Capping the Cost of Compliance with the Kyoto Protocol and Recycling Revenues into Land-Use Projects

Abstract

There is the concern among some countries that compliance costs with commitments under the Kyoto Protocol may be unacceptably high. There is also the concern that technical difficulties with the inclusion of land use, land-use change, and forestry activities in non-Annex I countries might lead to an effective exclusion of such activities from consideration under the Protocol. This paper is proposing a mechanism that addresses both these concerns. In essence, it is suggested that parties should be able to purchase fixed-price offset certificates if they feel they cannot achieve compliance through other means alone, such as by improved energy efficiency, increased use of renewable energy, or use of the flexible mechanisms in the Kyoto Protocol. These offset certificates would act as a price cap for the cost of compliance for any party to the Protocol. Revenues from purchase of the offset certificates would be directed to forest-based activities in non-Annex I countries such as forest protection that may carry multiple benefits including enhancing net carbon sequestration.

On fair, effective and efficient REDD mechanism design

“…It also avoids excessive producer rents by minimizing a REDD arbitrage gap (this is the difference between the REDD costs and the potential revenue from Annex I emission reduction credit supply). Furthermore, auctioning allows for flexibility in targeting the allocation of supply by geographic or thematic areas [ 24 , 25 ].…”

Environmentalists split over Kyoto and Amazonian deforestation

“…The Bonn agreement excludes avoided deforestation from the CDM in the Kyoto Protocol's first commitment period (2008)(2009)(2010)(2011)(2012). The question of avoided deforestation remains relevant to the Kyoto negotiations because of the need to define the rules for the second and subsequent commitment periods and because of the possibility of funding avoided-deforestation projects with money generated by the as-yet undefined compliance system (Schlamadinger et al, 2001). Much of the debate over carbon accounting and possible adjustments (Noble et al, 2000) is also relevant to other forest-sector activities, such as reforestation, which have been included in the CDM under the Bonn agreement.…”