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During the second week of the meeting, it became clear that there were four main areas of contention. In climate jargon, these were: sinks, supplementarity, compliance, and funding for adaptation. A note by Pronk to address these issues in what he considered a balanced manner, presented two days before the conference was to end, was not accepted by any of the groups. The us dismissed the note as 'unreasonable' even though ngos thought it reflected too many us positions.
The final deal-breaker, however, appears to be the sinks issue. "The refusal of some industrialised nations to give climate protection priority at home caused the failure," German environment minister Trittin said. "It also failed because industrialised countries wanted to count too much of their natural forests as sources of human-made reduction, rather than actually cutting greenhouse gases." A short description of the controversies involving the main "crunch issues", as Pronk called them, follows.
Cheapest way out
If the US has its way, it might increase its emissions and still meet its Kyoto targets
Carbon 'sinks' such as forests absorb (or sequester) carbon dioxide from the atmosphere. As a concession that several European and G77 governments now regret, the Kyoto Protocol allowed countries with reduction commitments the use of 'additional' land use, land use change and forestry (lulucf) activities to meet their commitments. Article 3.4, the now notorious article that allowed the use of lulucf activities, was the subject of major controversy at CoP-6, particularly in light of new revelations by the Intergovernmental Panel on Climate Change (ipcc).
A recent ipcc report states that there are too many complications and uncertainties associated with the use of lulucf to 'fix' carbon. Activities such as afforestation, reforestation and deforestation, listed under article 3.3 of the protocol, are not permanent methods. Moreover, each would need a precise definition to avoid serious loopholes. "While preparing the protocol we did not have the information now provided by the ipcc on sinks," admits Estrada, one of the main architects of the Kyoto Protocol. "Perhaps if we had more information, we would have been able to develop things further. For instance, three palm trees in one acre of land would not qualify as a forest."
Given the uncertainties, the eu and G-77/China have consistently opposed including activities like forest management in the first commitment period (2008-2012). But the umbrella group was not willing to let go of a cheap mitigation opportunity. They fought to ensure that the provisions of article 3.4 were applicable to the first commitment period without any restrictions. And they fought to ensure that sinks would be included as a valid activity under the clean development mechanism (cdm) -- once again a cheap mitigation option that would allow them to claim credits, for instance, for planting a forest in developing countries, where land and labour is cheap.
Neither a contact group on lulucf, formed in the first week, nor the numerous informal ministerial discussions could produce consensus on this hot topic. One week into CoP-6, the us, Japan and Canada came up with a very ambitious "compromise" proposal based on creative accounting. They wanted countries to gain full carbon credits for existing forest management activities up to a level of 20 million tonnes of carbon (MtC) per year during the commitment period, or a negotiated percentage, whichever is lesser. Beyond 20 MtC, the country would get only one-third credit, two-thirds being discounted to existing efforts ('business as usual' status). Then, beyond a threshold, which was left undefined, once again full credits should be allowed. This was to be applied to the first commitment period only. Further, they proposed that cropland and grazing land management activities can be fully accounted as their scale would not significantly impact the first commitment period.
A rapid analysis by the environmental group Greenpeace showed that if this proposal was adopted, the US would be able to increase emissions by 1 per cent, instead of reducing them by 7 per cent from 1990 levels ! Though the umbrella group acknowledged that natural phenomena could not be factored out satisfactorily, they were entirely opposed to waiting till the second commitment period for inclusion. When Pronk tried to break the deadlock with his own proposal, it had an uncanny resemblance to the us proposal, allowing the inclusion of additional lulucf activities in the first commitment period.
In the end, it was the sinks issue that led to the failure of the conference. According to one rumour, the last-minute huddle between the eu and us led to a deal where the us was willing to settle for no sinks under cdm if limited lulucf activities were allowed under article 3.4.
No holds barred
The umbrella group fought off restrictions on the use of trading mechanisms
There were two controversial issues so far as the mechanisms were concerned.
l To what extent should emissions trading be 'supplementary' to domestic action by annex B countries to reduce emissions?
l Should a 'positive list' of projects (such as renewable and clean technology), as proposed by the eu, be allowed under cdm. Equally contentious was the issue of whether sinks and nuclear projects should be excluded from cdm.
supplementarity: At CoP-6, an interesting development was the softened stance of the eu with regard to credits that can be gained through activities other than domestic action to cut emissions. This is definitely a give-in to the us. The Kyoto Protocol lays down that supplemental actions, like trading of credits for emissions reduction, can be used to meet targets. But the limit to the amount of credits that can be purchased has not been set. Keen on exploiting this situation by meeting most of their commitments through trading, the us claims that discussing any limit, or 'cap' on trading, amounts to renegotiating the protocol.
But the eu and G77 have strongly pushed for a stringent cap. The eu has long argued for a 50 per cent limit on credits through flexible mechanisms. But at CoP-6, they seemed willing to accept a qualitative target instead of a quantitative limit. Instead of negotiating for a well-defined cap, the eu seemed willing to settle for words such as 'significant' for domestic action. Pronk's proposal seemed to brush aside any controversy on the caps issue by suggesting only that annex B countries meet their targets 'primarily' through domestic action.
