2001 Marrakesh Accords amending (Kyoto Protocol)

A. CAPACITY BUILDING IN DEVELOPING COUNTRIES (NON-ANNEX I PARTIES)

Decision -/CP.7

Capacity building in developing countries (non-Annex I Parties)

The Conference of the Parties,

Being guided by Article 4.1, 4.3, 4.4, 4.5 and 4.7, in the context of Article 3, and Articles 5 and 6 of the Convention,

Recalling the provisions related to capacity-building for developing countries contained in its decisions 11/CP.1, 10/CP.2, 11/CP.2, 9/CP.3, 2/CP.4, 4/CP.4, 5/CP.4, 6/CP.4, 7/CP.4, 12/CP.4 and 14/CP.4,

Noting Article10, paragraphs (c), (d) and (e), and Article 11 of the Kyoto Protocol,

Recalling also the paragraphs on capacity-building of Agenda 21 and the Programme for the Further Implementation of Agenda 21,

Reaffirming its decision 10/CP.5,

Reaffirming also that capacity-building for developing countries is essential to enable them to participate fully in, and to implement effectively their commitments under, the Convention,

Recalling also its decision 5/CP.6, containing Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

1.               Adopts the framework for capacity-building in developing countries annexed to this decision;

2.               Decides that this framework should guide capacity-building activities related to the implementation of the Convention and effective participation in the Kyoto Protocol process;

3.               Decides to give immediate effect to this framework in order to assist developing countries to implement the Convention and to effectively participate in the Kyoto Protocol process;

4.               Notes that areas for capacity-building identified under the Convention are relevant to the preparation of developing country Parties for their effective participation in the Kyoto Protocol process;

5.               Requests the Global Environment Facility, as an operating entity of the financial mechanism, to report on its progress in support of the implementation of this framework in its reports to the Conference of the Parties;

6.               Urges the operating entity of the financial mechanism to adopt a streamlined and expedited approach in financing activities within this framework;

7.               Invites bilateral and multilateral agencies, and other intergovernmental organizations and institutions, to inform the Conference of the Parties, through the secretariat, of capacity-building activities conducted to assist developing country Parties with their implementation of the framework;

8.               Encourages bilateral and multilateral agencies, and other intergovernmental organizations and institutions, to consult with developing countries in formulating programmes and action plans to support capacity-building activities in accordance with the annexed framework;

9.               Requests the secretariat, in accordance with this framework for capacity-building, and consistent with Article 8 of the Convention, to undertake the following tasks:

(a)              To cooperate with the operating entity of the financial mechanism, its implementing agencies and other entities for capacity-building, to facilitate the implementation of this framework;

(b)              To collect, process, compile and disseminate, in both printed and electronic formats, the information needed by the Conference of the Parties or its subsidiary bodies to review the progress in the implementation of this framework for capacity-building, drawing in particular on information contained in:

(i)   National communications of developing country Parties relating to capacity-building activities;

(ii)  National communications of Parties included in Annex II to the Convention on activities and programmes undertaken to facilitate capacity-building in developing countries related to the implementation of this framework;

(iii) Reports from the Global Environment Facility and other agencies;

(c)              To provide reports to the Conference of the Parties at each of its sessions on activities to implement this framework;

10.             Decides that the Subsidiary Body for Implementation will regularly monitor the progress of the implementation of this framework, taking into account the information provided under paragraphs 9 (b) and 9 (c) above, and reporting to the Conference of the Parties at each of its sessions;

11.             Decides to conduct a comprehensive review of the implementation of this framework at the ninth session of the Conference of the Parties, and every five years thereafter;

12.             Invites Parties to provide information through national communications and other reports to enable the Subsidiary Body for Implementation to monitor progress in the implementation of this framework;

13. Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, at its first session, adopt a decision containing a framework on capacity-building that reaffirms the framework annexed to the present decision with additional reference to priority areas for capacity-building relating to the implementation of the Kyoto Protocol.

ANNEX

Framework for capacity-building in developing countries

A. Purposes

1.         The present framework for capacity-building in developing countries sets out the scope of, and provides the basis for action on, capacity-building related to the implementation of the Convention and preparation for the effective participation of developing countries in the Kyoto Protocol process that will, in a coordinated manner, assist them in promoting sustainable development while meeting the objective of the Convention. It should serve as a guide for the Global Environment Facility as an operating entity of the financial mechanism, and be considered by multilateral and bilateral organizations in their capacity-building activities related to the implementation of the Convention and preparation for their effective participation in the Kyoto Protocol process.

B. Guiding principles and approaches

2.         This framework for capacity-building in developing countries is guided and informed by, inter alia, Article 4.1, 4.3, 4.4, 4.5 and 4.7, in the context of Article 3, and Articles 5, 6 and 11.1 of the Convention, and relevant provisions contained in decisions 11/CP.1, 10/CP.2, 11/CP.2, 9/CP.3, 2/CP.4, 4/CP.4, 5/CP.4, 6/CP.4, 7/CP.4, 12/CP.4, 14/CP.4, and 10/CP.5,¹ and takes into account Article 10, paragraphs (c), (d), and (e), and Article 11 of the Kyoto Protocol.

3.         Capacity-building activities related to the implementation of the Convention by developing countries and to the preparation for their effective participation
in the Kyoto Protocol process should build on work already undertaken by developing countries, as well as on the work undertaken with support from multilateral and bilateral organizations.

4.         The capacity-building needs already identified in the various decisions of the Conference of the Parties should continue to be comprehensively and promptly addressed to promote sustainable development in developing countries through the effective implementation of the Convention and preparation for their effective participation in the Kyoto Protocol process.

