1. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Accounting for non-permanence of carbon sequestration – options as contained in FCCC/SBSTA/2003/10/Add.3 Jens Mackensen (following presentation by Martina Jung, HWWA, Manila)

2. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 The negotiaton text offers three options for accounting of non- permanence: 1) rCERs (removal Certified Emission Reductions) 2) tRMUs (temporary Removal Units) 3) iCERs (insured Certified Emission Reductions)

3. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 rCERs Temporary credit Validity? - (Only valid for CP in which it was issued) or - Expiry 5 (20) years after issuance Not bankable If carbon is lost upon expiry of rCER, it has to be replaced by other (temporal or permanent) credits

4. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 tRMUs Temporary credit converted CER from forest CDM project (after 2% for adaptation fund subtracted) Validity? - Valid for actual Commitment Period, in which it was issued - End of subsequent CP to which it was issued Not bankable An expired tRMU can be replaced by a valid tRMU up to 7 (x?) times / CP (total of 35 years) Afterwards, tRMU has to be replaced by a permanent credit

5. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 iCERs (Permanent) CER, insured up to at least [Y] years after end of crediting period In case of GHG release (during verification period), insurance has to replace the respective amount of iCERs with other credits If insurance provider unable, Annex 1 country in possession of iCER is liable No liability after end of insurance coverage

6. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Crediting Approaches AdvantagesDisadvantages rCER -accounts for non- permanence -Relatively easy to understand tRMU -accounts for non- permanence -rather complicated -renewal limited iCER If insurance coverage far beyond crediting period -Non-permanence (partially) accounted for -Insurance not available for such long-term iCER If insurance coverage NOT far beyond crediting period -not accounted for non-permanence -insurance not available to developing countries

7. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Carbon accounting 1.Total stock change 2.Average stock change 3.Delayed total stock J.44. The certification report shall constitute a request to the Executive Board for issuance of [CERs] [rCERs] [or ICERs] equal to the verified amount of net anthroponic greenhouse gas removals by sinks achieved by the afforestation and reforestation project activity under the CDM [during the [verification] period] [since the start of the project].

8. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Carbon stock accounting: Total stock change, advanced crediting t0t0 t1t1 Certification and issuance time carbon rCER - t 1 : here end of 1 st Commitment Period (could be earlier) - rCERs valid for CP in which certification has taken place - Problem: risk of carbon release afetr t 1 (full amount has not neen stored for t 1 -t 0 )

9. rCER UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 t0t0 t1t1 Certification and issuance time carbon - t 1 : here end of 1 st Commitment Period (could be earlier) - rCERs valid for CP in which certification has taken place - If release after t 1, but amount of rCERs represent sequestration in t 1 -t 0 - Economically unattractive Carbon stock accounting: Average stock change, advanced crediting

10. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 time -If total stock change of t 1 maintained, full issuance of rCERs at t 2 -Amount of rCERs represents real storage (risk of early release avoided) -Economically unattractive, because income flow very late Carbon stock accounting: Total stock change, delayed crediting t0t0 t1t1 Initial certification carbon t2t2 rCER Certification and issuance

11. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Crediting period Three options 1)Maximum of [Y] years, renewal of at most [X] times If original baseline still valid, starts with project activity Not beyond 31st December 2003 2)See above OR [A maximum of] [5] [X] years 3)A maximum of [5] [X] years In forestry environmental and socio-economic benefits are expected to be larger for longer crediting periods Investor interests/investor security ?

12. UNEP-IUCN-FAO CDM and Forestry Addis, Oct 2003 Definitions – Threshold date Keep 1990 -consistency, firmness -dont reward deforestation - natural regeneration needs time - documentation possible - historic emissions Change to 2000 - more suitable land available - more soc.-env. benefits - documentation easier - more geographic equity Shifting date (10 years)