Including land use, land-use change, and forestry in future climate change, agreements: thinking outside the box

Including land use, land-use change, and forestry in future climate change, agreements: thinking outside the box

environmental science & policy 10 (2007) 283–294 available at www.sciencedirect.com journal homepage: www.elsevier.com/locate/envsci Including land...

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environmental science & policy 10 (2007) 283–294

available at www.sciencedirect.com

journal homepage: www.elsevier.com/locate/envsci

Including land use, land-use change, and forestry in future climate change, agreements: thinking outside the box R. Benndorf a, S. Federici b, C. Forner c, N. Pena d,*, E. Rametsteiner e, M.J. Sanz f, Z. Somogyi b a

Federal Environment Agency, Bismarckplatz 1, D-1419 Berlin, Germany Joint Research Centre, European Commission, Via Enrico Fermi 1, I-21020 Ispra, Italy c Center for International Forestry Research (CIFOR), Jalan CIFOR Situ Gede, Bogor Barat 16680, Indonesia d Pew Center on Global Climate Change, 2101 Wilson Boulevard, Arlington, VA 22201, USA e IIASA, A-2361 Laxenburg, Austria f Fundacio´n CEAM, Charles H. Darwin 14, S-46980 Paterna, Valencia, Spain b

article info

abstract

Published on line 21 March 2007

This paper presents a framework that encompasses a full range of options for including land use, land-use change, and forestry (LULUCF) within future agreements under the United

Keywords:

Nations Convention on Climate Change (UNFCCC). The intent is to provide options that can

Climate change mitigation

address the broad range of greenhouse gas (GHG) emissions and removals as well as to bring

Commitments

the broadest possible range of nations into undertaking mitigation efforts. We suggest that

GHG emission reductions

the approach taken for the Kyoto Protocol’s first commitment period is only one within a

Policies and measures

much larger universe of possible approaches. This larger universe includes partially or completely ‘‘de-linking’’ LULUCF commitments from those in other sectors, and allowing commitments specified in terms other than tonnes of greenhouse gases. Such approaches may provide clarity and transparency concerning the role of the various sectors in the agreements and encourage participation in agreements by a more inclusive, diverse set of countries, resulting in a more effective use of LULUCF in addressing climate change. # 2007 Elsevier Ltd. All rights reserved.

1. Introduction: the need for exploring additional options for including land-use, landuse change, and forestry (LULUCF) in future climate change agreements Negotiating the current international agreement on climate change took over a decade. As part of this process, intensive negotiations on the rules for implementing the Kyoto Protocol’s (KP) first commitment period (CP-1) ran from 1997 to 2005. The LULUCF sector played a pivotal role in this process (Marland and Schlamandinger, 2000; Schlamadinger et al., 2007-a,b). The negotiations demonstrated that incorporation of LULUCF into climate change agreements is likely to be controversial (Marland and Schlamandinger, 2000; Schultze

et al., 2002) but also that, in spite of the difficulties, LULUCF will, most likely, be included in future climate change agreements. The inclusion of LULUCF is likely both because emissions from LULUCF are responsible for an estimated 20% of human-induced greenhouse gas (GHG) emissions (IPCC, 2000) and because LULUCF is expected to provide costeffective, short-term mitigation options, particularly through reducing deforestation (Pacala and Socolow, 2004). The KP was acceptable to, and ratified by, most parties to the UNFCCC (hereafter referred to as Parties). These Parties are now engaged in striving to meet their commitments for CP-1. However, not all large emitters of GHGs are bound to limit their emissions under the Kyoto Protocol. Some Parties failed to ratify this instrument, and others are not required to limit

* Corresponding author. E-mail address: [email protected] (N. Pena). 1462-9011/$ – see front matter # 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.envsci.2006.10.011

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emissions under the current rules. Bringing such Parties into a future climate change agreement with binding commitments seems necessary and would represent an important step forward in addressing GHG emissions. The importance of expanding both the range of nations participating in, and the fraction of emissions and removals covered by, climate change agreements, has led to a number of initiatives. The current volume, including this paper, is part of this wider effort to find promising avenues for climate change agreements beyond the KPs CP-1. The KP itself includes provisions for initiating consideration of post CP-1 commitments (Art. 3.91) and for reviewing the Protocol itself (Art. 9). In accordance with these provisions, the COP/MOP1 in Montreal in 2005 set the stage for Parties to begin consideration of a process that would lead to a post-2012 agreement.2 Many informal discussions preceded this decision (e.g., the Pew Center’s Climate Dialogue at Pocantico) and some of these discussions focus on the LULUCF sector (e.g., Options for Including LULUCF Activities in a Post-2012 International Climate Agreement, Graz, 5–6 May 20053; 1st Informal Dialogue on the inclusion of LULUCF in future agreements, New Zealand, 2005). Suggestions for achieving greater participation and coverage range from minor modifications of the current approach through climate change agreements with substantially different architectures. Options proposed for inclusion of LULUCF both throughout the history of the UNFCCC negotiations and for agreements after 2012 have been analysed in a number of papers, including Bodansky (2003), Trines (2004), Torvanger et al. (2004). Reasons for suggesting new approaches for LULUCF include the complexity of the CP-1 rules for LULUCF,4 the time-limited validity of some of these rules (i.e., for CP-1 only), and the restrictions on use of LULUCF as a mitigation option. Restrictions include a variety of limitations on Annex I Party5 use of LULUCF to meet commitments, such as the cap on forest management activities and the cap on credits from CDM projects. In addition, there is a limitation to afforestation and reforestation projects under the clean development mechanism (CDM). This latter limitation has the effect of excluding projects that involve avoiding deforestation in non-Annex I countries where the CDM is the primary avenue for formal participation in the KP during CP-1. This exclusion is especially problematic because most of the emissions associated with LULUCF are from deforestation in non-Annex I Parties, and it results in the exclusion of these emissions from the system through which commitments are satisfied in the KP (Skutsch et al., 2007). 1

Articles (Art.) as used in this paper refer to respective articles of the KP. 2 http://unfccc.int/files/meetings/cop_11/application/pdf/ cmp1_00_consideration_of_commitments_under_3.9.pdf. 3 http://www.joanneum.at/CarboInvent/post2012workshop.php. 4 The provisions for the CP-1 are all included in the so called Kyoto Rulebook, see documents FCCC/KP/CMP/2005/8, FCCC/KP/CMP/ 2005/8/Add.1, FCCC/KP/CMP/2005/8/Add.2, FCCC/KP/CMP/2005/8/ Add.3 and FCCC/KP/CMP/2005/8/Add.4 under www.unfccc.int. 5 The term Annex I Parties is used in this paper to refer to developed countries and countries with economies in transition that are listed in Annex I of the UNFCCC. Non-Annex I Parties are mainly developing countries.