5.         There is no “one size fits all” formula for capacity-building. Capacity-building must be country-driven, addressing the specific needs and conditions of developing countries and reflecting their national sustainable development strategies, priorities and initiatives. It is primarily to be undertaken by and in developing countries in accordance with the provisions of the Convention.

6.         Capacity-building is a continuous, progressive and iterative process, the implementation of which should be based on the priorities of developing countries.

7.         Capacity-building activities should be undertaken in an effective, efficient, integrated and programmatic manner, taking into consideration the specific national circumstances of developing countries.

¹ For the full texts of decisions adopted by the Conference of the Parties at its first, second, third, fourth and fifth sessions, see documents FCCC/CP/1995/7/Add.1, FCCC/CP/1996/15/Add.1, FCCC/CP/1997/7/Add.1, FCCC/CP/1998/16/Add.1 and FCCC/CP/1999/6/Add.1, respectively.

8. Capacity-building activities undertaken within this framework should maximize synergies between the Convention and other global environmental agreements, as appropriate.

9.         Capacity-building is crucial to developing countries, especially those that are particularly vulnerable to the adverse effects of climate change. The special circumstances of least developed countries and small island developing States need to be taken into account in the implementation of this framework. They include:

(a)              Fragile ecosystems;

(b)              High population pressure and isolated geographic locations;

(c)              Weak economies, low incomes, high levels of poverty and a lack of foreign investment;

(d)              Land degradation, desertification;

(e)              Undeveloped services, inter alia, meteorologic and hydrological services and water resources management;

(f)               Lack of early warning systems for natural disaster management;

(g)              Inadequate food security.

10.       Capacity-building involves “learning by doing”. Demonstration projects may be used in identifying and learning about the specific capacities that need to be further developed in developing countries.

11.       Existing national institutions have an important role to play in supporting capacity-building activities in developing countries. Such centres can incorporate traditional skills, knowledge and practices, to provide appropriate services in developing countries and facilitate information sharing. Whenever possible and effective, therefore, capacity-building should mobilize these existing national, subregional and regional institutions and the private sector in developing countries, and build on existing processes and endogenous capacities.

12.       National coordinating mechanisms and focal points and national coordinating entities have an important role to play in ensuring coordination at the country and regional levels and may serve as the focal point for coordinating capacity-building activities.

13.       Multilateral and bilateral bodies are encouraged to take account of this framework in their consultations with developing countries when supporting

capacity-building activities related to the implementation of the Convention and the preparation for effective participation by developing countries in the Kyoto Protocol process.

C. Objective and scope of capacity-building

Objective

14. Capacity-building should assist developing countries to build, develop, strengthen, enhance, and improve their capabilities to achieve the objective of the Convention through the

implementation of the provisions of the Convention and the preparation for their effective participation in the Kyoto Protocol process.

Scope

15.       The following is the initial scope of needs and areas for capacity-building in developing countries as broadly identified in the annex to decision 10/CP.5, in the compilation and synthesis

2                                                                                                             3

document prepared by the secretariat, and in submissions by Parties:

(a)              Institutional capacity-building, including the strengthening or establishment, as appropriate, of national climate change secretariats or national focal points;

(b)              Enhancement and/or creation of an enabling environment;

(c)              National communications;

(d)             National climate change programmes;

(e)              Greenhouse gas inventories, emission database management, and systems for collecting, managing and utilizing activity data and emission factors;

(f)               Vulnerability and adaptation assessment;

(g)              Capacity-building for implementation of adaptation measures;

(h)              Assessment for implementation of mitigation options;

(i)               Research and systematic observation, including meteorological, hydrological and climatological services;

(j) Development and transfer of technology;

(k) Improved decision-making, including assistance for participation in international negotiations;

(l)              Clean development mechanism;

(m)            Needs arising out of the implementation of Article 4, paragraphs 8 and 9, of the Convention;

(n)             Education, training and public awareness;

(o)             Information and networking, including the establishment of databases.

16.       Other capacity-building needs and possible responses are being identified by the Parties in their discussions of other issues. The decisions resulting from these discussions, as well as
other activities related to the implementation of the Convention and preparation for their effective participation in the Kyoto Protocol process, should continue to inform the scope and implementation of this framework.

² FCCC/SB/2000/INF. 1.

³ FCCC/SB/2000/INF.5.

Specific scope for capacity-building in least developed countries

17.       The least developed countries, and small island developing States amongst them, are among the most vulnerable to extreme weather events and the adverse effects of climate change. They also have the least capacity to cope with and adapt to the adverse effects of climate change. The following is the initial assessment of needs and priority areas for capacity-building in these countries:

(a)              Strengthening existing and, where needed, establishing national climate change secretariats or focal points to enable the effective implementation of the Convention and effective participation in the Kyoto Protocol process, including preparation of national communications;

(b)              Developing an integrated implementation programme which takes into account the role of research and training in capacity-building;

(c)              Developing and enhancing technical capacities and skills to carry out and effectively integrate vulnerability and adaptation assessments into sustainable development programmes and develop national adaptation programmes of action;

(d)              Strengthening existing and, where needed, establishing national research and training institutions in order to ensure the sustainability of the capacity-building programmes;

(e)              Strengthening the capacity of meteorological and hydrological services to collect, analyse, interpret and disseminate weather and climate information to support implementation of national adaptation programmes of action;

(f)               Enhancing public awareness (level of understanding and human capacity development).

D. Implementation

Actions to enhance the implementation of this framework, taking into account the initial scope outlined in paragraphs 15 to 17 above

18.       All Parties should improve the coordination and effectiveness of capacity-building efforts through dialogue between and among Annex II Parties, developing country Parties, and bilateral and multilateral institutions. All Parties should support the operation of this framework and promote conditions conducive to the sustainability and effectiveness of capacity-building activities.

