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14 Rev. Eur. Comp. & Int'l Envtl. L. 11 (2005)
Can Forestry Gain from Emissions Trading: Rules Governing Sinks Projects Under the UNFCCC and the EU Emissions Trading System

handle is hein.journals/reel14 and id is 13 raw text is: RECIEL 14 (1) 2005. ISSN 0962 8797 Can Forestry Gain from Emissions Trading? Rules Governing Sinks Projects Under the UNFCCC and the EU Emissions Trading System Patrick Graichen INTRODUCTION Forests serve many purposes: they protect soils and the local watershed, produce wood and other forest products, provide a home to numerous ecosystems and species, and are important for the local climatic condi- tions - to name just a few. As part of discussions about climate change, an important new role of forests has been highlighted: the world's forests are huge carbon reservoirs. When released into the atmosphere, this carbon - in the form of the greenhouse gas carbon dioxide (CO2) - contributes to global climate change. By the same token, enhancing carbon 'sinks', e.g. through afforestation, may mitigate climate change, because carbon is taken out of the atmosphere and stored on the ground.' As a consequence, it is commonly agreed that protect- ing our global forests is key to reducing CO2 emissions from the biosphere. Especially in countries with a large forest cover, like Brazil or Indonesia, emissions from deforestation are the national key source of greenhouse gas emissions, by far more important than industrial or energy-related emissions. However, the answer to this problem is not straightforward. The hotly debated question among parties to the United Nations Framework Convention on Climate Change (UNFCCC)2 within the negotiations on the Kyoto Protocol' was whether changes in carbon stocks should be accounted for within the Kyoto framework. That is, the question was whether carbon removals by sinks would be rewarded and thus could be traded within the Kyoto emissions trading regime. The debate, under the cryptic heading 'Land use, land-use change and forestry' (LULUCF), centred around four 1 Apart from the biosphere, oceans are also large carbon sinks. In this article, however, only biospheric carbon removals are meant when the term 'sink' is used. 2 United Nations Framework Convention on Climate Change (UNFCCC) (New York, 9 May 1992). 3 Kyoto Protocol to the UNFCCC (Kyoto, 7 December 1997). issues: scale, non-permanence, uncertainty and the question of credibility. Furthermore, the question was raised whether or not CO2 removals by sinks in develop- ing countries should also be able to generate credits to be used within the emissions trading regime. In this article, the solution that parties found to address these questions is described and analysed. First, the general approach chosen towards sinks is outlined. Second, the rules that govern forestry projects in developing countries are described, then the rules that LULUCF projects in developed countries would need to follow are briefly set out. The decision by the European Union on how to incorporate credits from projects into the EU emissions trading scheme is then ana- lyzed, before the discussion is brought to a conclusion. HOW SINKS ARE DEALT WITH UNDER THE KYOTO PROTOCOL In the negotiations on the rules for the Kyoto Protocol, the treatment of LULUCF was one of the hotly debated issues. At the heart of the debate there were the following four issues: Scale. The carbon reservoir of the biosphere is gigantic - around 7.4 Gt of CO2 are estimated to be stored in soils and plants. Thus, if avoided deforestation and/or an enhancement of sinks were accounted for, this might well crowd out emission reductions in the energy and industrial sectors, because carbon enhancement options are relatively cheap - and policies to halt carbon loss even more so. However, new low-carbon energy and industry technologies are needed as soon as possible in order to stabilize greenhouse gas concentrations in the atmosphere at a non-dangerous level - which is the ultimate objective of the UNFCCC.' 4 UNFCCC, Article 2. @ Blackwell Publishing Ltd. 2005, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Maiden, MA 02148, USA. 11

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