(the US cap has been increased by 17% and the Russian Federation cap reduced by 3%, not shown)
Likewise, incentives not to harvest below the reference level have been significantly enhanced. Since countries will now be debited for net removals below the reference level, the former double-sided cap no longer protects them.
All together, the total amount of “incentivized" carbon sequestration under FM would be substantially increased by some 10 times (for all the countries represented in the graphic plus the US and Russia, though some of these countries have already signaled they will not be part of CP2). Moreover, total potential carbon sequestration under this new model includes both the amount below the reference level and the new cap (FMRL + the new cap). This should be regarded as a significant change.
On the other hand, as we have argued both in our paper (Ellison et al 2011) and in Durban, amendments of this type have a less than ideal impact on the overall “Incentive Gap"—that portion of FM-based carbon sequestration that is not incentivized under the old nor the new carbon accounting framework. Although the new rule means that incentives are significantly enhanced, we would still propose eliminating the cap altogether, collapsing Art´s. 3.3 and 3.4, and including all LULUCF sources and sinks. As we will demonstrate in our next paper, the new rules remain a good distance away from this goal.
- HWP is now mandatory and can be accounted based either on the current instant oxidation approach, or based on the Production approach. However HWP leading to deforestation will be counted as instant oxidation.
This does indeed represent a step forward. Accounting for HWP will help place the traditional forest biomass sector on a more equal footing with the forest-based bioenergy sector. However, the limitation created by the 3.5% cap on carbon credits in FM will also apply to HWP accounting since HWP is included in the reference level. This will impede or eliminate some or most of the potential effectiveness and motive force of this ruling. The same argument applies with even more rigor to the option of accounting on the basis of instant oxidation.
- A new natural disturbances mechanism has been approved that allows Parties to withdraw emissions from land areas associated with natural disturbances from accounting when they exceed a set background level. The background level is set based on historical information on disturbances.
We think this represents a significant step forward. Including this mechanism has certainly had a positive influence on the acceptance of mandatory accounting for FM. This removed the necessity for a cap on the debit side for the handling of natural disturbances.
- Finally, a new mechanism has been introduced (under Art. 3.4) that allows countries to trade new afforestation against deforestation.
This may represent an improvement over the previous system since it now makes it easier to convert some land uses to FM.
- The potential for offsetting net emissions under Art. 3.3 (ARD) with excess carbon sequestration under Art. 3.4 (FM) has been eliminated.
We see this as an advantage, since it strengthens the force of incentives to increase carbon sequestration outside of FM.
All in all, since many or most of the concerns we have raised about carbon accounting practices in the LULUCF sector have not been addressed by the most recent Durban AWG-KP decisions, perhaps the most interesting question is what will be discussed in future AWG-KP meetings and who will define the agenda? Since we believe that much still needs to be accomplished, we hope to have a say in this process and will soon complete our second contribution to this debate.