19.       In implementing this framework, developing country Parties should:

(a)              Continue to identify their specific needs, options and priorities for capacity- building on a country-driven basis, taking into account existing capacities and past and current activities;

(b)              Promote South-South cooperation by utilizing the services of institutions in developing countries that can support capacity-building activities at the national, subregional and regional levels, wherever possible and effective;

(c)              Promote the participation of a wide range of stakeholders, including governments at all levels, national and international organizations, civil society and the private sector, as appropriate;

(d)              Promote the coordination and sustainability of activities undertaken within this framework, including the efforts of national coordinating mechanisms, focal points, and national coordinating entities;

(e)              Facilitate the dissemination and sharing of information on capacity-building activities conducted by developing countries for better coordination and South-South cooperation.

20.       In implementing this framework, Annex II Parties should:

(a)              Provide additional financial and technical resources to assist developing countries, in particular the least developed countries and small island developing States among them, in the implementation of this framework, including promptly available financial and technical resources to enable them to undertake country-level needs assessments and to develop specific capacity- building activities consistent with this framework;

(b)              Respond to the capacity-building needs and priorities of developing countries, in particular the least developed countries and small island developing States among them, in a coordinated and timely manner, and support activities implemented at the national and, as appropriate, subregional and regional levels;

(c)              Give particular attention to the needs of least developed countries and small island developing States among them.

Financing and operation

21.       Financial and technical resources should be made available, through an operating entity of the financial mechanism and, as appropriate, through multilateral and bilateral agencies and the private sector, to assist developing countries, in particular the least developed countries and small island developing States among them, in the implementation of this framework.

22.       In response to this framework, the operating entity of the financial mechanism should elaborate a country-driven strategy for its capacity-building activities.

23.       Multilateral and bilateral agencies are encouraged to take constructive action to support capacity-building activities in this framework through streamlined and coordinated approaches and in a timely manner.

24.       Financial and other assistance is to be made available to developing countries, in particular to the least developed countries and small island developing States among them, to enable them to continue to determine, assess and prioritize their needs for capacity-building in a simple, timely manner and to assist them in strengthening existing institutions and, when needed, to establish the institutional arrangements to implement effective capacity-building activities.

25.       The capacity-building activities undertaken within this framework are to be country- driven and implemented primarily at the country level.

26.       In order to facilitate the exchange of information and cooperation, developing countries, in collaboration with relevant institutions, should identify regional, subregional and sectoral activities that can effectively and efficiently address common capacity-building needs.

27.       The results of activities conducted by the Global Environment Facility as a multilateral financial institution, including the Capacity Development Initiative, as well as activities undertaken by multilateral, bilateral and private sector entities, may be considered in further developing capacity-building activities within this framework at the regional and subregional levels.

Time-frame

28.       This framework for capacity-building
should be implemented promptly, taking into account the immediate, medium- and long-term priority needs identified by developing countries.

29.       Developing countries which have already identified their capacity-building priorities through ongoing work aimed at the implementation of the Convention should be able to promptly implement capacity-building activities under this framework.

30.       The immediate priority needs of developing countries, in particular the least developed countries and small island developing States among them, should be addressed urgently in the implementation of this framework.

Review of progress

31.       The Conference of the Parties, through the Subsidiary Body for Implementation, shall regularly monitor and review the progress in the implementation of this framework.

32.       The Global Environment Facility, as an operating entity of the financial mechanism, is requested to report on its progress in support of the implementation of this framework in its reports to the Conference of the Parties.

Role of the secretariat

33.       In accordance with this framework for capacity-building, the secretariat is requested, consistent with Article 8 of the Convention, to undertake the following tasks:

(a)              To cooperate with the operating entity of the financial mechanism, its implementing agencies and other entities for capacity-building to facilitate the implementation of this framework;

(b)              To collect, process, compile and disseminate the information needed by the Conference of the Parties or its subsidiary bodies to review the progress made in the implementation of this framework for capacity-building.

B. CAPACITY BUILDING IN COUNTRIES WITH ECONOMIES IN TRANSITION

Decision -/CP.7 Capacity building in countries with economies in transition

The Conference of the Parties,

Recalling its decision 11/CP.5,

Recalling Articles 4.1, 4.2, 4.5 and 4.6, 5, 6 and 12 of the Convention,

Noting Articles 2, 3, 5, 6, 7, 10 and 17 of the Kyoto Protocol,

Further recalling its decisions 9/CP.2, 6/CP.4 and 7/CP.4,

Having considered the relevant recommendations of the Subsidiary Body for Scientific and Technological Advice and the Subsidiary Body for Implementation,¹

Recalling also its decision 5/CP.6, containing Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

1.               Adopts the framework for capacity-building activities in countries with economies in transition contained in the annex below;

2.               Decides to give immediate effect to this framework, in order to assist Parties with economies in transition to implement the Convention;

3.               Notes that many areas for capacity-building identified under the Convention are also relevant to the preparation of Parties with economies in transition for participation in the Kyoto Protocol when it enters into force;

4.               Decides to review the effectiveness of the implementation of the framework at regular intervals;

5.               Invites Parties included in Annex II to the Convention (Annex II Parties) and Parties with economies in transition to provide information to enable the Conference of the Parties and the subsidiary bodies to monitor progress in the implementation of this framework, consistent with guidelines for the preparation of national communications;

6.               Urges Annex II Parties, through multilateral agencies, including through the Global Environment Facility within its mandate, and bilateral agencies and the private sector, as appropriate, to make available financial and technical support for the implementation of this framework for capacity-building, including assistance for the development of national action plans of Parties with economies in transition consistent with their priorities;

7.               Further urges multilateral and bilateral agencies to coordinate their activities in support of the implementation of this framework for capacity-building;

8.               Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its first session, adopt a decision endorsing a framework for

See FCCC/SBSTA/2000/10 and FCCC/SBI/2000/10.

capacity-building under the Convention that parallels the framework contained in the annex below, with additional reference to priority areas for capacity-building relating to implementation of the Kyoto Protocol;

9. Requests the secretariat, consistent with Article 8 of the Convention:

(a)              To cooperate with multilateral and bilateral institutions to facilitate the implementation of this framework;

(b)              To collect, process, compile and disseminate the information needed by the Conference of the Parties and the subsidiary bodies to monitor progress in the implementation of this framework.