Authors who have analysed the KP CP-1 limitations on LULUCF (e.g., Ho¨ne et al., 2004; Schlamadinger et al., 2007-a,b) emphasize that the limitations resulted from a number of realities:  Agreement to include LULUCF was only reached after overall targets, specified in allowable tonnes of GHG emissions had already been set.  Under these circumstances the use of LULUCF could unduly diminish efforts to reduce GHG emissions in other sectors, including emissions from combustion of fossil fuels.  The terrestrial carbon pool is three orders of magnitude greater than annual fossil fuel emissions, and emissions from these pools due to natural occurrences beyond human control can result in very large emissions or emission reductions.  The uncertainty associated with changes in LULUCF emissions and emission reductions can also be large, particularly in comparison with the uncertainty around the fossil fuel emission reduction commitments.  Challenges to environmental integrity are presented by the use of project-based credits generated in countries not subject to an emissions limitation (i.e., projects in non-Annex I Parties under the CDM rules). Challenges result from the need to use baselines to determine project credits and the need to account for permanence and leakage absent a national-level commitment (Marland and Schlamandinger, 2000).  Finally, ensuring that the use of LULUCF in non-Annex I countries is consistent with sustainable development goals, as specified by Art. 12 of the KP, presents challenges due to potential conflicts between maintaining or increasing terrestrial carbon stocks and food, income, fuel, fiber, and related needs. The authors of this paper believe that by expanding the universe of approaches to LULUCF under consideration, it may be possible to design agreements that address these realities while avoiding the limitations they have, to date, engendered. Most discussions to date have focused on approaches that, like the current KP, utilize a single commitment, most often an emissions target specified in tonnes, which covers all sectors, although some papers and discussions have reviewed and suggested a variety of approaches. (See for example: Aldy et al., 2003; Bodansky, 2003; Mu¨ller et al., 2001; Murphy et al., 2005; Philibert and Pershing, 2001; Pew Center on Global Climate Change). This paper takes a different approach. To assist in the search for more effective and encompassing climate change agreements, the paper proposes and describes a systematic way of considering a full range of options – some with substantially different architectures than the KP – for including LULUCF within future climate change agreements. By providing a systematic guide, all options can be analysed, possible gaps can be detected, and unrealistic possibilities can be excluded.6 The present paper does not attempt to go beyond basic descriptions of the universe of options, and employs a 6 The paper does not consider the most extreme possible approach of excluding LULUCF altogether, an option which has to date been rejected by the international community. It must also be stated that the paper does not attempt to be policy prescriptive; rather, it explores all possible options to promote negotiations.

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matrix and a few examples to highlight some possible approaches within this universe. Through considering and analyzing a complete range of options, the authors believe that negotiators may develop approaches more likely to accommodate the needs of more Parties and that are more environmentally effective, simpler, and cost-effective. This wider range of approaches is discussed in the next section.

2.

A systematic expansion of options

Before describing the full range of approaches to including LULUCF in climate change agreements, it is useful to define some key concepts to describe different types of commitments, and to discuss how these various types of commitments might, or might not, be inter-related. First we define two basic types of commitments. The first type is emission-oriented commitments, which focus, as the name indicates, on the emissions themselves. Emissionoriented commitments are always quantified in terms of GHG emissions or removals. This is the type of commitment that is currently used in the KP, in which all commitments are defined in terms of emissions. The second type is cause-oriented commitments (also referred to as input-based approaches, e.g., see Heller and Shukla, 2003). In contrast to emission-oriented commitments, cause-oriented commitments focus on, directly address, and are expressed in terms of, the causes of emissions and/or removals by sinks.7 Cause-oriented commitments can take the form of non-quantified Policies and Measures (PAMs) or they can be quantified. If they are quantified, they will most likely be quantified in units other than tonnes of carbon dioxide (CO2) or CO2-equivalents. Examples of quantified cause-oriented commitments include commitments to reforest a specified land area, or to devote a certain number of manhours to educating farmers. Examples of non-quantified PAMs might be: to reduce subsidies that encourage conversion of old-growth forest to grazing lands, without specifying the level of reduction; to enforce logging laws without specifying the number of hectares to be affected; or to educate farmers without specifying how many would be reached. Both quantified PAMs and PAMs that initially are defined in a non-quantified way can, under some circumstances, be converted into ‘‘tonnes’’ of emission reductions or increased carbon stocks. For example, if data is available on the soil carbon increases that resulted from adoption of no-till practices after a specified year, a PAM that focused on tillage practices could be converted into increased carbon stocks, or tonnes of CO2 removed from the atmosphere. Hereafter, this paper uses the term ‘‘commitment’’ to cover both emissionoriented commitments (i.e., targets) and cause-oriented commitments.

7

Causes of emissions encompass the entire value chain created by human activities; all activities from resource extraction through final use and disposal of products are (or can be) causes of emissions. Thus, for example, coal mining, production of electricity, and use of electricity are, like human-induced deforestation and reforestation, potential causes of emissions.

