Daily report for 9 February 1995

WORKING GROUP I

Working Group I concluded its discussion of Agenda Item 7(b), Adequacy ofCommitments, and began consideration of Agenda Item 7(c), Joint Implementation.

AGENDA ITEM 7(b) " ADEQUACY OF COMMITMENTS: Brazil,Nigeria, Bangladesh, India, Egypt, Micronesia and Thailand supported the G-77 andChina"s statement made on Wednesday. Brazil agreed that commitments are inadequateand said that it would be necessary to negotiate further strengthening of commitmentsof Annex I Parties. Nigeria objected to attempts to place new commitments ondeveloping countries, and said new commitments could be considered only afterAnnex I Parties had met present commitments.

Bangladesh considered placement of the AOSIS draft protocol as timely. India andThailand opposed negotiations that would begin to place new commitments on non-Annex I Parties and said the AOSIS protocol is the first step toward requiring Annex Icountries to continue to meet their obligations. Egypt said there should be sufficienttime for the negotiation of new commitments, which should apply only to Annex IParties. Micronesia said that COP-1 should set targets beyond 2000 and urged allParties to give the AOSIS protocol full consideration and support. The Philippines, onbehalf of the G-77 and China, rejected the suggestion that developing countries shouldparticipate in tasks assigned to developed country Parties. He said it is urgent thatAnnex I Parties live up to their commitments. While Parties should discussimprovements well in advance, they should negotiate amendments only when presentcommitments are fulfilled.

AGENDA ITEM 7(c) " JOINT IMPLEMENTATION: The Secretariatinvited delegates to discuss A/AC.237/MISC.44 and A/AC.237/MISC.44/Add.1 onCriteria for Joint Implementation. The US, supported by Japan, Australia and Canada,introduced draft language for a decision on Joint Implementation (JI) and an appendixon criteria. The draft decision establishes a pilot phase for JI beginning immediatelyafter COP-1 and open to all Parties. Its objectives are to evaluate criteria, assessresults, methodologies and accounting procedures, determine costs and benefits, assessinstitutional arrangements, identify problems, and encourage private sectorinvolvement. The SBSTA would develop monitoring and evaluation modalities andreport to the SBI and the COP. The criteria include that JI is voluntary, does notmodify commitments, is financed outside existing ODA or Annex II GEFcontributions, addresses any gases, sources or sinks, and includes data andmethodological information to compare emissions with and without the JI measure.The US said JI should be negotiated in tandem with the negotiation of new aims orstrengthening of the Convention, because a JI programme would benefit theConvention. France, on behalf of the EU, and supported by Australia, said that AnnexI Parties should not use JI to meet their present commitments. He called for additionalclarification on expected benefits and risks through a pilot phase under an agreed setof criteria, and promised draft language for a JI programme.

China said JI means implementation of national policies between Annex I Parties and,thus, applies only to developed country Parties. If a developing country Party joins JIin the pilot phase, it should be on a voluntary basis and not shift developed countrycommitments onto developing country Parties. Due to its complexity, he said pilotphase JI credits, the system of accounting, and baselines should be excluded fromnational inventories and used only as an exercise for accumulating experience. TheCzech Republic said JI projects should be based on appropriate bilateral or multilaterallegal instruments.

Australia supported a phased approach beginning with pilot phase that has projectswith readily identified reduction targets but allocates no credits. Supporting China"spositions on voluntary participation and against shifting of commitments, Australiastressed the need to keep the institutional arrangements as simple as possible. Canadasaid JI is a cost-effective opportunity for collaboration on projects that will lead toreductions that would not otherwise occur, helping other environmental concerns in thehost country and providing access to technology. He said the host country shouldmaintain the right to approve or reject projects based on its own priorities.

Saudi Arabia, supported by Kuwait, Iran and Nigeria, said that the pilot phase of JIshould be limited to Annex I Parties and the experience gained from the pilot phasecould be used for the next phase. Chile supported JI as a multilateral system with amonitoring mechanism and accepted the idea of a pilot phase with a certain percentageof credits for developed and developing countries. While supporting JI, South Africasuggested that the full implications of JI is assessed for each country, totaltransparency is displayed in reporting and monitoring, any reductions under JI byAnnex I Parties are additional to their current commitments, and funding under JI isadditional to the financial mechanism of the Convention. The Russian Federationagreed on the broad involvement of the private sector, with national review of JIprojects. Costa Rica supported limits on Annex I Parties in JI and hoped that COP-1would arrive at a decision to launch a pilot phase. Argentina, supported by Mauritius,preferred a pilot phase without a credit system so that trust could be built amongpartners in the Convention. Argentina added that JI activities should be developed inaccordance with national and sustainable development priorities. The Philippines saidthat it was clear that several G-77 members were expressing their views as sovereignParties to the Convention and that their statements did not reflect the complete orcommon position of the G-77 and China. He noted that JI should not allow for theshifting of specific commitments of Annex I Parties to developing countries. He addedthat there was a plethora of interesting, but still divergent interests on this matter andefforts were underway to produce language that expressed unity of intention despitediversity of opinion.

WORKING GROUP II

Working Group II held cursory discussions on: guidance to the financial mechanism,provision of technical and financial support to developing country Parties, andmodalities for institutional linkages between the COP and the financial mechanism.

AGENDA ITEM 8(a)(i) " GUIDANCE: The Group resumed considerationof the remaining unresolved paragraphs in A/AC.237/Misc.47 on policy guidance tothe financial mechanism.

Paragraph 2(d): The Group agreed on: "The operating entity or entitiesshould, in accordance with the policies, programme priorities and eligibility criteria asestablished by the COP, be available to assist, if so requested, in the implementation of the national programmes adopted by developing country Parties." The US saidthat it could not accept 2(d) until there is agreement on 2(e).

