International Climate Change Institutions and the Greenhouse-Gas Emitting Performance of Nations

Abstract

This chapter begins the process of laying the foundations to support the global protocol revealed in Chap. 10. The exercise begins with an illumination of some key climate change institutions and related mechanisms. The exercise continues with an examination of the greenhouse gas-emitting performance of individual countries and the different UNFCCC-defined groups of nations. It is shown that global emissions rose by an alarming 31.0 % over the 1990–2010 period despite a 6.2 % fall in the greenhouse gases emitted by the Annex I group of nations—confirmation that the Kyoto Protocol’s confinement of emissions targets to Annex I nations did little to prevent global emissions from rising above their 1990 levels. More alarmingly, it is shown that the 6.2 % decrease in the Annex I group’s emissions was largely made possible by the enormous decline in the greenhouse gases emitted by the Annex I (non-Annex II) group of Parties over the 1990–2010 period (−28.5 %), which was caused by a one-off plunge in the emissions of former communist countries. As for future emissions obligations, it is revealed that the world’s wealthiest nations have emitted a disproportionately large share of global greenhouse gas emissions and therefore need to dramatically reduce their emissions in coming decades to help stabilise the atmospheric concentration of greenhouse gases at no more than 450 ppm of CO₂-e. Having said this, low-GDP countries also need to reduce their emissions, which will require them to be subject to emissions targets in the not-too-distant future. Altogether, the exercise performed in this chapter highlights the need to modify the Kyoto architecture and adopt a ‘common but differentiated convergence’ approach when setting and embodying national emissions targets in a new global emissions protocol.

Notes

• 1. Even if some countries do not agree to a final protocol, it can still be effective if the total emissions of the nations willing to abide by the protocol constitute the great majority of the world’s future greenhouse gas emissions.

• 2. Until recently, the group of least-developed countries (LDCs) consisted of 49 nations. In 2013, both Cape Verde and The Maldives graduated out of the group of LDCs, whereas South Sudan, as a new nation, was added. Equatorial Guinea and Vanuatu will also graduate out of the LDC group in the next few years.

• 3. The Global Environment Facility was established in 1991 by the World Bank as a $1 billion pilot programme to help protect the global environment and promote sustainable development. Projects funded by the Global Environment Facility were initially implemented by the United Nations Development Programme (UNDP), the United Nations Environment Programme (UNEP), and the World Bank (GEF 2011).

• 4. Raupach et al. (2007) have estimated that, between 1750 and 2004, UNFCCC-defined Annex I countries had contributed around 77 per cent of all energy-related CO₂ emissions. A more recent study indicates that Annex I nations had contributed 71 per cent of the world’s cumulative energy-related CO₂ emissions between 1850 and 2010 (29 per cent by non-Annex I nations) (den Elzen et al. 2013). However, the same study suggests that the contribution made by Annex I nations is just 52 per cent when non-CO₂ and land-use CO₂ emissions are included (48 per cent by non-Annex I nations).

• 5. Annex I Parties of the UNFCCC are referred to as Annex B Parties in the Kyoto Protocol because they are listed in Annex B of the Protocol.

• 6. For obvious reasons, carbon dioxide is automatically expressed in terms of its CO₂-equivalent warming effect.

• 7. National emissions targets specified in the Kyoto Protocol exclude emissions generated by international aviation and shipping activities (UNFCCC 1998).

• 8. The Alliance of Small Island States includes a group of island nations highly vulnerable to the impact of warming-induced sea-level rise. During the Kyoto Protocol negotiations, the G-77 represented 133 low-GDP nations of which China, at the time, was an associate rather than a member (Depledge 2000; Dessai et al. 2001).

• 9. Five UNFCCC Parties had alternative base years to 1990. They were: (i) Bulgaria (1988); (ii) Hungary (average of 1985–1987); (iii) Poland (1988); (iv) Romania (1989); and (v) Slovenia (1986).

• 10. Initially, Canada committed to cutting its greenhouse gas emissions to 6 per cent below 1990 levels by 2012. However, in 2009, Canada’s emissions were 17 per cent higher that in 1990. With Canada unlikely to achieve its Kyoto obligations and therefore facing significant penalties, it opted to withdraw from the Kyoto Protocol before the first commitment period concluded at the end of 2012 (Toronto Star 2011).