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Second we define a concept to indicate the degree of integration or separation between LULUCF commitments and commitments that may be undertaken in other sectors. This option arises if, instead of undertaking a single commitment that covers all sectors as in the current KP, nations are allowed to undertake separate commitments in specific sectors. For example, a country’s overall commitment could consist of a LULUCF commitment along with independent or semiindependent commitments for non-LULUCF sectors. Countries might also be allowed to undertake a commitment only in LULUCF, or only in non-LULUCF sectors. If sector-specific commitments (hereafter referred to as sectoral commitments) are allowed, over-achievement of one sectoral commitment might be allowed to offset underachievement in commitments in other sectors (i.e., exceeding a commitment in one sector can be used, under specified circumstances, to assist in meeting commitments in other sectors). In this case, the various sectoral commitments are linked, and some form of credit trading is allowed. On the other hand, even if sectoral commitments are allowed, it may be that fulfillment of each commitment must be achieved independently. In this case the sectoral commitments are de-linked. Partial linkage (or de-linkage) can also occur. Partial linkage indicates that some restrictions are placed on the circumstances under which, or extent to which, over-achievement in one sector can be used to meet other commitments. If commitments in different sectors are specified in different units, and linkage is allowed, a ‘‘currency exchange’’ is needed to enable ‘‘fungibility’’ of achievements, i.e., credit trading, across sectors. As suggested above, data on the carbon results of practice or land-use changes can be used to establish such currency exchanges. However, if a number of sectors take Box 1. Why sectoral approaches are attracting interest Sectoral approaches have gained interest within climate change discussions for a number of reasons. They enable a country to start with sectors of most concern, or most easily addressed, in a particular country; they most closely resemble policies countries ordinarily adopt; and they can be designed to meet multiple social goals. Additionally, there is a need to address specific activities or sectors that are not currently addressed within CP-1, e.g., emissions from international aviation and emissions from tropical deforestation. In the LULUCF sector, there may be sound reasons to use commitments that take the form of implementing specified practices (e.g., reduced impact logging), or adopting specified policies (e.g., altering subsidies from crop support to environmental benefits) rather than commitments to achieve specified emissions or emission reductions. There are multiple competing uses for land, and the uses that support the highest carbon stocks will not, in many cases, be compatible with the best use of the land from a wider societal perspective. For instance, both cropland and tree plantations are high-priority land uses with lower carbon stock potential than, in most cases, native vegetation. Consequently, on these lands the best approach may be to prescribe best practices that take into account multiple objectives including food, income,

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fiber, and fuel needs, as well as GHG emissions and other environmental concerns such as water retention and quality. These realities may lead both Annex 1 and non-Annex 1 Parties to prefer sectoral approaches to agricultural, forest, and other land uses since under sectoral approaches commitments can be tailored to each sector’s characteristics. Sectoral approaches also would allow Parties to undertake commitments only in LULUCF, only in non-LULUCF sectors, or in both. This flexibility may be particularly useful in enabling developing countries to accept climate change commitments. Some developing countries may not have significant opportunities to reduce energyrelated emissions or may view agreements to limit fossil fuel emissions as counter to development needs. By enabling such countries to enter into ‘‘LULUCF only’’ commitments, sectoral approaches can increase the coverage of LULUCF over space. Conversely, some countries may be willing to adopt commitments in non-LULUCF sectors, but may be reluctant to adopt LULUCF commitments – or an overall commitment that might impact or include land use – for a number of reasons, including risks, national sovereignty, and commitment to focusing GHG policies on emissions from fossil fuels. Additional perceived advantages of sectoral approaches include: (a) they enable developing countries to switch from project-based approaches to approaches that cover their entire LULUCF sector; (b) they may be less challenging and/or more cost-effective to implement than current project-based approaches that occur within the CDM; (c) if sectoral approaches become part of future climate change accords, commitments would be set through an iterative process. By considering, in an iterative manner, the level of desired and feasible reductions in the overall, as well as the sectoral commitments, the lack of clarity about the relative contributions of LULUCF and non-LULUCF sectors to the overall commitments, and the resultant complexity and restrictions of LULUCF rules, might be avoided. It should be noted that some versions of sectoral approaches could be accommodated within the current KP, thereby offering some of the advantages envisioned for sectoral approaches in general. However, other sectoral approaches may not be compatible with the current system. In particular, sectoral approaches in which Annex I country and/or developing country commitments are in sector-specific terms (i.e., not in tonnes of GHG emission reductions) may not be compatible with the KP approach. For example, a country’s overall commitment might consist of (1) a commitment to capture and geologically sequester some percent of CO2 emissions from coal-fired utilities, (2) efficiency standards for appliances, (3) a biofuel commitment in transportation, and (4) use of specified technologies in cement and aluminium production. While such commitments could, possibly, be translated into GHG reduction ‘‘results,’’ establishing equivalencies would be a challenge. Commitments of these types also represent a quite different approach than the economy-wide caps, specified in GHG emissions, of the KP.

commitments in terms other than tonnes of GHGs (see Box 1) conversion and fungibility may be more challenging. To illustrate the expansion of approaches resulting from consideration of the concepts defined above, a matrix is used (Fig. 1). The vertical axis of the matrix portrays the various types of commitments, while the horizontal axis illustrates the degree of linking that might be established by framework rules. Put together, the matrix provides a conceptual basis for thinking about two critical questions that arise when LULUCF is included within a climate change mitigation agreement: what types of commitments could be used (options shown along the y-axis), and to what extent will achievements in LULUCF be linked to the compliance rules of commitments in other sectors (options shown along the x-axis). It is important to bear in mind that the columns and rows shown in the matrix are arbitrarily set for illustrative purposes. While the extreme positions may be the easiest to interpret, in practice combined, intermediate situations can occur. That is, international agreements may consist of combinations of linked and de-linked commitment of various types (i.e., from various rows), and in fact such intermediate, combinatorial approaches may be the most interesting, attractive, and, ultimately, the most successful ones. To understand the range of possible approaches to including LULUCF within broader climate change agreements, it may be helpful to start by considering where the KPs approach falls within the matrix. In CP-1, each Annex I Party has a single, integrated, quantitative, emissions-oriented commitment that combines all sectors;8 no sector-specific commitments are specified within this commitment. Thus, achievements in all sectors contribute to fulfilment of this single commitment. In a system of this type, achievements due to LULUCF activities under Article 3.3 and Article 3.4, and credits from the use of afforestation and reforestation under the CDM, are specified in terms of the total tonnes removed from the atmosphere, and can be used by a Party to demonstrate compliance. This approach falls in the upper left hand corner of the matrix. Additional approaches can be explored by moving out from this initial ‘‘box’’ in two ways: allowing additional types of commitments (i.e., ‘‘adding’’ rows), and allowing sectoral commitments that can be linked to various degrees (i.e., ‘‘adding’’ columns). The top row represents approaches that would only involve emission-oriented commitments.9 The middle row represents agreements in which at least some commitments are cause-oriented. These commitments may be quantified using some units (e.g., manpower, number of landholders, or land area addressed). Finally, the bottom row 8 These targets are referred to as Quantified Emission Limitation or Reduction Commitments (QELRC) and are listed in Annex B of the KP. 9 Although not further discussed in this paper, although emission-oriented targets are often expressed in absolute number of tonnes of GHGs. They can also be intensity-based, i.e., stated in terms of GHG emissions relative to some other socio-economic variable. Examples of intensity targets are targets expressed as, GHG emissions per unit of GDP, per ton of output, or per dollar of sales. The intensity-based target approach has been proposed by some Annex I Parties that refused to ratify the KP arguing that absolute targets limit economic growth.

