The fourth session of the AGBM considered strengthening the commitments in Article 4.2 (a) (policies and measures) and (b) (QELROS within specified time frames); implementation of Article 4.1 (national reports); the possible features of a protocol or other legal instrument; and the Berlin Mandate process. In his draft report of AGBM-4 (FCCC/AGBM/1996/L.2), Rapporteur Dan Reifsnyder (US) reported that the AGBM Chair Ra�l Estrada- Oyuela (Argentina) recalled, at the opening meeting on 11 July, that Parties are now halfway through the preparation period a protocol or other legal instrument. The Chair also expressed concern at the lack of progress made by some Annex I Parties in reducing GHG emissions and at the perception of some Parties that commitments do not extend beyond 2000. To facilitate exchange, the group convened three round tables.
ROUND TABLE ON POLICIES AND MEASURES: This round table was chaired by Suphavit Piamphongsant (Thailand). There was broad agreement that Parties should have considerable flexibility in deciding policies and measures based on starting points and national circumstances, but disagreement on whether national action is adequate in all cases and whether some measures need to be mandated internationally. Advocates of the former suggested a menu approach. Others argued for a limited number of required or harmonized policies and measures because some desirable elements would not be implemented unilaterally for competitive reasons.
Criteria for selecting policies and measures would include their potential to limit GHG emissions, economic cost, political feasibility and the need for common action. Priority areas include no regrets strategies, renewable energy, product standards, industrial sectors with high energy demand, CFCs, the international air and marine transport sector, economic/fiscal instruments, reductions in subsidies to, for example, coal, and financing mechanisms for economies in transition. Also discussed were the possibility of developing countries acceding voluntarily to commitments, linkage of policies and measures and QELROs, and the need to amend policies and measures in light of new information and transparency.
ROUND TABLE ON POSSIBLE IMPACTS ON DEVELOPING COUNTRY PARTIES OF NEW COMMITMENTS TO BE NEGOTIATED BY ANNEX I PARTIES: This round table was chaired by Kilaparti Ramakrishna of the Woods Hole Research Center (US). On the impact of possible new Annex I commitments, participants agreed that developing countries would be affected by action taken by Annex I Parties to address climate change. The extent of the impact and their positive and/or negative nature was the subject of disagreement. Cited studies indicate loss of export revenue, especially for fossil fuel exporters, increased barriers to trade, and spill-over effects. Negative effects in Annex I countries may have an impact on aid flows. Potential positive benefits include technical innovation and transfers, and renewed growth based on low-emission activities. A key theme was the uncertainty concerning economic and social impacts of mitigation policies.
On the question of weighing the economic and social impacts of Annex I Parties action against the economic, social and environmental costs of inaction, participants drew attention to non-economic costs including ecosystem degradation. Noting the special vulnerability of developing countries to climate change, speakers said the short-term negative costs resulting from Annex I actions would be dwarfed by the consequences of inaction. Doing nothing is not an option.
On the question of where Parties go from here, there was agreement on the need to achieve equitable and appropriately financed burden sharing through global cooperation in conformity with the FCCC. Noting the flexibility enjoyed by Annex I Parties, participants advocated well-designed, cost-effective responses that stimulate technological innovation and improved efficiency. No regrets and low-cost strategies were emphasized along with AIJ. Further study and a compensation fund were proposed.
ROUND TABLE ON QUANTIFIED EMISSION LIMITATION AND REDUCTION OBJECTIVES: This informal round table on quantified emission limitation and reduction objectives (QELROs) was chaired by Dan Reifsnyder (US). Panelists noted the inherent difficulties on the question of level or levels of emissions limitation and reduction. Some highlighted that even the best efforts of Annex I Parties would not lead to a stabilization of global emissions. Ultimately the determination of QELROs would be politically based.
On whether or not eventual quantified objectives should be legally binding, a number argued that legally binding commitments would increase credibility and send appropriate signals to the market place where they are required for competitiveness reasons. Binding commitments could coexist with flexibility. Others favored an indicative target. Monitoring of compliance and enforcement was also considered.
On whether commitments should be multi-Party obligations, single Party, or a combination, panelists generally agreed on a preference for the single Party option, even if an overall objective for Annex I Parties is set. On appropriate end year(s), panelists concentrated on calls for early action. Diverse views were offered on the question of differentiated commitments which, it was said, had the potential to achieve a more equitable and efficient outcome than a flat rate approach. Proposals for differentiation included: energy efficiency per unit of GDP; the cost of GDP foregone; marginal costs of abatement; and a flat rate reduction effort combined with full trading among Annex I Parties.
AGBM-4: The Chair drew attention to the apparent preference among the Annex I Parties for a draft protocol, but noted that the continuing divergence of views on the majority required for its adoption meant that an amendment remained an option. During discussion on policies and measures and QELROS, the AGBM debate centered on the pros and cons of mandatory approaches and their market-based alternatives. The US argued that no single set of policies and measures could apply to all countries given their diverging circumstances. The EU, calling for the widest possible measures and significant emission reductions, put forward three categories of policies and measures, ranging from required elements to a broad list from which Parties might choose.
A number of non-Annex I Parties expressed concern about existing Annex I Party implementation, while some countries suffered the effects of inaction. BANGLADESH reminded developed countries about their obligations. AUSTRALIA cautioned that the potential to limit GHG emissions without seriously undermining economic growth is limited and ruled out flat emissions as neither environmentally nor cost effective. At the final meeting of AGBM-4, SAUDI ARABIA complained about a lack of transparency in discussion regarding Annex I countries and called for an international approach to revenue recycling, mirroring the approach to burden sharing. KUWAIT stressed an assessment of policies and measures and QELROs based on their economic impact on developing countries. The EU said a draft protocol should be negotiated at AGBM-6 based on a synthesis of proposals received in time for AGBM-5.
In his draft conclusions, the Chair, Ra�l A. Estrada-Oyuela (Argentina), recorded points of agreement and contention. Many delegations stressed that the form of the protocol or other legal instrument to be adopted at COP-3 should flow from its substance. Delegates agreed on the principle of institutional economy to avoid a proliferation of new bodies and mechanisms. Parties also supported a single process for communication and review of information. The AGBM will explore the possibility of having a single COP and streamlined budgetary processes, with voting on a new instrument restricted to member Parties. Many Parties favored a protocol. The US and AUSTRALIA objected to the inclusion of a reference already binding Parties to the inclusion of a list of options or a menu in the Chairs draft conclusions.
There was support for both the draft protocols submitted by the EU and AOSIS. Several reserved their position pending decisions by the COP on rules of procedure and by the AGBM on the substance of any new instrument. Several delegations reaffirmed support for legally binding QELROs, ruled out a regional mechanism, favored flexibility to reflect different national circumstances possibly including differentiated commitments, and emphasized a design that can accommodate evolution via a mechanism to review provisions. A strengthened in-depth review process and a mechanism to accumulate experience in activities implemented jointly were also noted.
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