• 11. Table 8.1 (column e) indicates that Canada, Japan, the Russian Federation, New Zealand, and Turkey have no emissions target for the second Kyoto commitment period. As mentioned, Japan and the Russian Federation chose not to be subject to a new round of emissions obligations. New Zealand elected to set an economy-wide reduction under the UNFCCC, whilst Turkey was spared a greenhouse gas emissions target for the 2013–2020 period. As for Canada, it withdrew from the Kyoto Protocol in 2012. The USA (not included in Table 8.1) also has no emissions target for 2013–2020 because it is not a signatory to the Kyoto Protocol.

• 12. The economic basis behind the creation of a number of flexibility mechanisms is that the marginal cost of mitigation differs between countries (IPCC 2001d). Hence, by allowing Annex I countries to trade in emissions allowances (Assigned Amount Units) and to invest in emissions-reduction projects in other Annex I nations and/or non-Annex I nations (i.e., where the marginal cost of emissions reduction is much lower), it is possible to reduce the overall cost of reducing greenhouse gas emissions. This philosophy is similar to that explained in Chap. 7 with regard to different greenhouse gas-emitting firms (see Fig. 7.4).

• 13. Upon a Party transferring some of its Assigned Amount Units in accordance with the provisions of Article 17 relating to International Emissions Trading, the Assigned Amount Units shall be added to the Units allotted to the acquiring Party (Article 3.10). Conversely, the Assigned Amount Units shall be deducted from the Units allotted to the transferring Party (Article 3.11).

• 14. One AAU is equal to one tonne of CO₂-equivalent greenhouse gases. In any one year, an Annex I nation can typically emit millions of tonnes of CO₂-equivalent greenhouse gases. Hence, the assumption of annual emissions of 100 units or 100 tonnes of CO₂-equivalent greenhouse gases is made here for illustrative purposes only.

• 15. This latter situation has occurred in the case of Annex I nations with ‘economies in transition’ (EITs). In the aftermath of communism, the productive capacity of the former USSR and most Eastern European countries declined significantly. When Annex I nations were assigned AAUs under the Kyoto Protocol in the late-1990s, the AAUs were determined relative to their greenhouse gas emissions in 1990 (with a few minor exceptions; see Endnote # 9). 1990 coincided with the collapse of communism. Hence, the AAUs of many EITs far exceeded their capacity to generate greenhouse gas emissions. This left many EITs with a windfall of unused AAUs which they could sell to non-EITs within the Annex I group of nations (Carbon Trust 2009).

• 16. The $20 million cost to country B could exist in the form of the cost of reducing the emissions-intensity of its real output or, should it not do this, the value of the goods and services it must forego to limit its greenhouse gas emissions to 90 units.

• 17. The $40 million benefit to country A equals $90 million less $50 million; the $30 million benefit to country B equals $50 million less $20 million.

• 18. Just like one AAU, one CER is equal to one tonne of CO₂-equivalent greenhouse gases.

• 19. A Designated Operational Entity (DOE) is an independent auditor accredited by the CDM Executive Board to validate project proposals and verify whether approved CDM-projects have achieved greenhouse gas emissions reductions, as promised. Verification by a DOE is used to determine the quantity of CERs that should be issued to a project (https://cdm.unfccc.int/DOE/index.html).

• 20. To assist in the management of the Clean Development Mechanism, the Executive Board is also supported by various other panels and working groups. For more information on them, see (http://cdm.unfccc.iny/EB/governance.html).

• 21. To qualify as a CDM-project under Article 12 of the Kyoto Protocol the project must deliver “real, measurable, and long-term benefits related to the mitigation of climate change” including “reductions in emissions that are additional to any that would occur in the absence of the certified project activity”.

• 22. In other words, the additionality test prevents an Annex I nation from acquiring Certified Emissions Reduction units (CERs) from projects that would have taken place in non-Annex I countries regardless of the Clean Development Mechanism.