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Fig. 1 – Matrix of generic commitment options and options for linking LULUCF commitments into a wider international climate arrangement.

represents agreements in which only cause-oriented commitments are undertaken, and at least some of them are not quantified. Possibly the simplest way to move beyond the current KP system is to ‘‘remain’’ in the top row, maintaining emissionoriented commitments quantified in tonnes of GHG emissions, while moving to the right along the columns (see explanation of columns below). The most complex approach, but possibly the most attractive one in terms of types of commitments, would be a mix of cause-oriented and emission-oriented commitments (i.e., a mix of commitments from lower two rows and the top row). An example of such approach is the ‘‘Bottom-up’’ proposal of Reinstein (2004). Under this approach each Party proposes its own commitment consisting of a unique package of PAMs and emission-oriented commitments (i.e., specified in tonnes of GHG emissions) based on its national circumstances. Agreement as to what commitments from each Party would be accepted as part of an international agreement would be internationally negotiated. Moving to the right along the horizontal or ‘‘linkage’’ axis, the linkage between LULUCF-specific sectoral commitments (if any) and other commitments decreases. That is, restrictions become increasingly stringent on allowing over achievement of LULUCF commitments to be used to fulfill commitments in other sectors (or possibly vice versa). In the right-most column restrictions become ‘‘total’’; no linkage between LULUCF and other sectors is allowed; over-achievement of an LULUCF commitment can not be used to fulfill any non-LULUCF commitment. The left-most column represents approaches, which have a single, integrated framework of rules. A number of systems fall within the left-most column, including the current KP; the proposal of Jacoby et al. (1999) where each party’s single

commitment would be based on their ‘‘ability to pay’’ (as measured by per capita GDP); and the ‘‘Brazilian Proposal’’ (International Institute for Sustainable Development, 2003; FCCC/AGBM/1997) based on historical responsibilities on emissions. The middle column includes options in which there are separate commitments and accounting frameworks for LULUCF and other sectors, but some linkage between commitments is permitted for compliance, e.g., through credit accounting rules. That is, some mechanism is provided through which, under specified circumstances, some achievements in LULUCF might be used to fulfill commitments in other sectors, and (possibly) vice versa. The middle column includes options in which some countries might take commitments only in LULUCF or some might decide to take commitments only in non-LULUCF sectors. Finally, the right hand column represents agreements in which commitments and implementation arrangements in one or more sectors – e.g., in LULUCF – are completely separated from commitments (and their implementation) in other sectors. In this column there is a ‘‘firewall’’ between LULUCF and non-LULUCF arrangements. No provision is made, and no mechanism exists, for achievements in LULUCF to count in fulfilling other commitments; i.e., exceeding a LULUCF commitment is not allowed to ‘‘count’’ toward meeting any nonLULUCF commitment (and vice versa). This approach would require setting a complete, stand-alone, LULUCF protocol. This ‘‘firewall’’ approach has the advantage that PAMs can be more easily used for LULUCF commitments without impacting commitments in other sectors. However, under a ‘‘firewall’’ approach countries could not meet non-LULUCF commitments through achievements in LULUCF. Thus a ‘‘fire-wall’’ approach has the disadvantage that some mechanism other than

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monetary flows induced by the need to meet non-LULUCF commitments would have to be used in meeting LULUCF commitments or inducing desired LULUCF changes. The top box of the middle column includes approaches that would modify the current KP rules, solving some of the major problems envisaged for CP-1, while still retaining the essential architecture of the current KP. For example, allowing nonAnnex I Parties to adopt national-level emission-oriented commitments in LULUCF (e.g., commitments to reduce emissions from deforestation) could address a much larger fraction of emissions from LULUCF than the current projectbased CDM approach. The current project-by-project approach could continue to be used by some countries and in some sectors, but, as a complement, the CDM could encompass ‘‘projects’’ that are sector-wide, possibly submitted through a specialized window of the CDM (Figueres, 2006). Under this approach a national-level ‘‘baseline’’ emission level or rate would be established, and achievements beyond the baseline would be eligible for credits. An approach of this sort would continue to use emission-oriented commitments and would allow fungibility of credits between LULUCF and other commitments. The most complex situation, although an attractive one, would be an international agreement that would fall in the middle box of the middle column. Under this scenario commitments would be a mix of commitments quantified in terms of emissions (emission-oriented commitments), and quantified cause-oriented commitments. Some linkage between the various commitments would be permitted. Linkage could be restricted to achievements in specified activities (e.g., to achievements in reducing deforestation rates), by amount of tonnes that could be used to meet targets in other sectors, or by requiring, for example, that LULUCF commitments be exceeded by specified amounts (or percents) before excess emission reductions or removals could be used to offset emissions from – i.e., help fulfil commitments in – other sectors. To the extent that linkage is permitted, reductions resulting from cause-oriented commitments would have to be translated into ‘‘tonnes of GHG reductions achieved’’.

3.

Discussion of matrix options

3.1. Advantages and disadvantages of different approaches to commitments Every approach to including LULUCF in an overall regime has specific advantages and disadvantages. Proposed approaches can be evaluated on the basis of a number of criteria. Important criteria include environmental effectiveness (in the case of LULUCF this includes coverage over space and time10), scientific soundness, political acceptability (including promotion of participation), ethical and equity issues, cost-

10

The non-permanance of LULUCF removals is an exceedingly difficult issue that must be addressed regardless of approach. An evaluation of whether, in general, non-permanence is more difficult to address, or must be addressed differently, under sectoral or cause-oriented commitments than under single, unified, emission-oriented approaches is beyond the scope of this paper.

effectiveness, negotiability (including degree to which it is likely to cause controversy), simplicity and transparency, and ability to enhance sustainable development. For LULUCF some additional key criteria are acknowledgement of national sovereignty and ability to provide incentives for improving land use (Trines, 2004; Bodansky et al., 2004; Schlamadinger et al., 2007-a).

