Introduction to registry systems under Article 7 4

Introduction to registry systems under Article 7. 4 of the Kyoto Protocol Pre-sessional consultations on registries Bonn, 2 -3 June 2002 Andrew Howard UNFCCC secretariat ahoward@unfccc. int

Scope of presentation • Kyoto Protocol compliance • Registry system requirements - registry structures - transactions - features for integrity and transparency Based on document FCCC/CP/2001/13/Add. 2: • Decision 19/CP. 7 on Article 7. 4 (pages 55 -72) Para numbers in this presentation refer to this decision • Decision 17/CP. 7 on the CDM (see pages 41 -43 on the CDM registry) 2

Compliance with Kyoto Protocol targets Party B is a net seller … Target Emissions Target Mechanisms subtractions Sink additions Annex B target Mechanisms additions Sink additions Annex B target Party A is a net buyer … Emissions 3

Accounting units (paras 1 -4) All units denominated as 1 tonne of CO 2 equivalent: AAU Assigned amount unit (AAU) • Based on the Annex B target (Articles 3. 7/8) RMU Removal unit (RMU) • Based on carbon sequestration in sinks (Articles 3. 3/4) ERU CER Emission reduction unit (ERU) • converted from AAUs or RMUs as a result of JI projects Certified emission reduction (CER) • issued into the CDM registry as a result of CDM projects 4

Tracking the units through the registry system Transaction log (operated by the secretariat) Transactions ERU CER AAU Annex I Canada Annex I Bulgaria Annex I Germany Annex I Russia CDM registry (operated by the executive board) National registries (operated by Annex I Parties) A registry is a standardized electronic database for recording and tracking of units (ERUs, CERs, AAUs and RMUs) (para 19) 5

National registry account types (para 21) Held by the government Canada Party account Held by companies, organizations or individuals (if authorized by the Party) Units transferred here to count towards compliance Legal entity a/c Retirement a/c Cancellation a/c Units transferred here to compensate for net emissions from sinks or to strengthen targets 6

AAU and RMU issuance (paras 23 and 25) Calculation of assigned amount (Articles 3. 7/8) Bulgaria Party account AAU AAU Legal entity A Legal entity B RMU RMU Retirement a/c Cancellation a/c Calculation of net sequestration (subject to limits!) (Articles 3. 7/8) 7

Transfers and acquisitions under emissions trading (para 30) Germany Canada Party account Legal entity A Legal entity B AAU CER ERU Legal entity A Legal entity B RMU 8

Retirement and carry-overs (paras 34 and 36) Retirement (para 34) AAU CER ERU RMU Russia Party account (paras 36) Legal entity A Legal entity B Retirement a/c Units in retirement accounts not transferable Unused units carried-over in holding accounts to the next commitment period Compliance assessment Units in retirement account > = < Emissions 2008 to 2012 9

ERU issuance (para 29) JI project (conversion of AAUs to ERUs) Russia Germany Party account Legal entity A ERU Legal entity A Legal entity B ERU Legal entity B Retirement a/c Cancellation a/c AAU Cancellation a/c Verification by host Party (track 1) or independent procedure (track 2) 10

CER issuance (into the CDM registry) Participants’ request CER CER CDM project CDM registry Canada Pending account Party account Share of proceeds (for adaptation and admin costs) CER CER Legal entity A Legal entity B Bolivia account Certification of emission reductions by an operational entity Retirement a/c India account Cancellation a/c 11

Cancellation of units to strengthen targets (para 33) Germany What: Cancelled units are removed from the system and cannot be used for compliance Who: schools, NGOs, individuals, etc Party account Legal entity A AAU CER ERU RMU Legal entity B Retirement a/c Cancellation a/c Units in cancellation accounts may not be transferred or retired 12

Features for integrity and transparency • serial numbers -------------> to keep track of the units • account numbers -------------> to identify the accounts • the transaction log -----> to ensure the integrity of transactions • accessible information ---------> to maintain transparency 13

Unique serial numbers for units (para 24, 27 and 29) AAU 01 CH 1 0 314782 000 RMU 01 CA 2 3 003752 000 ERU 01 PL 3 0 078625 033 CER 01 BO 4 0 047691 046 Commitment period Party of origin Unit type LULUCF activity Unique number Project number Number formats are not yet specified - these are examples only 14

Account numbers (para 22) Canada Party account CA 001 Legal entity A CA 002 Legal entity B CA 003 Retirement a/c CA 485 Cancellation a/c CA 486 Party Unique number 15

Message exchange: International transfer (para 38 -43) 1 Proposal 3 Instruction / transfer Account in national registry of Party A Account in national registry of Party B 2 2 Proposal response 4 4 Confirmation 1 Proposal Transaction log (automated checks) 1 Transaction record containing: - trans. number - trans. type - serial numbers - account numbers 16

Message exchange: Domestic issuance (para 38 -43) 3 Account in national registry of Party A Issuance 2 Proposal response 1 4 Confirmation 1 Proposal Transaction log (automated checks) Transaction record containing: - trans. number - trans. type - serial numbers - account numbers 17

Potential discrepancies (para 42) The transaction log conducts automated checks for: • units improperly issued or duplicated units • units previously retired/cancelled • units not carried over from the previous commitment period • eligibility of Parties / legal entities • infringements on the commitment period reserve • infringements on the limits for carbon sequestration The transaction log ensures the integrity of all transactions Each unit is held in one account at a time 18

Publicly accessible information (paras 44 -48) • Account information (account type, holder, representative, etc) • JI and CDM project information (on national registries and the CDM registry respectively) - name - location - reports / documentation • Information on holdings and transactions, including on cancellations and retirements • List of legal entities authorized by the Party (national registries) 19

Registries development beyond COP 7 Technical standards on the exchange of data between national registries, the CDM registry and the transaction log … a decision at COP 8 (Nov 2002) Establishment of national registries by Annex I Parties … before 1 Jan 2007 Establishment of the CDM registry by the CDM executive board … interim registry by COP 8? Establishment of the transaction log by the secretariat … completed by COP 10 (Nov 2004) 20

Introduction to registry systems under Article 7. 4 of the Kyoto Protocol www. unfccc. int Andrew Howard UNFCCC secretariat ahoward@unfccc. int 21