Paragraph 2(e): The G-77 and the US insisted that there should be a linkbetween paragraphs 2(d) and 2(e). The G-77, supported by the US and Australia,proposed deleting the bracketed phrase in paragraph 1(a)(v), if 2(e) remains in the text.Otherwise, the G-77 felt that 2(e) should be deleted. The EU disagreed. There werealso questions about whether the "comprehensive approach" to mitigation described inthe Convention focuses only on emissions sources or on sinks as well. The Chairindicated that the main objective of this paragraph is that activities to mitigategreenhouse gas emissions should get priority in GEF financing. The EU preferredretaining reference to the comprehensive approach, and added that its deletion wouldrequire explicit listing of the sectors in which mitigation activities must be carried out.Developing countries held that the first part of the paragraph referenced onlymitigation of emissions and additional terms would alter the focus. The Co-Chairproposed the following: "In the implementation of these national programmes, theoperating entity or entities should support activities to mitigate greenhouse gasemissions not controlled by the Montreal Protocol, [and to protect and enhance sinksand reservoirs of greenhouse gases/consistent with the comprehensive approachcontained in the convention]."

AGENDA ITEM 9 " PROVISION TO DEVELOPING COUNTRYPARTIES OF TECHNICAL AND FINANCIAL SUPPORT: Janos Pasztorfrom the Interim Secretariat presented documents A/AC.237/90 and the addenda,which contained progress reports on the Climate Convention information exchangeprogramme (CC:INFO), the joint training programme (CC:TRAIN), and a note on theClimate Convention cooperation programme (CC:COPE). Antigua and Barbuda,referring to A/AC.237/ 90/Add.3 on assistance for enabling activities, asked about therole of the informal consultative mechanism and whether it involves technologytransfer. The Interim Secretariat replied that the consultative mechanism is intended asa sharing process, and that technology transfer has not been discussed. Antigua andBarbuda also asked whether paragraph 39(a), on enabling countries to produce betterproject proposals, was intended to help develop proposals, or merely to shareinformation. The GEF said that the mechanism was under the guidance of the InterimSecretariat.

Peru asked about the specific composition of the consultative mechanism and thecriteria for its creation. The Interim Secretariat replied that while there were currentlyno formal list of participants, it should include agency technical experts andindividuals with relevant experience and the INC could come up with criteria. Indiaasked how programme priorities would be met by this consultative process. TheInterim Secretariat replied that this document only spells out how the staffs wouldwork together but the issues to be addressed were up to the Working Group.

The US commented that document A/AC.237/80 contains the inputs for the CCprogrammes and asked for estimates on the outputs. The Interim Secretariat willprepare a table for discussion next week. Poland and the Russian Federation expressedconcern about the availability of GEF financing within the financial mechanism andsaid it should not be limited to developing countries. The GEF replied that thisdocument only covers enabling activities within the financial mechanism and thatactivities within CC:COPE are not limited to developing countries. Algeria said thatagreement must be reached on an approach that will define the framework ofassistance to be given to developing countries, adding that the COP alone isempowered to define eligibility criteria. The GEF responded that the operationalcriteria defined in paragraph 18 of the document are not eligibility criteria but ratherinternal operating matters for the GEF.

AGENDA ITEM 8(a)(ii) " MODALITIES: The Chair said that morediscussion is needed on the assessment of funding needs and the form of thearrangement. During INC-10, there was a choice between an MOU and a legally-binding agreement, and most Parties, if not all, expressed support for the MOU. ThePhilippines noted that the G-77 and China have not yet come up with a definitedecision on this matter or on the assessment of funding needs. Colombia said that theCOP should begin to work on the MOU before the Secretariat of the Conventionbegins its talks with the GEF. The US responded that since the Secretariat hasproduced a good text in A/AC.237/87, the Committee could recommend that the twosecretariats meet and develop an MOU in time for COP-1. Discussion will resume onboth agenda items on Tuesday morning.

IN THE CORRIDORS

As the debate on Joint Implementation (JI) "heats" up, divisions between developingcountries based on divergent interests and priorities are becoming apparent. It is clearfrom Article 4(2)(a) of the Convention that JI can take place between Annex I Parties.Discussion on broadening JI to include developing countries was first initiated atINC-8, raising developing countries' concerns about its potential implications andimpacts. Developing countries have viewed JI with varying degrees of skepticism andcaution. Concerns have once again been expressed that Annex I Parties should not useJI as a means to avoid meeting their current commitments under the Convention andthat JI agreements should not substitute for funding mechanisms under the Convention.However, the position of some developing countries appears to be changing. There arethose who favor limiting the JI pilot phase only to Annex I Parties and others who aremore amenable to the voluntary and equitable participation of developing countries.There appears to be some agreement among developing countries that the thornyproblem of the allotment of greenhouse gas abatement credits and a "baseline" beexcluded from the pilot phase.

THINGS TO LOOK FOR TODAY

PLENARY: This morning the Plenary is expected to discuss Agenda Item 6,Rules of Procedure. In the afternoon, topics for discussion include Agenda Item 2,Arrangements for COP-1, and Agenda Item 5, Permanent Secretariat (institutionallinkages, financial rules and budget, and physical location).

WORKING GROUP I: Working Group I will hold informal consultationson the first draft text on methodologies and discussions on Agenda Item 7(e),Subsidiary bodies.

INFORMAL CONSULTATIONS: Working Group II Vice Chair John Asheis expected to hold consultations on guidance to the financial mechanism inConference Room 6 at 10:00 am. The Chair"s revised draft document, which will formthe basis for discussion, will be available in the room.