3.2. Advantages and disadvantages of sectoral approaches One advantage of specifying a separate commitment in LULUCF is that it should encourage independent analysis and understanding both of what might be feasible in LULUCF and of the contribution LULUCF would make to the complete set of commitments. Such independent analysis would represent a significant improvement over the process that occurred during the KP negotiations, where the lack of independent analysis together with the use of a single, integrated commitment ultimately resulted in the need for complex and restrictive rules on LULUCF, compromising both transparency and environmental effectiveness, including coverage over space and time. Sectoral commitments can promote environmental effectiveness both by increasing political acceptability and participation (see Box 1) and by encouraging a more comprehensive, inclusive approach to LULUCF within both Annex I and developing countries. Comprehensive approaches have the potential to both increase coverage over space and to resolve scientific challenges. In the context of the CDM, sectoral approaches can increase coverage over space by offering an alternative to the project-based approach. Sectoral approaches can resolve scientific challenges posed by the CDMs project-based approach (e.g., leakage) and challenges posed by Articles 3.3 and 3.4 for Annex I countries (e.g., determining human-induced deforestation or afforestation). A well-designed commitment in LULUCF could cover both additions to, and reductions in, carbon stocks; or coverage of additions could be voluntary, but coverage of reductions compulsory. A commitment that only counted additions to carbon stocks (e.g., via afforestation), but did not count reductions in carbon stocks in forestlands could not be characterized as ‘‘well-designed’’ (see also Schlamadinger et al., 2007-a). Allowing sectoral commitments can also address equity. Developing countries have lower per capita emissions due to use of energy than developed countries. Consequently equity can be addressed by allowing developing countries to undertake commitments only in LULUCF while opting out of energyrelated commitments at least in the near-term. Further, given the more limited resources of developing countries, equity can be addressed by allowing them to focus resources on particular sectors, perhaps transportation, that are most critical to their development path. It should be noted that incremental, stepby-step approaches, in which commitments in selected sectors are undertaken first and emissions in other sectors addressed subsequently, may also be attractive to developed countries (see Box 1 and Bodansky, 2003). Sectoral approaches are particularly well suited to acknowledging national land-use sovereignty. A nation’s

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freedom to use its land may be a particularly sensitive issue and GHG commitments can impact this freedom. For example, incentives to decrease deforestation rates could affect opportunities to provide food, fiber, fuel, and foreign income. By allowing countries to take commitments only in nonLULUCF sectors, and by prohibiting the use of LULUCF credits to meet non-LULUCF commitments, sectoral, de-linked approaches formally acknowledge this sovereignty concern and can serve to move the land base of developing countries out of the sphere of interest of developed countries as they strive to address their emissions. Two significant disadvantages of establishing sectorspecific commitments would tend to arise where no linkage between commitments in LULUCF and other sectors is permitted. If achievements in LULUCF cannot be used to comply with commitments in other sectors, it may be difficult to find mechanisms to provide incentives to implement desirable land use changes and management practices, particularly in developing countries. Lack of linkage also means that countries may not be able to take advantage of the most cost-effective mitigation options (Bodansky, 2003). De-linking, particularly total de-linking, may make inclusion of LULUCF in climate change agreements more acceptable to some Parties; however, total de-linking may be unacceptable to others, so its effect on political acceptability and participation is open to question (see Section 4). Another disadvantage arises as a result of the ‘‘step-by-step’’ nature of sectoral commitments. Under sectoral approaches countries may be allowed to ‘‘opt-out’’ of commitments in some sectors, and may choose to take commitments only in sectors where it is relatively easy or inexpensive to do so. Over time it will be necessary to address emissions in more difficult sectors, a task that may be difficult for political or economic reasons. Consequently, expanding sectoral commitments to cover all sectors may meet with resistance.

3.3. Advantages and disadvantages of cause-oriented and emission-oriented approaches The major advantage of cause-oriented approaches is the possibility of putting in place a coherent set of policies and measures: measures that address GHG emissions; are consistent with, and assist in achieving, other national objectives including development and adaptation needs; and avoid perverse results. By enabling developing countries to achieve development objectives as well as GHG mitigation, causeoriented approaches address ethical and equity issues. Use of cause-oriented approaches to craft GHG commitments that simultaneously achieve other high-priority goals also renders GHG commitments more relevant to key constituencies. This, increases political acceptability in both developed and developing countries, thus enhancing chances of their success and, in turn, their environmental effectiveness (Heller and Shukla, 2003; Kok and de Coninck, 2004; UNEP, 2004). Such commitments will necessarily have to be designed by individual countries, taking into account their specific national priorities and circumstances. However, in order to be accepted as part of an international climate change agreement, the commitments would have to be approved by the other Parties to the agreement.

