progress is needed on the KP track here in Bonn.

CAN would like to remind delegates that when the KP was first negotiated, Parties agreed targets first, and the following years were spent agreeing the loopholes to accommodate them - loopholes that have contributed to the gigatonnes gap between accounting for emissions and what the atmosphere actually sees.

It is CAN’s long-standing opinion that the underlying rules should be negotiated first, so that the needed reduction target of at-least -40% can be allocated between the Annex B Parties, based on a clear and common understanding of the underlying scope and accounting rules.

Negotiating time in Bonn and for the subsequent intersessionals should therefore be focused on reaching agreement on a number of issues, including:

Accounting rules that actually reduce net LULUCF emissions;
Modalities for the flexible mechanisms – to avoid double counting of developed country mitigation and financial support obligations, and keep out inappropriate sectors, such as nuclear and CCS
The AAU banking loophole
The scope of new sources and sectors and other accounting rules – the “other issues”
Commitment period length and base year

These issues need to be agreed, but not agreed at any cost. CAN has strong concerns about some of the proposals currently being discussed, especially for LULUCF.

In the LULUCF negotiations, Annex I Parties are proposing to make their forests part of the climate change problem, rather than part of the solution. They are proposing to increase their annual net emissions from forest management by approximately 400 Mt CO2e without even accounting for it. This type of proposal has absolutely no place in a global climate agreement.

At this session, Annex I Parties must stop the accounting games. Annex I Parties must commit to absolute reductions in net anthropogenic emissions from LULUCF and they must protect their forests and other natural ecosystems as reservoirs of greenhouse gases. Parties could then quickly agree to LULUCF rules that transparently meet these two principles.

Like so much in this process, time is not required to fix LULUCF, only political will and ambition.

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