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Addressing double counting of mitigation for diverse contribution types Christina Hood (IEA) Presentation to SBSTA 8 June 2014 Climate Change Expert Group www.oecd.org/env/cc/ccxg.htm OECD/IEA papers on UNFCCC emissions accounting options Concepts relevant pre- and post-2020 2 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers 3 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers 4 Climate Change Expert Group Which transfers matter for accounting? Two conditions under which transfers of mitigation matter for UNFCCC accounting: “Used” by a Party as counting directly towards a contribution under UNFCCC + Originating outside the boundary of that contribution (geographic, scope or temporal) Could include credits (offsets), allowance units from domestic emissions trading systems, or nonmarket transfers 5 Climate Change Expert Group Double counting of mitigation “Double issuance” = more than one unit issued for the same emissions reductions “Double selling” or “double retirement” = same unit used more than once towards emissions obligations “Double claiming” against pledges/targets = same mitigation claimed by two jurisdictions “Double coverage” of transferred mitigation by GHG and non-GHG targets leading to double counting 6 Climate Change Expert Group Double Counting Solutions Double Issuance Strong governance of mechanisms for environmental integrity 7 Double Selling Robust registry/tracking arrangements Double claiming between GHG targets GHG/Non-GHG double coverage Understand by tracking/reporting transfers Prevent by rules/criteria Understand by tracking/reporting transfers Climate Change Expert Group Double claiming example -10Mt Party A Inventory granularity? -------Emissions 100Mt 90Mt 10Mt Party B Emissions 100Mt -------110Mt Emissions inventory total = 90+110 = 200Mt If Party A DOES NOT account for export but party B DOES account for import, then declared total = 90+100 = 190Mt 8 Climate Change Expert Group What do Parties want to “prevent” ? 1. Prevent double counting in aggregate ex post reconciliation of total mitigation ? track actual unit and non-market use Enables understanding of double claiming to prevent double counting of aggregate emissions reductions 2. Also prevent or limit double counting in ex ante estimates of expected mitigation ? requires rules for market or non-market use e.g. quantitative limits on use of transferred mitigation from jurisdictions that do not account for unit flows (i.e. limit double claiming) e.g. GHG goals must account for unit flows (i.e. prevent double claiming) 9 Climate Change Expert Group Double counting via “double coverage” of GHG/non-GHG targets Party A Party B How double counting could arise Quantified GHG target Renewable If renewable energy target delivered in part by energy crediting mechanism (with units sold to Party A), (capacity) could be double counting of mitigation. Renewable Renewable With trade of green certificates between Party A energy energy and B, there is potential for double counting if (transfers) (capacity) one Party accounts for the transfers and the other doesn’t. Quantified GHG target Production If electricity is exported from Party B to Party A of clean via grid interconnection, the mitigation could be electricity counted by both Parties. Understand by tracking/reporting transfers 10 Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers 11 Climate Change Expert Group Multiple-year target Annual unit purchases Actual reported inventory emissions 2030 inventory 100Mt 90Mt 80Mt 2030 target 2020 2025 2030 Multi-year target avoids risk that emissions in single target year are unrepresentative of general trend Facilitates use of market mechanisms 12 Climate Change Expert Group Single-year target Actual reported inventory emissions 2030 inventory 100Mt 90Mt 80Mt 2020 2030 target 2025 2030 Ex ante uncertainty over total emissions due to unknown path to target 13 Climate Change Expert Group Single-year target 2030 inventory 100Mt 90Mt 80Mt 2020 14 2030 target 2025 2030 Ex ante uncertainty over total emissions due to unknown path to target Ex ante uncertainty amplified by use of units in target year Gets complex when we think about “vintages” of units Climate Change Expert Group Options for use of mitigation transfers with single year targets Report unit use • allows ex-post reconciliation • poor ex-ante estimation • Reduces ex-ante uncertainty Quantitative limit • Impractical (supply ongoing) Target year • Prone to gaming (Scneider et al.) vintage only Only units from • If units are retired for multi-year goals (e.g. domestic ETS), then ok ongoing action Disallow 15 • Only continuous multiyear goals can use transferred mitigation Climate Change Expert Group Outline Double counting of mitigation Mitigation transfers with single-year targets Potential rules/criteria for “opt-in” to use of market or non-market mitigation transfers 16 Climate Change Expert Group Packages of rules for Parties “opting in” to use of market or non-market transfers 1.Transparency •Ex post reporting of flows* Ex-ante clarity on expected •Provide ex ante estimate of expected flows total abatement and national Approach goals •Ex post reporting of flows •Provide ex ante estimate of expected flows •Quantitative limit on units issued by Parties with 2. Enhanced GHG goals that do not account for flows. clarity •Units in single-year targets must be reflective of continuous action 3. Avoidance of double claiming •Ex post reporting of flows •Provide ex ante estimate of expected flows •GHG based contributions must account for flows, must be multi-year. *flows = issuance, retirement, transfers, banking [PLUS: governance of systems, registry and tracking arrangements] 17 Climate Change Expert Group Thank you for your attention GHG or not GHG: Accounting for diverse mitigation contributions in the post-2020 climate framework Christina Hood ([email protected]) Gregory Briner ([email protected]) Marcelo Rocha www.oecd.org/env/cc/ccxg.htm 18 Climate Change Expert Group