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Cause-oriented commitments can prescribe how a nation will proceed to shift net emission trends in a given sector or sub-sector. By specifying which actions are to be taken, causeoriented commitments can control possible counter-productive effects. For example, specifying a LULUCF commitment in terms of tons of carbon or CO2 might result in destroying valuable habitat in an effort to increase carbon stocks, whereas a commitment that specifies reforestation of degraded lands can avoid such undesired results while also assisting in achieving adaptation and sustainable development goals. PAMs, in particular, tend to cover an entire sector or sub-sector and thus can increase coverage over space – particularly in comparison to project-based approaches – and, if the policies remain in place, can result in coverage over time. A second major advantage of cause-oriented approaches, particularly in the form of PAMs, is that PAMs are familiar and widely used to affect land uses and land-use changes in many nations. At present, many national PAMs affecting land use and land-use changes have adverse climate impacts. For example, PAMs that provide subsidies, land rights, or tax advantages for developing land (e.g., converting forestland to agricultural use) have been effective in achieving this goal, often with negative GHG consequences. However, some PAMs, for example, ones that regulate buffer strips along rivers, have carbon benefits. Redesign of national PAMs to take carbon stocks into account can thus utilize a well-known approach and can also take advantage of existing national land-use and management infrastructure (Richards et al., 2006). Nations may well utilize cause-oriented policies, particularly PAMS, to meet obligations even if commitments are emission-oriented due to the considerations described above: familiarly, ability to achieve multiple objectives, and desire to avoid perverse effects. Cause-oriented commitments are highly compatible with, and possibly most effective in conjunction with, sectoral approaches. In fact, allowing sectoral, caused-oriented commitments can be considered a formal recognition of the soundness of PAM approaches. Cause-oriented approaches can also provide simplicity and be cost-effective, particularly if no linkage is permitted between LULUCF commitments and commitments in other sectors. Under such agreements, there is no need for fungibility between achievements in LULUCF and other sectors. LULUCF commitments can be undertaken in terms of non-quantified PAMs, thus avoiding complex and costly monitoring and verification protocols. This combination of simplicity and cost-effectiveness may also increase political acceptability and promote participation. The major disadvantage of cause-oriented commitments, particularly non-quantified ones, is the lack of any guarantee that the policies and measures will be sufficiently well designed and implemented to achieve the intended goals. In other words, cause-oriented approaches may result in fewer negative impacts, but may carry a serious risk of not achieving the desired reduction in net GHG emissions. In addition, these approaches leave open the possibility that business-as-usual policies, or those implemented for other reasons, will be considered as ‘‘climate’’ policies even though they have no additional effect on climate change mitigation. Finally, by prescribing how society will move, cause-oriented approaches provide less flexibility, less opportunity for devising and

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implementing innovative, possibly better, more effective, alternatives for achieving the desired goal. If linkage is permitted between commitments in LULUCF and commitments in other sectors, a difficulty, although not strictly speaking a disadvantage, arises because the units in which cause-oriented commitments are specified may differ from sector to sector. This then requires establishing ‘‘currency’’ exchanges: mechanisms that allow credits from one sector to be translated into units deemed equivalent to the units used in other sectors. As indicated earlier, data on the carbon results of LULUCF activities could be used to establish equivalencies between LULUCF achievements and tonnes of GHG emission reductions. However, linking sectors can give rise to both double-counting and equivalency issues. For example, appliance-efficiency improvements might be measured in kWhs. Such improvements contribute to electricutility emission reduction commitments, which may be specified in tonnes of GHGs. Allowing linkage (and fungibility of credits) between sectors with cause-oriented commitments will inevitably require strict GHG reporting and accounting, risking sacrificing at least some of the cost-effectiveness and simplicity of cause-oriented approaches. In establishing such currency exchanges it will be important, and may be difficult, to insure that environmental integrity and scientific soundness are maintained. The major advantage of emission-oriented approaches is the great flexibility that arises from all commitments being in the same units, thus easing linkages between sectoral commitments. This flexibility also can lead to the spontaneous creation of new and efficient mechanisms, and can enable individuals, groups, and businesses to devise the most cost-effective means to achieve the objective. Drawbacks of emission-oriented approaches include: inadvertently providing perverse incentives; risk of interfering with, or not supporting, sustainable development; and complexity and expense due to inventory, monitoring and verification requirements. For example, in Annex I Parties an emission-oriented commitment might provide an incentive to replace natural forests with single-species (or single-clone) fast-growing plantations. However, this land-use change can have negative environmental impacts (e.g., on conservation of biodiversity), and negative social impacts (e.g., reduced recreational opportunities). In general, whether or not a change from natural forests to fast-growing plantations is consistent with sustainable development goals depends on the particulars of the circumstances. For example, sustainability could be adversely affected if the land-use change resulted in adverse affects on water quantity or quality, or on opportunities for local populations to secure food, fiber, fuel, or income. It is important to note that the various types of commitments are not mutually exclusive but can be mutually reinforcing. As mentioned previously, even when commitments are in terms of net tonnes of GHG emissions, policies and measures are likely to be used and, especially over the long-term, can be effective in assisting to reach the goal. Therefore, while emission-oriented commitments may be important, particularly at the international level, drawing attention to and driving certain national-level PAMs may also be effective. In short, it is important to

recognise that flexibility is needed to find the best mix of approaches to reach UNFCCC goals in the most efficient manner.

4.

Example of a partially de-linked option

Of all possible alternatives to the KP CP-1 approach, one example has been selected to demonstrate how an approach that utilizes sector-specific, partially linked commitments might work. This option is to be understood as an example, not a recommendation by the authors. In this example, the actual level of carbon stocks in carbon pools, and their expected changes in specific countries, would be used to set country-specific commitments in the LULUCF sector, and achievements beyond these commitments could be used – possibly only to some specified extent – to meet commitments in other sectors. This approach assumes that a proposal for a post-2012 agreement will respond to two main objectives: (1) To the extent possible, it should demonstrate continuity with the current system. (2) It should improve the current KP CP-1 system by eliminating loopholes and increasing coverage and effectiveness. The option described is also intended to meet the following objectives:  To ensure that the LULUCF sector cannot be used to avoid efforts in other sectors.  To provide flexibility by establishing a system in which a variety of conditions could be set in regard to the circumstances under, or extent to, which over-achievement of some sectoral commitments could be utilized in meeting the overall commitment.  To take into account different national circumstances. To address the above objectives, the approach outlined here envisions that two distinct commitments are set within a single mitigation protocol. The two commitments are:  A non-LULUCF commitment (or commitments) in sectors designed to achieve a decrease or a limited increase of anthropogenic GHG emissions by sources listed in Annex A of the Kyoto Protocol.  A LULUCF commitment designed to achieve an increase, or a limited decrease, of terrestrial organic carbon stocks. Each commitment would have its own accounting rules, but together they would form the compliance system of a unique emission reduction commitment. Both sub-commitments would, therefore, have to be met at the end of any commitment period and rules would establish the conditions under, and extent to which, over-achievement of one commitment could be used to assist in meeting other subcommitments. Parties could elect to commit to either or both of the separate sectoral commitments, allowing great flexibility in accommodating national circumstances.