• 23. This is a requirement under Article 2 of the Kyoto Protocol.

• 24. Once again, the assumption of annual emissions of 100 units or 100 tonnes of CO₂-equivalent greenhouse gases is made for illustrative purposes only.

• 25. The annual cost of the CDM-project would constitute the initial and ongoing costs amortised over the lifetime of the project.

• 26. Let’s assume that, in the current year, country X’s annual emissions are 35 units and the annual emissions of countries A, B, and C are 100 units each. The combined emissions of the four nations would be 335 units (100 + 100 + 100 + 35). With the emissions of countries B and C remaining at 100 units each, and the emissions of countries A and X expected to rise to 110 and 40 units respectively, the combined emissions for the upcoming year, should no CDM-project be undertaken, would be 350 units (110 + 100 + 100 + 40). By undertaking the CDM-project to reduce X’s upcoming emissions to 30 units in order to allow A to legally emit 110 units, the project does not prevent combined emissions rising over the upcoming year by 5 units to 340 units (110 + 100 + 100 + 30).

• 27. That is, the Clean Development Mechanism does not prevent ‘carbon leakage’ to countries not subject to emissions targets.

• 28. In the case of European Union countries, it would also depend on whether they had reached the limits imposed by the EU-ETS on their capacity to meet their emissions targets via investments in CDM-projects.

• 29. Restrictions on the ability to sell surplus AAUs could arise if the Annex I nations are European Union countries which have reached their permissible limits under the EU-ETS.

• 30. This was the number of CERs issued as of 1 June 2014. It has been estimated that around 5.3 billion CERs are likely to be issued between the beginning of 2014 and the end of 2020 (http://www.cdmpipeline.org/overview.htm).

• 31. One ERU is equal to one tonne of CO₂-equivalent greenhouse gases.

• 32. To qualify as a JI-project under Article 6 of the Kyoto Protocol the project must deliver “a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur”. Given the large technology gap between transition economies (EITs) and Annex I nations with established market economies, the Joint Implementation facility was created on the expectation that most JI-projects would be undertaken in EITs. As of late-2010, more than 200 JI projects had been initiated in fourteen host countries, the great majority of which had taken place in the Russian Federation and the Ukraine (Henson 2011).

• 33. If the country hosting the JI-project has a comfortable AAU surplus (i.e., its AAUs far exceed its likely emissions), it will have less concern over whether the emissions reductions arising from the project are additional. This is because it is unlikely that the host country will need to undertake any action to make up for non-additional emissions. I’ll have more to say about this in Chap. 9.

• 34. By eligible, I mean that the host nation meets all Joint Implementation eligibility requirements. In this situation, the host nation supervises the JI-project.

• 35. The independent auditors are referred to as Accredited Independent Entities (AIEs).

• 36. The assumption of annual emissions of 100 units or 100 tonnes of CO₂-equivalent greenhouse gases is again made for illustrative purposes.

• 37. The JISC consists of: (i) six Annex I countries—three of which must be countries undergoing the transition to a market economy (EITs); (ii) three non-Annex I countries; and (iii) one member from the group of small-island developing states (SIDS). To become a member of the JISC, a country must be nominated by a relevant constituency and then be elected by the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol.

• 38. 824,098 ERUs had been issued to Track 1 projects; 25,386 ERUs to Track 2 projects; and 46 ERUs to ‘programmes of activities’ (PoAs).

• 39. Articles 3.3, 3.4, and 3.7 of the Kyoto Protocol also discourage activities in Annex I nations that lead to deforestation, which is a form of carbon removal.

• 40. One RMU equals one tonne of CO₂-equivalent greenhouse gases. RMUs can be traded under the Kyoto Protocol’s International Emissions Trading (IET) system (Article 17).

• 41. A forestry project is only a net-sequester of greenhouse gases during the forest’s ‘growth’ phase. Upon full maturity of a forest or timber plantation, it ceases to be a net-sequester of greenhouse gases. This is because, at full maturity, the greenhouse gases that a forest sequesters via regeneration are offset by the release of greenhouse gases caused by natural tree death. The forest thus becomes a steady-state store of carbon. In the hypothetical example used for Table 8.5, a ten-year growth period prior to full maturity is assumed. In reality, this may be many decades, although the annual rate of net sequestration is likely to decline as the forest nears full maturity, meaning that the quantity of RMUs generated by the project will eventually taper off.

