Distorsiones que disminuyen la autonomía del arbitraje comercial

At the third Conference of the Parties (COP3) in Kyoto, Japan, in 1997, the Annex B countries were successful in introducing negotiable rights systems, the so-called Flexibility Mechanisms, for the purpose of reducing their costs for complying with the goals for reducing greenhouse gases (GHG). According to the Massachusetts Institute of Technology (MIT, 1997), the costs of complying with the goals without the mechanisms are high. For example, the incremental cost for the USA, will reach US$76 for the last ton of CO2 reduced at home and Japan faces domestic costs of

US$239.

Each Annex B country has an annual stock of rights to emit CO2, known as allocated

amount, equal to its national emissions goal. Each country will allocate its rights to the sources of emissions i.e. those who emit greenhouse gases such as companies,

11

Article 12.10 of the KP provides: “Emissions Reductions Certificates obtained during the period included between the year 2000 and the beginning of the first compliance period (2008-2012) can be used for compliance during the first compliance period” (UNFCCC, 1998a, p. 19).

factories, etc., the emitters of GHGs will have the final responsibility of generating the purification of the atmosphere.

Table 3.2: Summaries of the Conferences of Parties COPs Date and

Year Place Feature COP1 28 October-7 November 1995

Berlin Adoption of Berlin Mandate: Review of Convention’s progress including

proposal related to a Protocol. COP2 8-19 July

1996

Geneva Review of COP1’s decisions in favor of adoption a Protocol.

COP3 1-11 December 1997

Kyoto Adoption of Kyoto Protocol.

COP4 2-14 November 1998

Buenos Aires

Adoption of Buenos Aires Plan of Action.

COP5 25 October–5 November 1999

Bonn Review of Buenos Aires Plan of Action and worked for future entry into force of the Kyoto Protocol.

COP6 first part

13-25 November 2000

The Hague Conference suspended without any decision. COP6 second part 16-25 July 2001

Bonn Reached to Bonn Agreement on

implementation of Buenos Aires Plan of Action with a consensus to forward to COP7.

COP7 29 October-10 November 2001

Marrakech Adoption of Marrakech Accord with a major decision of operation and modalities of flexible mechanisms. COP8 23

October-01 November 2002

Delhi Delhi Ministerial Declaration on Climate Change and Sustainable Development.

COP9 1-12 December 2003

Milan Review of Marrakech Accord.

COP10 6-17 December 2004

Buenos Aires

Kyoto Protocol ready to enter into force.

Each individual source must develop an analysis of reduction options and its

compliance plan, where it will select the most cost-effective solutions. According to the Kyoto Protocol (UNFCCC, 1998a), options include:

• Emission reductions domestically and optimizing its productive resources.

• Purchasing of emissions rights from the international emissions market established under Article 17 of the Kyoto Protocol.

• Purchasing of emissions rights proceeding from reductions programs in the Joint Implementation program established under Article 6 of the Kyoto Protocol.

• Purchasing of emissions rights proceeding from projects in developing countries through the CDM.

• Waiting until the last moment to minimize the risk of early action, and allow new technological options to be developed and prices to fall.

There will be a choice within the CDM among thousands of possible projects in many countries of the developing world. Every Annex B party will take the set of options, which are most cost-effective for its own case, with an initial preference for projects “at home” to avoid the transaction costs, risks and regulatory uncertainty associated with external options. Every source will execute the most cost-effective solutions in-house, passing to options outside its company when the incremental in- house cost rises above the price of external options adjusted for the transaction costs, risk and regulatory uncertainty of each flexibility mechanism. The three flexibility mechanisms have different characteristics and operational modes that will affect their economic attractiveness as compliance options. They are summarised in Table 3.3 and discussed below.