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Box 2. Examples of operation of LULUCF commitment in conjunction with commitments in non-LULUCF All numbers are in Megatons CO2-equivalents. Negative numbers indicate increased net emissions; positive numbers indicate decreases in net emissions to the atmosphere. (Note: Due to uncertainties in estimating carbon stock changes, in reality, significantly larger changes from the base period than illustrated would be needed for commitments.) Country A B C D

Base FFE (a)

AA (b)

TCAbase (c)

500 500 50 50

460 460 70 70

5,000 50,000 50,000 5,000

TCAcommitted (d) 5,050 49,950 49,750 5,025

(+1%) ( 0.1%) ( 0.5%) (+0.5%)

Total commitment = [(a)

(b)] + [(d)

(c)]

90 10 270 5

FFE, non-LULUCF emissions; AA, assigned amount (LULUCF excluded); TCAbase, total carbon stocks, value in base period; TCAcommitted, carbon stock commitment. Country A is both reducing non-LULUCF emissions and increasing carbon stocks. Country B, while reducing non-LULUCF emissions, does not expect to be able to retain its current carbon stock level, but may be committing to reducing expected losses. Country C, very likely a developing nation, expects to need to increase its emissions from current levels, and also does not expect to be able to retain current carbon stock levels. Country D, while also expecting to increase emissions, does expect to be able to increase its carbon stocks.

The accounting system for non-LULUCF commitments would work in the same way as the overall commitments in the CP-1 with the same flexible mechanisms, ensuring a complete correspondence with CP-1. The accounting system for the LULUCF commitment should work in a different but compatible way. In order to determine and establish the LULUCF commitment, each Party could, for example, be required to estimate a base-value, such as the total amount of its terrestrial organic carbon stocks at the start of the commitment period (TCAbase) (using either a base year or a base period). Based on the TCAbase and expected changes, and taking into consideration the Party’s anthropogenic GHG emissions, each Party that chooses to undertake a LULUCF commitment would propose a LULUCF commitment expressed, for instance, as a percentage value of the TCAbase. Its overall commitment might consist solely of this LULUCF commitment or its total commitment might be allocated between non-LULUCF and LULUCF sectors. See Box 2 for numeric examples. In order to comply with its commitment, the Party would estimate its carbon stocks at the end of the commitment period and compare it with the commitment. If the carbon stocks at the end of the commitment period are higher than

the LULUCF commitment then the Party would be allowed to issue carbon credits up to the amount of the difference, or some fraction of the amount of the difference. The extent to which such credits could be used to meet non-LULUCF commitments would be specified in the overall agreement rules. If, however, the TCA is lower, then the Party would have to compensate for the shortfall (debit) either by over complying with its non-LULUCF commitment [if any, and if rules allow such transactions – see (1) and (2) below] or by purchasing credits from other Parties (i.e., through emission trading, JI, or CDM credits if some non-Annex I Parties are still operating without commitments in some sectors; see below). Therefore, the carbon stock changes during the commitment period could result in a debit or in a credit vis-a-vis the LULUCF commitment (see Fig. 2). Note that the example focuses on carbon stock changes because they are simpler to describe and understand than fluxes. There is no intent to support any particular accounting methodology. The example is intended to illustrate how sectoral approaches, using baselines, could operate in differing country circumstances and possibly reward over-achievement of a commitment. The use of this approach avoids the need to define and agree on a set of LULUCF activities. All that is required is to

Fig. 2 – Determination of existence of debit or credit due to LULUCF commitment.

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define the geographic boundaries of lands11 that will be used to determine the TCA, and to define the carbon pools to be included. These pools could be the same ones that are included in the Marrakech Accords, but harvested wood products could also be included. In this example no distinction between direct and/or indirect human-induced carbon stock changes has been made. The TCAbase, the projected, and the actual carbon stock changes will all, to some degree, include effects of both direct and indirect human actions. This has the effect of avoiding the need to separate out these two sources of change, since the indirect effects will largely cancel each other out in the comparisons (Canadell et al., 2007). The system could operate in one of two ways with regard to linkage between LULUCF and other sectors: (1) Carbon credits issued for over-achievement of a Party’s LULUCF commitment can only be used for meeting LULUCF commitments of other countries. This means that the allocation of the overall commitment between LULUCF and non-LULUCF sectors is established ex ante when commitments are established and not ex post (during the compliance check) as in the KP CP-1 (i.e., there is a ‘‘firewall’’ between the LULUCF and non-LULUCF commitments, and non-LULUCF commitments must be fulfilled without using credits from LULUCF). (2) Carbon credits issued for over-achievement of the LULUCF commitment can be used, under some specified restrictions and conditions, to meet non-LULUCF commitments. This would be more similar to the existing KP CP-1 system. However, unlike the experience during the negotiations for the KP, explicit attention is paid to expected changes in carbon stocks during the commitment establishment process, and commitments are set taking these expected changes into account. Consequently, credits will only ensue if measured carbon stocks are higher than TCA commitments, and the LULUCF commitments play a semiindependent and clearly defined role in complying with the overall commitment. This may forestall the need to impose the types of complex rules presently required in the CP-1.

5. Concluding remarks; an outlook to the future Talks on the future climate change regime will start soon, with great expectations on the part of the public and, at the same time, great reservations within negotiating Parties. Doubts have emerged as to whether the KP agreement under the UNFCCC will continue, unless the largest emitters join. On the other hand, interest in instruments such as the CDM remains strong. At this early stage, it is difficult to foresee the direction of the process, particularly how LULUCF will be treated. However, it is not unreasonable to expect substantial changes 11 Because the difficulty to define properly the word ‘‘management’’ and consequently the management activities, it is better to simply refer to land in which carbon stock changes in the defined carbon pools are occurring as a direct consequence of human activities.