• 42. Of course, as more afforestation and reforestation projects are undertaken, the marginal cost of remaining projects increases. At some point, the marginal cost of afforestation and reforestation must exceed the marginal cost of mitigation, in which case it makes more sense to abandon the implementation of new forestry-based sequestration projects and undertake additional strategies to reduce greenhouse gas emissions.

• 43. Eventually, soil carbon reaches a new equilibrium, upon which time additional carbon removals in soils cease. In the meantime, the estimated 3.3 Gigatonnes of annual carbon dioxide removals should be considered in light of: (i) the 53.2 Gigatonnes of CO₂-equivalent greenhouse gases that were emitted worldwide in 2010; and (ii) the 13.7 Gigatonnes of CO₂-equivalent greenhouse gases that would be emitted in 2050 if emissions cuts were in line with those recommended by Anderson and Bows (2008) to stabilise the atmospheric concentration of greenhouse gases at 450 ppm of CO₂-e. In the second case, 3.3 Gigatonnes would constitute around one-quarter of total greenhouse gas emissions in 2050.

• 44. Nitrous oxide is also generated by fossil fuel combustion and industrial activities, such as the manufacture of nylon (Garnaut 2008).

• 45. These shares are based on estimates of global CO₂ emissions using the ‘sectoral’ approach.

• 46. In terms of the average annual rate of growth, the difference between the rate of increase in bunker-fuel emissions and total CO₂ emissions between 1990 and 2010 was 2.9 per cent and 1.9 per cent respectively.

• 47. The ICAO is a specialised agency of the United Nations assigned with the task of promoting the safe and orderly development of international civil aviation throughout the world. Addressing climate change forms a key element of the work of the ICAO’s Environment Branch (UNFCCC 2013f). The ICAO has long been working on an emissions-trading system for international civil aviation (Garnaut 2008). The IMO is another specialised agency of the United Nations responsible for the safety and security of international shipping and the prevention of marine pollution by ships. The limitation of greenhouse gas emissions from international shipping forms a vital component of the work performed by the IMO’s Marine Environment Division (UNFCCC 2013f).

• 48. For all participating countries, the EU baseline for aviation activities was set at 221.4 Megatonnes of CO₂ emissions.

• 49. The 193 member states of the United Nations are divided up into five regional groups. They are: (i) the African Group (54 member states); (ii) the Asia-Pacific Group (54 members); (iii) the Eastern European Group (23 member states); (iv) the Latin American and Caribbean Group (33 member states); and (v) the Western European and Others Group (28 member states plus one state (USA) which attends, as an observer, the meetings of this regional Group).

• 50. To participate in the Kyoto Protocol’s flexibility mechanisms, an Annex I Party must meet, among other things, the following eligibility requirements (UNFCCC 2013o):

  • ratification of the Kyoto Protocol;

  • calculation of Assigned Amount Units (AAUs) in terms of tonnes of CO₂-equivalent greenhouse gas emissions;

  • installation of a national system for estimating emissions and removals of greenhouse gases within its own territory;

  • installation of a national registry to record and track the creation and movement of Emissions Reduction Units (ERUs), Certified Emission Reduction units (CERs), Assigned Amount Units (AAUs), and Removal Units (RMUs);

  • the annual reporting of information on all emissions and removals to the Kyoto secretariat.

• 51. The emissions credits can be any one or a combination of Assigned Amount Units (AAUs), Emissions Reduction Units (ERUs), Certified Emission Reduction units (CERs), or Removal Units (RMUs).

• 52. This means that a non-compliant Party will be allocated fewer emissions units than it otherwise would have received in a subsequent commitment period.

• 53. The equitable sharing of costs is based on the recognition of common but differentiated responsibilities as reflected by the respective capabilities of different nations.