ANNEX

Framework for capacity-building in countries with economies in transition

A. Purpose

1.         The purpose of this framework for capacity-building is to set out the scope and basis for action for capacity-building activities in countries with economies in transition (EIT Parties) under the Convention and for the preparation of EIT Parties for their participation in the Kyoto Protocol when it enters into force.

B. Guiding principles and approaches

2.         This framework for capacity-building in EIT Parties is guided and informed by,

inter alia, Articles 4.1, 4.2, 4.5 and 4.6, 5, 6 and 12 of the Convention and relevant provisions contained in decisions 9/CP.2, 6/CP.4, 7/CP.4 and 11/CP.5,² and takes account of Articles 2,

3. 5, 6, 7 and 17 of the Kyoto Protocol.

3.         As Parties included in Annex I, EIT Parties have quantified emission limitation and reduction commitments that impose challenges to their existing capacities to implement the Convention. As Parties undergoing the process of transition to a market economy, they need to enhance their ability to address climate change issues. Capacity-building is therefore critical to the effective implementation by EIT Parties of their commitments under the Convention and the preparation of EIT Parties for their participation in the Kyoto Protocol when it enters into force.

4.         Capacity-building for EIT Parties must be country-driven, be consistent with their national sustainable development strategies, reflect their national initiatives and priorities, respond to needs determined and prioritized by EIT Parties themselves, and be primarily undertaken by and in EIT Partie
s in partnership with other Parties and relevant organizations, as appropriate, in accordance with the provisions of the Convention.

5.         Capacity-building should contribute to the effective implementation of the Convention by EIT Parties and the preparation of EIT Parties for their participation in the Kyoto Protocol when it enters into force.

6.         Capacity-building efforts are more effective when they take place within an enabling environment conducive to the development of human, institutional and technical capacity.

7.         Capacity-building should be results-oriented and implemented in an integrated and programmatic manner to facilitate its monitoring and evaluation, cost-effectiveness and efficiency.

8.         Capacity-building is a continuous process aimed at strengthening or establishing, as appropriate, relevant institutions, organizational structures, and human resources in order to strengthen expertise relevant to paragraph 3 of this framework.

9.         Capacities should be developed and strengthened in a manner and under conditions that will work towards sustainability and support the short- and long-term objectives and priorities of EIT Parties under the Convention.

For the full texts of decisions adopted by the Conference of the Parties at its second, fourth and fifth sessions, see FCCC/CP/1996/15/Add.1, FCCC/CP/1998/16/Add.1 and FCCC/CP/1999/6/Add.1 respectively.

10.       Capacity-building involves “learning by doing”. Capacity-building activities should be designed and implemented in a flexible manner.

11.       Capacity-building should improve the coordination and effectiveness of existing efforts and promote the participation of, and dialogue between, a wide range of actors and constituencies, including governments at all levels, international organizations, civil society and the private sector.

12.       Wherever possible, capacity-building should utilize existing institutions and bodies and build on existing processes and endogenous capacities.

13.       National focal points and other institutions, such as research centres and universities and other relevant organizations, should play an important role in providing capacity-building services and facilitating the flow of knowledge, best practices and information.

14.       Capacity-building should be designed so that it results in the development, strengthening and enhancement of institutional capacities, human resources, knowledge and information, methodologies and practices, and the participation and networking of EIT Parties to promote sustainable development and for the purpose set out in paragraph 1 of this framework.

15.       Capacity-building in support of achieving the objectives of the Convention should maximize synergies between the Convention and other global environmental agreements, as appropriate.

16.       Capacity-building is more effective when it is coordinated at all levels (national, regional and international) through dialogue between and among Annex I Parties, and when past and existing efforts are taken into account.

C. Objective and scope of capacity-building

Objective

17.       To build the capacity of EIT Parties to enable them to effectively implement the objective of the Convention and to prepare for their participation in the Kyoto Protocol when it enters into force.

Scope

18.       To ensure that capacity-building efforts are country-driven, each EIT Party should, within the scope of capacity-building, determine its specific objectives, needs, priorities, and options to implement the Convention and to prepare for its participation in the Kyoto Protocol when it enters into force, consistent with its national sustainable development strategy, taking into account existing capacities and past and current activities undertaken by the country itself and in partnership with bilateral and multilateral institutions and the private sector.

19.       The needs for capacity-building in EIT Parties were first identified in the compilation and synthesis document prepared by the secretariat³ based on the submissions of EIT Parties.⁴

³ FCCC/SB/2000/INF.2.

⁴ FCCC/SB/2000/INF.7.

The general areas and needs for capacity-building are listed below. This scope for capacity- building may be revised as further information is made available and as needs and priorities are further identified.

20. General priority areas for capacity-building identified by EIT Parties related to the implementation of the Convention, which may also be relevant to their preparation for participation in the Kyoto Protocol, are to be identified in their national action plan for capacity-building, and include:

21.       In order to maximize available resources for capacity-building and to facilitate exchange and cooperation among EIT Parties, multilateral and bilateral agencies in consultation with EIT Parties should assist, as appropriate, the efforts of EIT Parties themselves to identify, develop and implement national, regional, subregional and sectoral activities that meet the capacity-building needs of EIT Parties. The results of the current and next phase of the Capacity Development Initiative of the Global Environment Facility (GEF) could provide valuable inputs for these activities.