in the way commitments are negotiated, as well as in the rules that govern the obligations. As Parties consider ways forward, they may want to consider commitments specified in terms other than tonnes of emissions; the use of non-quantified, cause-oriented commitments; and the option of sectorspecific commitments. Such changes may lead to a system that accommodates a wider range of country circumstances and, in particular, more fully accounts for emissions and removals due to LULUCF, e.g., by encouraging more countries to adopt LULUCF commitments and by including emissions due to deforestation in developing countries. Given past experiences, if commitments include LULUCF and non-LULUCF sectors, the relation or linkage between, and relative contributions of, LULUCF is likely to be given more attention in future negotiations. These issues are likely to be discussed from the start of negotiations, and Parties are likely to invest in more careful assessments or forecasts of future (net) emissions from all relevant sectors. The present paper presents a systematic way to consider both possible linkages and types of commitments with a view towards facilitating these discussions—discussions whose success may require delegates to explore rules and commitments well beyond, or substantially different from, those established during the negotiations in Kyoto. The views and political positions of Parties are complex and are affected by multiple considerations ranging from economic concerns, ideologies, and even the personal views of individual negotiators. It is possible, however, based on past discussions, to infer some general, likely, characteristics of Party positions. At a very general level, some Parties are likely to partially or totally favor inclusion of LULUCF in broader climate change agreements. Historically, countries with substantial forest resources such as United States, Norway, New Zealand, Australia, and the Russian Federation have taken such a position (Marland and Schlamandinger, 2000). Such Parties may not only favor commitments in LULUCF, but may also be inclined to favor linkages between LULUCF and non-LULUCF commitments. Other Parties are likely to be partially or totally against inclusion of LULUCF. Such Parties might not want to take on LULUCF commitments themselves and may want at least some degree of de-linking, if not total de-linking. Stakeholders that have taken positions against inclusion of LULUCF include the European Union, Brazil, and some environmental groups (Goetze, 1999; Marland and Schlamandinger, 2000). Such stakeholders might consider the intrinsic non-permanence of the removals achieved through LULUCF as presenting unacceptable risks due to increasing extreme events, such as extended drought and associated fires. Underlying views – the reasons why a Party does or does not favor inclusion of LULUCF – will also affect positions, both on the type of commitment in LULUCF and the degree of linkage. For example, Parties may favor inclusion of LULUCF because they want to achieve reductions at least cost. Such Parties might want all commitments to be in tonnes of (net) emissions and might want few if any restrictions on the use of LULUCF credits to meet commitments in other sectors. These features would maximize fungibility of credits and facilitate emission-trading; the United States might be an example of such a Party. On the other hand, the same concern with

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inexpensive achievement of reductions might lead a Party, particularly a developing country, to a preference for PAMs due to the lower reporting costs entailed, the lower risk of liability in case of failure to meet commitments, and on the grounds that alterations in land use policies will eventually be the most effective and cost-effective mechanisms. The basic positions of Parties will also lead to inter-play between positions on the types of commitments and the degree of linkage. If both LULUCF and non-LULUCF commitments are specified in terms of tonnes of GHG emissions, those Parties against LULUCF would be more likely to favor complete de-linking. In this way the level of effort devoted to reducing GHG emissions from fossil fuels, and the commitments set for fossil fuel related emissions, would not be reduced or compromised by LULUCF actions. In addition, under complete de-linking LULUCF credits would not be fungible with other credits. If, on the other hand, PAMs are used for LULUCF commitments while other commitments are quantified, the difficulty of rendering the PAM-based credits fungible with, and therefore utilizable as, credits in other sectors may reduce concerns about linkage. We expect that the interest of the international community in expanding the number of countries that participate in a future climate change agreement is sufficiently strong to result in more flexibility in how LULUCF will be incorporated into the agreement. This increased flexibility may include both flexibility in type of commitment and degree of linkage. It may also extend beyond the LULUCF sector, translating into acceptance of commitments only in, e.g., the transportation or electricity generation sector. Such flexibility may require partial or total de-linking, particularly to prevent actions within LULUCF from inappropriately affecting actions in other sectors. Whatever transpires, the outcome of the next round of negotiations will be critical to the international effort to address climate change, and the fuller the range of approaches under consideration the more likely that these discussions will meet with success.

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Clearing the way for reducing emissions from tropical deforestation. Environ. Sci. Policy 10, 322–334. Torvanger, A., Twena, M., Vevatne, J., 2004. Climate change beyond 2012. A survey of long-term targets and future frameworks. CICERO Report 2004: 02. Oslo. Trines, E., 2004. Possible role of land use, land-use change and forestry in future climate regimes: an inventory of some options. Final Report. Ministry of Agriculture, Nature and Food Quality, Netherlands. United Nations Environment Program (UNEP), 2004. Climate Policy Frameworks Beyond 2012 Development and Climate Change in South African Context. Energy Research Centre, University of Cape Town. R. Benndorf works at the Federal Environmental Agency of Germany. She has been following the international climate change talks since COP6 in The Hague as a member of the German delegation. S. Federici holds a PhD in forest management, is member of the UNFCCC Roster of Expert, and is Researcher in the Climate Change Unit, European Commission, Joint Research Centre. C. Forner works for the Center for International Forestry Research (CIFOR) as the coordinator of climate change activities of this organisation. Before joining CIFOR, he worked for the UNFCCC secretariat, where he was in charge of negotiations on LULUCF. N. Pena works at the Pew Center on Global Climate Change in the United States. She has, for the past 7 years, focused on the use of

terrestrial and geological sequestration as options to assist in addressing greenhouse gas emissions. E. Rametsteiner is forest policy scientist with more than 10 years of experience in international forest policy analysis. He is currently inter alia working as a researcher at IIASA’s FOR Programme INSEA Project on Integrated Sink Enhancement Assessment. M. Sanz is a senior researcher and Head of Program at Fundacio´n CEAM. She represented Spain in international climate change talks since COP6 in The Hague. She is a lead author of the Good Practice Guidance for LULUCF (IPCC, 2003), as well as the 2006 Guidelines of the IPCC and the Fourth Assessment Report of IPCC that is now under development. She participates in the UN CLRTAP as chair of the WG on Air Quality of the ICP-Forests. With her activities in various international and domestic research projects, she has also contributed to the better understanding of the carbon cycle in different land uses, as well as documenting air pollution dynamics and effects in the Mediterranean Region. Z. Somogyi represented Hungary in international climate change talks since COP6 in The Hague. He is a lead author of various chapters of the Good Practice Guidance for LULUCF, as well as the 2006 Guidelines of the IPCC. With his activities in various international and domestic research projects, he has also contributed to the better understanding and to the improved estimation of the carbon cycle of forests. He is a certified reviewer of national inventory reports submitted to the UNFCCC. Currently he is seconded from the Hungarian Forest Research Institute to the Climate Change Unit of the Joint Research Centre of the European Commission.