• 54. It has been estimated that, in the energy sector alone, the additional investment required to stabilise the concentration of greenhouse gases at the level needed to prevent average global temperatures rising 2 °C above pre-industrial levels is US$910 billion per year until 2050 (IEA 2012b). Since much of the energy-sector infrastructure has public goods characteristics, governments will have to provide most of this funding. To put the funding requirements into perspective, the US$910 billion per year represents nearly three times the estimated US$337 billion of climate change finance used for mitigation purposes in 2012 (Climate Policy Initiative 2013).

• 55. Of these agents, bilateral and multilateral finance institutions play a central and unique role in directing funds from both public and private sources (Atteridge et al. 2009). See, also, Climate Policy Initiative (2013).

• 56. As things stand, the UNFCCC is probably the best place to locate a repository of this nature, although the repository would probably shift to a new international climate change agency, should one emerge in the future.

• 57. The Green Investment Scheme (GIS) is a means of promoting the environmental efficacy of transactions involving the buying and selling of surplus Assigned Amount Units (AAUs). The GIS operates by earmarking some of the funds generated by international emissions trading for use in environmentally-related projects. Each GIS project is set up by the seller of surplus AAUs and operates as a domestic scheme within their climate change policy framework, albeit the full operational details must ultimately be agreed upon on a bilateral basis between buyer and seller nations (Blyth and Baron 2003; Carbon Trust 2009; World Bank 2011).

• 58. The GEF Trust Fund is supported by resources committed every four years by donor nations through a formal replenishment process (Möhner and Klein 2007). Since 1994, the World Bank has served as the Trustee of the GEF Trust Fund, which requires the Bank to perform a fiduciary role and provide administrative services on behalf of the Global Environment Facility (GEF 2011).

• 59. The one exception was an allocation of funds to support a pilot adaptation project in Hungary—an Annex I nation.

• 60. A full list of the 26 projects funded under the SPA is provided in Annex I of GEF (2012). Of the US$658 million allocated to the 26 projects, US$49.3 million was provided directly from the GEF Trust Fund and a further US$608.7 million was made available from co-financed sources. US$0.7 million of the US$50 million allocated to the SPA was used for administrative and logistic purposes.

• 61. The Least Developed Countries Fund also supports other elements of the work programme designed to assist LDCs, such as the provision of training and the strengthening of the capacity of meteorological and hydrological services (Möhner and Klein 2007). The Fund is not accessible to other non-Annex I Parties.

• 62. The steps for the preparation of a NAPA include a synthesis of available information and: (i) a participatory assessment of the vulnerability of a nation to current climate variability; (ii) identification of key adaptation measures as well as the criteria for prioritising activities; and (iii) a selection of a prioritised short list of adaptation-related activities. The development of a NAPA also includes short profiles of projects and/or activities intended to address the urgent and immediate adaptation needs of a LDC Party (UNFCCC 2013i).

• 63. In partnership with the Global Environment Facility are the following ten implementing agencies: the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IDB), the International Fund for Agricultural Development (IFAD), the United Nations Development Programme (UNDP), the United Nations Environment Programme (UNEP), the Food and Agriculture Organization of the United Nations (FAO), the United Nations Industrial Development Organization (UNIDO), and the World Bank.

• 64. The additional costs are the difference between a ‘baseline’ scenario (i.e., one where development activities would be pursued in the absence of climate change) and an alternative GEF adaptation scenario (i.e., one where activities respond to the adverse impacts of climate change) (GEF 2006). Given the difficulties associated with making an ex ante estimation of the additional costs of adaptation, the Global Environment Facility applies a sliding scale for funding under the Least Developed Countries Fund. The scale serves as a proxy for estimating additional costs (see Möhner and Klein 2007, Table 1). Under the sliding scale formula, small projects receive proportionally more funding than large projects on the assumption that the former have a higher adaptation component. (GEF 2006).

• 65. To date, the Least Developed Countries Fund has financed 138 country-level projects, all with the aim of addressing the urgent and immediate adaptation needs of LDCs. See http://www.thegef.org/gef/LDCF (accessed 12 February 2014).