3.4.1 Emissions Trading

Article 17 established the option of emissions reductions unit for emissions rights transactions only between Annex B countries. It will probably be a fluid, simple and efficient market for the exchange of rights between suppliers and demanders of rights. Under this mechanism, reduction projects do not require approval or ex ante participation by another agent. Each party will report its own emissions yearly, and

companies that have emitted less than their present quota of rights will be able to sell their surplus rights in the market without the intervention or approval of

environmental authorities. The level of risk and regulatory uncertainty are considered to be relatively low. This compliance option is attractive for its simplicity, low transaction costs and minimal risk for the participants. Any such trading shall be supplemental to domestic actions for the purpose of meeting quantified emission limitation and reduction commitments under Article 3. Developing countries will not be able to participate in International Emissions Rights Trading unless they adopt national reductions goals and be formally included by the COP in Annex B.

3.4.2 Joint Implementation (JI)

Article 6 of the Kyoto Protocol establishes Joint Implementation that will be managed among Annex-I countries on a project-by-project basis. All projects must be approved by the countries involved in the process and must demonstrate that the reductions are additional to those that would have occurred in the project’s absence. The acquisition of emission reduction units needs to be supplemental to domestic actions for the purposes of meeting commitments under Article 3. These conditions of approval and additionality generally increase the transaction costs associated with this option, which indicates that this option will be costlier than the same reductions if the same projects can be generated with lower transaction costs and regulatory intervention under Article 17’s emissions rights trading. Besides, the acquisition of emission reduction units will be supplemental to domestic actions.

3.4.3 Clean Development Mechanism

As pointed out earlier, Article 12 establishes the CDM with two objectives; those are: (1) to help the Parties not included in Annex B to achieve sustainable

development and contribute to the ultimate aim of the convention (i.e. to manage to stabilize GHG concentrations at a level where any dangerous anthropogenic

interference in the climate system is prevented), and (2) to help the Parties included in Annex B to comply with their quantified and formalized commitments regarding the limitation and reduction of emissions. The Annex B countries entities such as companies or enterprises will be able to obtain CERs proceeding from emissions

reductions projects in developing countries. The CERs will be added to their

allocated quantities to be used in complying with their GHG reduction commitments.

Table 3.3: Characteristics of Emission Trading, Joint Implementation and the Clean Development Mechanism

Characteristics Emission Trading (ET) Joint Implementation (JI) Clean Development Mechanism (CDM) Kyoto Protocol Article 17 6 12 Products to be exchanged Allowance trading as allocated amount unit (AAU)

Credit trading as emission reduction unit (ERU)

Credit trading as certified emission reduction (CER)

Points of reference Inventory based Project based Project based Bankability Banking possible in

commitment period

No banking specified- possible only during commitment period

Banking possible from 2000

Applicability Applicable 2008-2012 Applicable 2008-2012 Applicable in 2008-2012 but early start from 2000 Inclusion Sinks included Sinks included Sinks included only for

first commitment period Trade requirement Host Party compliance is

required for trade

Host Party compliance is required for credit transfer

Not applicable

Parties included Solely Annex B Solely Annex I No limitation, anyone can be involved. Annex I and Non-Annex I

Participation Voluntary Voluntary Voluntary

Observance Based on inventory Based on each project Based on each project

Suplimentarity yes yes yes

Additionality - yes yes

Private participation Not clarified in the text Explicitly anticipated Explicitly anticipated Certification Not compulsory Not Compulsory Yes, by Operating

Bodies Procedure Purchase-sale of emission

rights in accordance with the deficit or surplus in true emission with respect to the allocated amount.

Transfer/acquisition of ERUs resulting from projects which reduce emission or increase GHG absorption

CER transfer in exchange of benefiting from “certified project activities”

Source: Summarized from the “Report of the Conference of the Parties on Its Seventh Session, held at Marrakech from 29 October to 10 November 2001” (FCCC/CP/2001/13/Add.2).

The environmental integrity of the Kyoto Protocol depends on the production of real emissions reductions. Annex B emitters will add the CER permits purchased to their allocated quantity of rights, and thus they don’t have to reduce at home. If the CER generated are based on reduction which would have occurred anyway in the

developing country, there would be no reduction in Annex B or any reduction in the developing country. The result is that GHG concentrations in the atmosphere would not evolve in the manner agreed to in the conference of the parties.

The CDM has the potential to become a powerful tool for both development and emission reduction. However, this depends on the uptake of the mechanism. It is also important to fully understand its provisions and organisational procedures. The section to follow discusses how the CDM is envisaged to function.