D. Implementation

Responsibilities for implementation

22.       In implementing the activities undertaken within this framework for capacity-building, EIT and Annex II Parties have the following mutual responsibilities:

(a)              To improve the coordination and effectiveness of existing efforts;

(b)              To provide information to enable the Conference of the Parties to monitor progress in the implementation of this framework for capacity-building.

23.       In the implementation of this framework for capacity-building, EIT Parties have the following responsibilities:

(a)              To provide an enabling environment to promote the sustainability and effectiveness of capacity-building activities relating to the implementation of the ultimate objective of the Convention;

(b)              To identify their specific needs, priorities and options for capacity-building on a country-driven basis, taking into account existing capacities and past and current activities;

(c)              To identify and provide information on their own capacity-building activities;

(d)              To promote cooperation among EIT Parties as well as to report to the Conference of the Parties on these activities in their national communications;

(e)              To ensure the mobilization and sustainability of national capacities, including the institutional leadership necessary for national coordination and the effectiveness of capacity-building activities;

(f)               To promote the participation in and access to capacity-building activities of all stakeholders, including governments, civil society and the private sector, as appropriate.

24.       In cooperating with EIT Parties to support the implementation of this framework for capacity-building, Annex II Parties have the following responsibilities:

(a)              To assist EIT Parties, including by making available financial and other resources, to undertake country-level needs assessments to enable them to effectively implement the Convention and, as appropriate, to prepare them for participation in the Kyoto Protocol when it enters into force;

(b)              To assist EIT Parties, including through the provision of financial and other resources, to implement options for capacity-building consistent with their specific priorities and this framework.

Financing

25.       The Annex II Parties, through multilateral agencies, including through the Global Environment Facility within its mandate, and bilateral agencies and the private sector as appropriate, are requested to make available financial and technical support to assist EIT Parties in the implementation of this framework for capacity-building.

Time-frame

26.       The implementation of activities undertaken within this framework for capacity- building should commence as soon as possible.

Monitoring of progress

27.       The Conference of the Parties, through the subsidiary bodies, shall monitor the effectiveness of the implementation of this framework for capacity-building.

28.       Information to enable the Conference of the Parties to monitor the effectiveness of the implementation of this framework should be reported by Parties. Other institutions involved in capacity-building in EIT Parties are invited to provide information for this purpose.

Role of the secretariat

29. In accordance with this framework for capacity-building, the secretariat is requested, consistent with Article 8 of the Convention, to undertake the following tasks:

(a)             To cooperate with multilateral and bilateral institutions to facilitate the implementation of this framework;

(b)             To collect, process, compile and disseminate the information needed by the Conference of the Parties or its subsidiary bodies to monitor progress in the implementation of this framework for capacity-building.

C. DEVELOPMENT AND TRANSFER OF TECHNOLOGIES (DECISIONS 4/CP.4 AND 9/CP.5)

Decision -/CP.7

Development and transfer of technologies (decisions 4/CP.4 and 9/CP.5)

The Conference of the Parties,

Recalling chapter 34 of Agenda 21 and the relevant provisions of the programme for the further implementation of Agenda 21 on the transfer of environmentally sound technologies adopted by the United Nations General Assembly at its nineteenth special session in,¹

Pursuant to the relevant provisions of the Convention, in particular, its Article 4.1, 4.3, 4.5, 4.7, 4.8 and 4.9, Article 9.2(c), Article 11.1, 11.5, and Article 12.3 and 12.4,

Recalling its decisions 11/CP.1, 13/CP.1, 7/CP.2, 9/CP.3, 4/CP.4, 9/CP.5 and the relevant provisions of its decision 1/CP.4 on the Buenos Aires Plan of Action,

Recalling also its decision 5/CP.6, containing Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

1.               Decides to adopt the framework for meaningful and effective actions to enhance the implementation of Article 4, paragraph 5, of the Convention contained in the annex to this decision as part of the outcome of the technology transfer consultative process (decision 4/CP.4) and the Buenos Aires Plan of Action (decision 1/CP.4);

2.               Decides to establish an expert group on technology transfer to be nominated by Parties, with the objective of enhancing the implementation of Article 4, paragraph 5, of the Convention, including, inter alia, by analysing and identifying ways to facilitate and advance technology transfer activities and making recommendations to the Subsidiary Body for Scientific and Technological Advice. The Conference of the Parties will review at its twelfth session the progress of the work and terms of reference, including, if appropriate, the status and continuation of the expert group;

3.               Requests the Global Environment Facility, as an operating entity of the financial mechanism of the Convention, to provide financial support for the implementation of the annexed framework through its climate change focal area and the special climate change fund established under decision -/CP.7 (Funding under the Convention);

4.               Urges developed country Parties to provide technical and financial assistance, as appropriate, through existing bilateral and multilateral cooperative programmes to support the efforts of the Parties in implementing the programmes and measures identified in the annexed framework and to enhance the implementation of Article 4, paragraph 5, of the Convention;

5.               Requests the Convention secretariat:

¹ A/RES/S-19/2.

(a)              To consult with relevant international organizations, and solicit information on their capabilities and abilities to support certain activities identified in the framework for meaningful and effective actions contained in the annex to this decision, and to report on i
ts findings to the Subsidiary Body for Scientific and Technological Advice at its seventeenth session;

(b)              To facilitate the implementation of the annexed framework in cooperation with the Parties, the Global Environment Facility and other relevant international organizations.

ANNEX

Framework for meaningful and effective actions to enhance the implementation of Article 4, paragraph 5, of the Convention

A. Purpose

1.         The purpose of this framework is to develop meaningful and effective actions to enhance the implementation of Article 4, paragraph 5, of the Convention by increasing and improving the transfer of and access to environmentally sound technologies (ESTs) and know-how.