• 66. The last completed NAPA was submitted by Equatorial Guinea in November 2013. The only remaining NAPA to be finalised is that by South Sudan—a recent addition to the group of LDCs. The details of the completed NAPAs are available from https://unfccc.int/adaptation/workstreams/national_adaptation_programmes_of_action/items/4585.php.

• 67. The same clarification of additional costs was also sought with respect to the Least Developed Countries Fund given that a similar funding methodology is used.

• 68. A further aim of the Green Climate Fund is to set a 50 per cent floor on the adaptation allocation to highly vulnerable countries, in particular, least-developed countries (LDCs), small-island developing states (SIDS), and African nations (GCF 2014).

• 69. Stakeholders are defined in the Green Climate Fund Governing instrument as private-sector actors, civil-society organisations, vulnerable groups, women, and Indigenous Peoples (GCF 2011).

• 70. In keeping with the country-driven nature of the Green Climate Fund, National Designated Authorities are to ensure that private-sector interests are aligned with national climate change policies (www.climatefundsupdate.org).

• 71. To recall from Chap. 6, since all sectors of the economy depend on the input of natural resources, all sectors are in some way climate-sensitive. In this context, ‘climate-sensitive’ implies the sectors of the economy that are directly rather than indirectly affected by climate change, such as the agricultural and resource-extractive industries that make up the primary sector of a national economy.

• 72. Since the great majority of non-Annex I nations ratified the Kyoto Protocol after the Adaptation Fund was established, it could be argued that the Fund has been successful in facilitating ratification of the Protocol.

• 73. Also exempt from the levy are small-scale afforestation and reforestation CDM-projects (UNFCC 2008a).

• 74. The 2 per cent levy does not apply to any subsequent transfer of the same AAUs.

• 75. This amounts to a cumulative total of US$394.8 million in the Adaptation Fund since its inception or US$412.9 million if outstanding pledges are eventually received.

• 76. The CER price averaged US$0.51 in 2013 (World Bank 2014a).

• 77. This figure does not include any future donations that would obviously boost the Adaptation Fund.

• 78. Of course, whether non-Annex I nations are issued with emissions allowances will depend entirely on the design of future protocols.

• 79. Although projects generated by the Green Investment Scheme can take various forms, they are generally divided into the category of ‘hard greening’ and ‘soft greening’. The former involves activities that directly reduce emissions in ways that can be easily monitored and quantified (e.g., renewable energy projects and improvements in the energy efficiency of new and existing buildings). The latter involves capacity building to help increase the potential for future emissions reductions (Carbon, Trust 2009). Classifying the Green Investment Scheme in this way has also overcome the additional hurdle posed by EU State Aid legislation that, by prohibiting government funds from being used to fund many commercially-related activities, has the potential to restrict the nature of some emissions-reducing projects. It has been estimated that, between 2008 and 2012, around 458 million AAUs valued at approximately €1.6 billion (US$2.3 billion) were traded through the application of Green Investment Schemes (Tuerk et al. 2013).

• 80. It has been shown that the Green Investment Scheme can promote activities that the Clean Development Mechanism and the Joint Implementation programme have great difficulty facilitating, such as investments in land use/bioenergy projects and increased energy efficiency of buildings and transport (Carbon Trust 2009).

• 81. To recall from Fig. 8.1, all European Union countries belong to the Annex I group of nations.

• 82. At the end of 2012, the Russian Federation possessed AAUs equivalent to around 5,800 MtCO₂-e of greenhouse gas emissions. This constituted 45 per cent of the estimated of surplus AAUs in existence at the end of the first Kyoto commitment period (equivalent to around 13,000 MtCO₂-e of greenhouse gas emissions).

• 83. This edict was designed to maintain the integrity of the emissions targets applied during the first Kyoto commitment period.

• 84. There is no equivalent restriction on the sale of surplus AAUs from the second Kyoto commitment period.

• 85. The amendments compel a country wishing to partake in the second Kyoto commitment period (2013–2020) to submit a greenhouse gas emissions target that is no greater than its average 2008–2010 emissions levels. The reason for doing this is to avoid the huge surpluses of AAUs that EITs enjoyed during the first commitment period—a policy aimed at preventing countries from accumulating so-called ‘hot air’ (Carbon Market Watch 2013).

