Doha Decisions on Kyoto Surplus Explained by Carbon Market Watch

At COP 18 in Doha at the end of 2012, Parties decided how to deal with the large surplus of Assigned Amount Units (AAUs) from the first Kyoto commitment period (CP1) and how to prevent the accumulation of new surplus in the second commitment period (CP2) of the Kyoto Protocol.

Carbon Market Watch just released a policy brief that explains the decisions that were taken in Doha and examines their implications. You candownload the Carbon Market Watch policy brief here. For a shorter article that explains the issue to people not as familiar with the topic, see theCarbon Market Watch newsletter article from March 2013.

The compromise adopted in Doha has two main elements relating to surpluses from the first and second commitment period.

1.    The decision does not limit the carry-over of surplus AAUs from CP1 but puts limits on their use in CP2. It also makes it impossible for countries without a reduction target in CP2 to sell their surplus to countries with a reduction target. In other words, Russia and other countries with surplus that do not join CP2 will not be able to sell units to CP2 countries. To underline their climate commitments, several countries made political declarations that they will not buy AAU surplus from CP1 in CP2.

2.    Countries also decided to restrict the initial assigned amount (the number of AAUs a country initially receives for CP2) in order to avoid the build-up of new surplus. This amendment makes it impossible for countries to accumulate new surplus AAUs. This amendment may set an important precedent for future decisions on target setting.

The decisions on use restrictions of AAU surplus that were taken in Doha are complex. The newCarbon Market Watch policy brief  tries to explain the issues in a balanced way and discusses the impacts of the Doha surplus decisions on the second commitment period and beyond.

Please do not hesitate to send us comments or questions.

Thank you!
Anja Kollmuss on behalfofCarbon Market Watch

Consultation on the application of carry-over for New Zealand Emission Trading Scheme Participants

The New Zealand Government is seeking feedback on the application of the international carry-over rules within the New Zealand Emissions Trading Scheme (ETS). These rules place a restriction on the number of certain types of units which can be carried over from the first Kyoto Protocol commitment period (CP1, 2008–2012) and be valid for use subsequently. This does not impact on NZUs.

International carry-over rules require units which are not carried over to be cancelled. We anticipate the carry-over of units will occur after the 31 May 2015 ETS surrender deadline. However the Government is consulting on this issue now to provide greater certainty to ETS participants and to allow them to plan their compliance purchasing and surrendering appropriately.

The Government must decide to what extent, if any, New Zealand’s 2.5 per cent international carry-over entitlement for Certified Emissions Reductions (CERs) and Emission Reduction Units (ERUs) is extended to individual account holders.

Information received through this consultation process will allow the Government to better assess the potential impacts on account holders of the various options set out in the consultation document. We recommend that any NZEUR account holder with Kyoto units in their account read through the consultation document. The consultation will be open from Monday 4 March to 5 pm Friday 29 March.

Further information

For information regarding Kyoto units and rules

For information regarding access to international units from 1 Jan 2013