B. Overall approach

2.         The successful development and transfer of ESTs and know-how requires a country- driven, integrated approach, at a national and sectoral level. This should involve cooperation among various stakeholders (the private sector, governments, the donor community, bilateral and multilateral institutions, non-governmental organizations and academic and research institutions), including activities on technology needs assessments, technology information, enabling environments, capacity-building and mechanisms for technology transfer.

C. Key themes and areas for meaningful and effective actions

1. Technology needs and needs assessments

Definition

3.         Technology needs and needs assessments are a set of country-driven activities that identify and determine the mitigation and adaptation technology priorities of Parties other than developed country Parties, and other developed Parties not included in Annex II, particularly developing country Parties. They involve different stakeholders in a consultative process to identify the barriers to technology transfer and measures to address these barriers through sectoral analyses. These activities may address soft and hard technologies, such as mitigation and adaptation technologies, identify regulatory options and develop fiscal and financial incentives and capacity-building.

Purpose

4.         The purpose of technology needs assessments is to assist in identifying and analysing priority technology needs, which can form the basis for a portfolio of EST projects and programmes which can facilitate the transfer of, and access to, the ESTs and know-how in the implementation of Article 4, paragraph 5, of the Convention.

Implementation

5.         Parties other than developed country Parties, and other developed Parties not included in Annex II, particularly developing country Parties, are encouraged to undertake assessments of country-specific technology needs, subject to the provision of resources, as appropriate to country-specific circumstances, from developed country Parties and other developed Parties included in Annex II. Other organizations in a position to do so may also assist in facilitating the technology needs assessment process. Parties are encouraged to make available information on the results of their needs assessments in their national communications, other related national reports and channels (for example, technology information clearing houses)

for consideration by the Subsidiary Body for Scientific and Technological Advice (SBSTA) on a regular basis.

6.         Developed country Parties and other developed Parties included in Annex II to the Convention are urged to facilitate and support the needs assessments process, recognizing the special circumstances of least developed countries.

7.         The Chairman of the SBSTA, with the assistance of the secretariat, in consultation with the expert group on technology transfer, is requested to organize a meeting with representatives from governments, experts drawn from the UNFCCC roster of experts, and representatives from relevant international organizations, to identify methodologies needed to undertake technology needs assessments and to report its findings to the SBSTA at its sixteenth session.

2. Technology information

Definition

8.         The technology information component of the framework defines the means, including hardware, software and networking, to facilitate the flow of information between the different stakeholders to enhance the development and transfer of environmentally sound technologies. This technology information component of the framework could provide information on technical parameters, economic and environmental aspects of environmentally sound technologies and the identified technology needs of Parties not included in Annex II, particularly developing country Parties, as well as information on the availability of environmentally sound technologies from developed countries and opportunities for technology transfer.

Purpose

9.         The technology information component serves to establish an efficient information system in support of technology transfer and to improve the generation and flow of, access to, and quality of technical, economic, environmental and regulatory information relating to the development and transfer of ESTs under the Convention.

Implementation

10.       The Convention secretariat is requested:

(a)              To build on the success of the current work, including that undertaken by the secretariat, in cooperation with the Climate Technology Initiative and other relevant organizations, inter alia, to develop a new search engine on the Internet that will allow for quick access to existing inventories of environmentally sound and economically viable technologies and know-how, including those conducive to mitigating and adapting to climate change;

(b)              To identify, in collaboration with regional centres and other institutions, gaps in existing EST inventories, and update and develop inventories, as needed;

(c)              To organize an expert workshop on technology information, including options for the establishment of an information clearing house and enhancement of information centres and networks, and to further define user needs, criteria for quality control, technical specifications and the role and contribution of the Parties;

(d) To accelerate its work on the development of a technology transfer information clearing house by coordinating with Parties and relevant United Nations agencies and other international organizations and institutions, and developing options for implementation, in particular, networking of an international technology information clearing house under the Convention, and enhancement of technology information centres and networks. A report on the options and recommendations should be provided to the SBSTA at its sixteenth session.

11.       An information clearing house, including a network of technology information centres, should be established under the auspices of the secretariat, by the time of COP 8, taking into consideration the conclusions of the SBSTA, at its sixteenth session, on the above-mentioned report.

3. Enabling
environments

Definition

12.       The enabling environments component of the framework focuses on government actions, such as fair trade policies, removal of technical, legal and administrative barriers to technology transfer, sound economic policy, regulatory frameworks and transparency, all of which create an environment conducive to private and public sector technology transfer.

Purpose

13.       The purpose of the enabling environments component of the framework is to improve the effectiveness of the transfer of environmentally sound technologies by identifying and analysing ways of facilitating the transfer of environmentally sound technologies, including the identification and removal of barriers at each stage of the process.

Implementation

14.       The following are means of creating enabling environments for technology transfer:

(a)              All Parties, particularly developed country Parties, are urged to improve, as appropriate, the enabling environment for the transfer of environmentally sound technologies through the identification and removal of barriers, including, inter alia, strengthening environmental regulatory frameworks, enhancing legal systems, ensuring fair trade policies, utilizing tax preferences, protecting intellectual property rights and improving access to publicly funded technologies and other programmes, in order to expand commercial and public technology transfer to developing countries;

(b)              All Parties are urged to explore, as appropriate, opportunities for providing positive incentives, such as preferential government procurement and transparent and efficient approval procedures for technology transfer projects, which support the development and diffusion of environmentally sound technologies;

(c)              All Parties are urged to promote joint research and development programmes, as appropriate, both bilaterally and multilaterally;

(d)              Developed country Parties are encouraged to promote further and to implement facilitative measures, for example export credit programmes and tax preferences, and regulations, as appropriate, to promote the transfer of environmentally sound technologies;

(e)              All Parties, particularly developed country Parties, are encouraged to integrate, as appropriate, the objective of technology transfer to developing countries into their national policies, including environmental and research and development policies and programmes;

(f)               Developed countries are encouraged to promote, as appropriate, the transfer of publicly owned technologies.