  The formula used to cancel AAUs is as follows (Note: the average emissions levels of the 2008–2010 period are multiplied by eight because the second Kyoto commitment period is eight years long; AAU _CP2 denotes the AAUs allotted for the second Kyoto commitment period; GHG denotes greenhouse gas emissions):

  $$ {\text{AAUs}}\,{\text{cancelled}} = \left[ {AAU_{\text{CP2}} - \left( {{\text{ave}}.\,2008 - 2010\,GHG \times 8} \right)} \right] $$

  If, for example, the following applied to an Annex I nation (AAU _CP2 = 800 units and ave. 2008–2010 GHG = 80 units), then:

  $$ \begin{aligned} {\text{AAUs}}\,{\text{cancelled}} & = \left[ {800 - \left( {80 \times 8} \right)} \right] \\ & = \left[ {800 - 640} \right] = 160 \\ \end{aligned} $$

• 86. To recall, the CDM-projects undertaken in least-developed countries (LDCs) are exempt from the levy.

• 87. It has been estimated that a CDM-project can leverage new private-sector and public investment in the order of 6–8 times the amount of the initial funds used to finance the project (Ellis et al. 2004).

• 88. Canada and the USA are not eligible in any case because they are not signatories to the Kyoto Protocol.

• 89. Modification of the rules regarding automatic additionality was first approved at COP-16 in Cancún in 2010.

• 90. The amendment to the Regulation governing the registry infrastructure underpinning the EU-ETS was approved on 23 January 2013 and took effect later that year.

• 91. The value of the primary and secondary ERU markets in 2011 was US$339 million and US$780 million respectively (World Bank 2012).

• 92. Global adaptation support in 2012 was estimated at US$22 billion—much less than the US$337 billion allocated in support of mitigation projects (US$359 billion in total).

• 93. The concept of REDD+ was first proposed at the COP-11 meeting in 2005 as a policy mechanism to decelerate, stabilise, and reverse the loss the global forests. The concept began as an initiative to reduce greenhouse gas emissions from deforestation and forest degradation (REDD). It was later expanded to incorporate the enhancement of forest carbon stocks and the conservation and sustainable management of forests in developing countries (REDD+).

• 94. Result-based payments differ from conventional forms of up-front finance insofar as financial support is provided ex post pending the verified accomplishment of pre-defined outcomes (World Bank 2013).

• 95. The US$466.5 million includes pledges as well as committed funds (https://www.forestcarbonpartnership.org/sites/fcp/files/2014/June/FMT%20Note%20CFM-2014-1%20FCPF%20CF%20Budget%20FY15%20final.pdf).

• 96. Referred to in French as the Agence Française de Developpement.

• 97. Having said this, bilateral institutions seldom contribute finance to carbon funds through purchases of emissions units.

• 98. Despite the differences between the institutions, lending constitutes the greatest portion of participating institution’s activities (Atteridge et al. 2009).

• 99. Although not strictly bilateral finance institutions, national development banks share similar characteristics. The main differences are the mandates of the two categories of institutions, their objectives, and the types of activities they support.

• 100. United Nations agencies and programmes come under the grouping of ‘Development co-operation agencies’ in Fig. 8.2.

• 101. It is also worth pointing out that the UNEP and UNDP perform the function of multilateral implementing agencies of the Global Environment Facility. Since 2002, both organisations have served as implementing entities of the Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF) (Atteridge et al. 2009). Moreover, as indicated earlier, the UNEP and UNDP serve as implementing agencies associated with the Green Climate Fund’s ‘direct access’ mechanism (GCF 2011).

• 102. The OECD reporting system measures the climate change funding of bilateral finance institutions in two distinct ways. Firstly, it measures funding activities with respect to three OECD policy objectives, including ‘aid to environment’, which helps bilateral finance institutions assess their progress in achieving Millennium Development Goals. Secondly, it measures funding activities with respect to certain United Nations conventions—such as the UNFCCC—thus allowing bilateral finance institutions to judge their performance against so-called ‘Rio Markers’ (Atteridge et al. 2009).