CDM: Creating a list of eligible cdm projects and whether sinks and nuclear projects should be a part of cdm were the crucial areas on which there was no agreement till the end of CoP-6. The us, Canada, Japan and Australia are against a 'positive list' proposed by the eu, and strongly advocate using sinks in cdm. Developing countries, particularly India and China, came under pressure for allegedly promoting the inclusion of nuclear projects in cdm.
Though some Latin American countries support the proposal to include sinks projects under cdm, including Costa Rica and Bolivia, most developing countries were opposed to the inclusion of sinks in cdm. Most of them also reject the idea of a positive list, arguing that host country should have the privilege of deciding on projects.
A compromise proposal on this came from Colombia, which presented a proposal on 'expiring credits'. It suggests that all lulucf projects should be treated as potentially non-permanent and resulting credits should expire after a specific time period. After the expiry period, these credits would be deducted from the country's emission allowance. Pronk's proposal, meanwhile, allowed for afforestation and reforestation projects under cdm, under accounting rules and modalities developed by the subsidiary body on scientific and technological advice (sbsta). He also left out the positive list, leaving the choice of projects to a country's discretion.
Japan supported using the official development assistance (oda) for cdm. Developing countries opposed this, insisting on the 'financial additionality' of cdm projects -- that they must use funds over and above oda and foreign direct investment flows to developing countries.
Polluters turn monitors
Industrialised countries resisted all effort of having a just and effective compliance regime
It was hoped that at CoP-6, an effective compliance system to ensure that countries meet their commitments under the Kyoto Protocol would be drawn. What emerged out of the negotiations was a lengthier draft with more options that before. None of the parties were willing to budge from old positions. Virtually nothing productive came out. Designing a compliance system for rich countries is more difficult than catching and penalising poor nations. Trade sanctions can ensure that a poor country complies with its international commitments. But what if a rich country does not comply, as is the case with the Kyoto Protocol?
Among the options available is the creation of a compliance fund, as proposed by G77/China. In the event of failure to meet emissions reduction target, a country can pay into this fund at a pre-determined penalty rate. The penalty rate must be high enough to act as a deterrent. It is suggested that a percentage of the fund be allocated to finance projects to reduce greenhouse gas emissions. The us opposes any financial penalties. It would like to 'borrow' credits from future commitment periods, at a 1.3 penalty rate (for every tonne that a country defaults on, 1.3 tonnes are deducted from future commitment periods). The eu supports a strong action plan, laying down how a defaulting country proposes to make amends in the next commitment period.
In the pre-CoP negotiations, the idea of a committee to determine compliance and decide consequences was agreed upon. In The Hague, though, no breakthrough was achieved on the composition of facilitative and enforcement branches of this committee. Countries with emissions reduction targets want a larger representation in the enforcement branch given their share of commitments; this demand has now been extended to the membership of the facilitative branch. G77/China stress for an equitable geographical representation as global warming affects everyone. One consolation came from Pronk's note, which favoured both the facilitative and the enforcement branches to have equitable representation.
Developing countries emphasise enforceable consequences should apply only to countries with reduction commitments. The us, Australia, New Zealand and the eu were unwilling to make this distinction. It was decided, however, that compliance procedures will now apply only to the Kyoto Protocol and not to commitments under the convention. Commitments under the convention include assisting developing countries in adapting to adverse effects of climate change and technology transfer.
adaptation and vulnerability
GEF or more?
Promised funds for adaptation remain elusive
There is more reason than ever to believe that the worst effects of climate change will take place in the poorest and the most vulnerable parts of the world. The climate convention, in articles 4.8 and 4.9, asks for actions necessary to meet the specific needs of developing countries (including funding, insurance and transfer of technology) regarding adverse effects of climate change or impact of steps taken to counter climate change. The Kyoto Protocol's article 3.14 also calls on annex I (industrialised) countries to minimise adverse social, environmental and economic impacts on developing countries. It was expected that the details of these provisions would be worked out at CoP-6.
When negotiations finally got serious during the second week, industrialised countries wanted all financial assistance for adaptation to be channelled through the Global Environment Facility (gef). Developing countries opposed this because they find gef too bureaucratic. The issue was referred to a contact group, which was expected to narrow down controversial areas. But the key issues of controversy continued to remain unresolved even after they were referred to the ministerial talks during the second week.
The umbrella group tabled a proposal of its own that offered the creation of a "new window within gef" to fund adaptation and mitigation activities. G77/China opposed this. The umbrella group also wanted the adaptation fund to be part of the proceeds from cdm and voluntary donations, which would amount to industrialised countries fulfilling their commitments by taxing the profits of developing countries from cdm. Pronk's proposal at the fag end of the talks bore several similarities to the draft by the umbrella group. For example, it suggested an adaptation fund under gef, financed from a 2 per cent cut of the share of proceeds from cdm, accommodating the umbrella group proposal. He proposed a convention fund as a new window to gef with new and additional funding for technology transfer. He also proposed that climate change funding be increased "through other channels" to reach a level of us $1 billion over five years. A levy will be applied on joint implementation and emissions trading only if resources in 2005 are found to be less than one billion dollars.
After the Pronk text appeared and negotiators began last-ditch efforts to cut a deal, the issues under this box were relegated to the background with negotiations centring around the us and eu priority areas of sinks and emissions trading. G77/China negotiators, clearly getting sidelined, maintained a stoic silence about the issue.