4. Capacity-building

Definition

15.       Within the context of enhancing the implementation of Article 4, paragraph 5 of the Convention, capacity-building is a process which seeks to build, develop, strengthen, enhance and improve existing scientific and technical skills, capabilities and institutions in Parties other than developed country Parties, and other developed Parties not included in Annex II, particularly developing country Parties, to enable them to assess, adapt, manage and develop environmentally sound technologies.

16.       Capacity-building must be country-driven, addressing specific needs and conditions of developing countries and reflecting their national sustainable development strategies, priorities and initiatives. It is primarily to be undertaken by and in developing countries in accordance with the provisions of the Convention.

Purpose

17.       The purpose of capacity-building under this framework is to strengthen the capacities of Parties other than developed country Parties and other developed Parties not included in Annex II, particularly developing country Parties, to promote the widespread dissemination, application and development of environmentally sound technologies and know-how, to enable them to implement the provisions of the Convention. Capacity-building under this framework should be guided by the principles established in the decisions related to capacity- building (decisions -/CP.7 and -/CP.7).

Scope

18.       The following sets out the initial scope of the needs and areas for capacity-building of Parties, other than developed country Parties and other developed Parties not included in Annex II, particularly developing country Parties, for the transfer of, and access to, environmentally sound technologies and know-how:

(a)              Implementation of regional, subregional and/or national capacity-building activities related to the transfer and development of technologies;

(b)              Enhancement of the awareness of financial institutions, public, private and international, of the need to evaluate environmentally sound technologies on an equal footing with other technology options;

(c)              Provision of opportunities for training in the use of environmentally sound technologies through demonstration projects;

(d)              Enhancement of skills in the adoption, adaptation, installation, operation and maintenance of specific environmentally sound technologies and a broadening of understanding of methodologies for evaluating alternative technological options;

(e)              Strengthening of the capacities of existing national and regional institutions relevant to technology transfer, taking into account country- and sector-specific circumstances, including South-South cooperation and collaboration;

(f)               Training in project development and the management and operation of climate technologies;

(g)              Development and implementation of standards and regulations promoting the use, transfer of, and access to ESTs, taking cognizance of country-specific policies, programmes and circumstances;

(h)              Development of skills and know-how in conducting technology needs assessments;

(i)               Improvement of knowledge on energy efficiency and the utilization of renewable energy technologies.

19. The following sets out the initial scope of the needs and areas for capacity-building for the development and enhancement of endogenous capacities and technologies in developing countries. These shall be country-driven processes supported by developed country Parties:

(a)              To establish and/or strengthen, as appropriate, relevant organizations and institutions in developing countries;

(b)              To establish and/or strengthen, to the extent possible, training, expert exchange, scholarship and cooperative research programmes in relevant national and regional institutions in developing countries for the transfer, operation, maintenance, adaptation, diffusion and development of environmentally sound technologies;

(c)              To build capacity for adapting to the adverse effects of climat
e change;

(d)              To strengthen the endogenous capacities and capabilities in research, development, technological innovation, adoption and adaptation, and technology for systematic observation relevant to climate change and its associated adverse effects;

(e)              To improve knowledge in the areas of energy efficiency and the utilization of renewable energy technologies.

Implementation

20. Developed country Parties and other Parties included in Annex II shall take all practicable steps:

(a) To make available resources to assist developing countries in the implementation of capacity-building to enhance the implementation of Article 4, paragraph 5, taking into account the lists contained in paragraphs 18 and 19 above. These resources should include adequate financial and technical resources to enable developing countries to undertake country-level needs assessments and to develop specific capacity-building activities consistent with enhancing the implementation of Article 4, paragraph 5;

(b)              To respond to the capacity-building needs and priorities of developing countries in a coordinated and timely manner, and support activities implemented at the national and, as appropriate, subregional and regional levels;

(c)              To give particular attention to the needs of least developed countries and small island developing States.

21.       All Parties should improve the coordination and effectiveness of capacity-building activities relating to the development and transfer of technologies. All Parties should promote conditions conducive to the sustainability and effectiveness of these capacity- building activities.

5. Mechanisms for technology transfer

Definition

22.       The mechanisms for technology transfer, as identified in this section, are to facilitate the support of financial, institutional and methodological activities: (i) to enhance the coordination of the full range of stakeholders in different countries and regions; (ii) to engage them in cooperative efforts to accelerate the development and diffusion, including transfer, of environmentally sound technologies, know-how and practices to and between Parties other than developed country Parties and other developed Parties not included in Annex II, particularly developing country Parties, through technology cooperation and partnerships (public/public, private/public and private/private); and (iii) to facilitate the development of projects and programmes to support such ends.

Purpose

23.       The purpose of the proposed mechanisms is to develop meaningful and effective actions to enhance the implementation of Article 4, paragraph 5, of the Convention by increasing the transfer of and access to environmentally sound technologies and know-how.

Implementation

Institutional arrangements for technology transfer

24.       Functions: To provide scientific and technical advice on the advancement of the development and transfer of environmentally sound technologies and know-how under the Convention, including the preparation of an action plan to enhance the implementation of Article 4, paragraph 5, of the Convention.