• 103. Domestic government spending on other mitigation initiatives is not included in these figures (Climate Policy Initiative 2013).

• 104. The Clean Technology Fund is not specifically designed to deal with climate change, but has been set up by the US, UK, and Japanese Governments to accelerate the deployment of clean, energy-efficient technologies. Administered by the World Bank, it is hoped that the Fund will indirectly assist non-Annex I nations to reduce the greenhouse gas emissions-intensity of its economic activities (Garnaut 2008; Paulson et al. 2008).

• 105. A significant amount of this investment has been made possible by the Clean Development Mechanism (Stern 2007).

• 106. 83 per cent of household mitigation spending took place in industrialised nations (Climate Policy Initiative 2013).

• 107. These five elements are a variation and extension on the four elements presented in Aldy et al. (2003).

• 108. This assumes that global greenhouse gas emissions peak in 2015.

• 109. To obtain average values in column b, the values in column a are divided by 5.

• 110. Process-related emissions include greenhouse gas emissions from energy sources, industrial processes, solvent and other product use, waste, and sundry activities. In sum, they include net greenhouse gas emissions from all sources except land-use, land-use change, and forestry activities (LULUCF).

• 111. A more detailed explanation can be found in EEA (2013).

• 112. The weaknesses of the EU-ETS were outlined in Chap. 7.

• 113. The conversion takes place on the basis that one ETS-related emissions allowance equates to one AAU.

• 114. This simply means that, for countries not governed by an emissions-trading system, the quantity of ‘verified ETS emissions’ in Eq. (8.2) equals zero.

• 115. Although column i of Table 8.7 does not provide data on the use of the Kyoto flexibility mechanisms by the Russian Federation and the Ukraine, both Parties have been active sellers of excess AAUs and willing Joint Implementation participants.

• 116. To make up for the shortcomings, Denmark, Japan and Switzerland respectively require emissions units equal to 0.8 million, 17.3 million, and 0.2 million tonnes of CO₂-e per year. The surplus AAUs alone from the first Kyoto commitment period have been estimated at 13 Gigatonnes or 13,000 million tonnes of CO₂-e (World Bank 2013). Hence, there is no lack of emissions units available for purchase. To date, there is no indication that the Danish and Swiss Governments intend to purchase additional emissions units to achieve their first-round Kyoto targets. However, Japan has shown a keen interest to acquire a substantial quantity of emissions units from Ukraine, Hungary, Poland, the Russian Federation, and the Czech Republic in conjunction with the Green Investment Scheme (Stern 2007; Government of Japan 2008).

• 117. The purchase of emissions units would be large in terms of the percentage of Iceland’s net emissions (47.3 per cent). In absolute terms, it would require permits equivalent to around 1.8 million tonnes of CO₂-e per year, which is well within the available surplus of emissions units and much less than what Japan needs to purchase to meet its first-round target of 17.3 million tonnes of CO₂-e per year.

• 118. At the time the manuscript for this book was submitted, there was no news on whether Iceland’s emissions had significantly exceeded its targets or whether the Icelandic Government had taken action to address the problem.

• 119. The values in Table 8.9 include emissions/removals from LULUCF activities. Hence, they represent net greenhouse gas emissions.

• 120. To ensure comparable data on each of the UNFCCC-defined groups over the 1990–2010 period, the data on Annex I Parties used in Table 8.9 differs slightly to the data used to compile Table 8.7.

• 121. Having said this, it is worth noting that reducing greenhouse gas emissions would be made easier in future if the wealthiest Annex I countries reduced their real GDP in order to transition to an optimal macroeconomic scale. I’ll have more to say on this in Chap. 10.

• 122. These values depend on the world’s population peaking at 8.55 billion in 2060 and falling to 7.95 billion by 2100 (see Table 4.1). Should the world’s population be higher than this, a more severe cut in per capita global emissions will be required to achieve the 450 ppm target.

• 123. In Chap. 4, it was assumed, based on the GPI studies of many countries, that the optimal scale of a national economy exists at a per capita GDP of Int$15,000 (2004 prices).

• 124. Reducing the emissions-intensity of economic activities would be akin to a nation increasing its real GDP/emissions ratio.