25.       The terms of reference of the expert group on technology transfer appear in the appendix below.

26.       The expert group on technology transfer shall comprise 20 experts, as follows:

(a)              Three members from each of the regions of the Parties not included in Annex I, namely Africa, Asia and the Pacific, and Latin America and the Caribbean;

(b)              One member from the small island developing States;

(c)              Seven members from Parties included in Annex I; and

(d)              Three members from relevant international organizations.

27.       The secretariat shall facilitate the organization of meetings of the group and the preparation of its report to the SBSTA at its subsequent sessions and to the Conference of the Parties.

28.       The expert group on technology transfer shall meet twice a year in conjunction with the sessions of the subsidiary bodies.

APPENDIX

Terms of reference of the expert group on technology transfer

1.         The expert group on technology transfer shall have the objectives of enhancing the implementation of Article 4, paragraph 5, of the Convention and advancing the technology transfer activities under the Convention.

2.         The expert group on technology transfer shall analyse and identify ways to facilitate and advance technology transfer activities, including those identified in the annex to the decision -/CP.7 (Development and transfer of technologies), and make recommendations to the Subsidiary Body for Scientific and Technological Advice (SBSTA).

3.         The expert group on technology transfer shall report on its work each year and propose a programme of work for the following year for decision by the SBSTA.

4.         The members of the expert group on technology transfer shall be nominated by Parties for a period of two years and be eligible to serve two consecutive terms. The SBSTA shall ensure that half of the members of the expert group nominated initially shall serve for a period of three years, taking into account the need to maintain the overall balance of the group. Every year thereafter, half of the members shall be nominated for a period of two years. Appointment pursuant to paragraph 5 shall count as one term. The members shall remain in office until their successors are nominated. The members from three relevant international organizations shall serve on an issue-oriented basis.

5.         If a member of the expert group on technology transfer resigns or is otherwise unable to complete the assigned term of office or to perform the functions of that office, the expert group may decide, bearing in mind the proximity of the next session of the Conference of the Parties, to request the group that had nominated the member to nominate another member to replace the said member for the remainder of that member’s mandate. In such a case, the expert group shall take into account any views expressed by the group that had nominated the member.

6.         The expert group on technology transfer shall annually elect a Chairman and Vice- Chairman from among its members, with one being a member from a Party included in Annex I and the other being a member from a Party not included in Annex I. The positions of Chairman and Vice-Chairman shall alternate annually between a member from a Party included in Annex I and a member from a Party not included in Annex I.

7.         The members of the expert group on technology transfer shall serve in their personal capacity and shall have expertise in any of the following areas, inter alia, greenhouse gas mitigation and adaptation technologies, technology assessments, information technology, r
esource economics, or social development.

D. IMPLEMENTATION OF ARTICLE 4, PARAGRAPHS 8 AND 9, OF THE

CONVENTION (DECISION 3/CP.3 AND ARTICLE 2, PARAGRAPH 3, AND ARTICLE 3, PARAGRAPH 14, OF THE KYOTO PROTOCOL)

Decision -/CP.7

Implementation of Article 4, paragraphs 8 and 9, of the Convention (decision 3/CP.3 and Article 2, paragraph 3, and Article 3, paragraph 14, of the Kyoto Protocol)

The Conference of the Parties,

Determined to protect the climate system for present and future generations,

Recalling its decisions 11/CP.1, 3/CP.3, 1/CP.4, 5/CP.4 and 12/CP.5,

Recalling also its decision 5/CP.6, containing Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Recognizing the specific needs and concerns of developing country Parties referred to in Article 4, paragraph 8, of the Convention, and the specific needs and special situations of the least developed countries referred to in Article 4, paragraph 9,

Recognizing that low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change,

Recognizing the special difficulties of those countries, especially developing countries, whose economies are particularly dependent on fossil fuel production, use and exportation, as a consequence of action taken to limit greenhouse gas emissions,

Reaffirming that Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities, and that, accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof,

Reaffirming that the specific needs and special circumstances of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change, and of those Parties, especially developing country Parties, which would have to bear a disproportionate or abnormal burden under the Convention, should be given full consideration,

Affirming that responses to climate change should be coordinated with social and economic development in an integrated manner with a view to avoiding adverse impacts on the latter, taking into full account the legitimate priority needs of developing countries for the achievement of sustained economic growth and the eradication of poverty,

Acknowledging the efforts already made by Parties to meet the specific needs and concerns of developing country Parties, in particular the least developed countries, with regard to adaptation,

Acknowledging the need to sensitize policy makers and the general public in Parties not included in Annex I to the Convention to climate change and its effects, in accordance with Article 6(a) of the Convention,

Having considered the report,¹ in two parts, on the two workshops referred to in decision 12/CP.5,

Noting the many persistent uncertainties highlighted by those workshops, particularly with regard to the impact of response measures,

Insisting that the extent to which developing country Parties will effectively implement their commitments will depend on the effective implementation by the developed country Parties of their commitments relating to financial resources and transfer of technology and will also take fully into account that economic and social development and poverty eradication are the first and overriding priorities of the developing country Parties,

Acknowledging that the impact of the implementation of response measures will differ significantly from country to country, depending on each country’s unique national circumstances, including the structure of its economy, trade and investment, natural resource endowment, social system, legal regime and population growth rate,

Recognizing that the least developed country Parties are among the most vulnerable to the adverse effects of climate change, and in particular that widespread poverty limits their adaptive capacity,

Acknowledging that the human, infrastructural and economic conditions of the least developed countries severely limit their capacities to participate effectively in the climate change process,

Noting that many of the least developed country Parties do not have the capacity to prepare and submit national communications in the foreseeable future,

I. ADVERSE EFFECTS OF CLIMATE CHANGE

1.         Asserts the importance of a country-driven approach that allows developing country Parties to pursue the specific activities most appropriate to their unique national circumstances;

2.         Insists that action related to adaptation follow an assessment and evaluation process, based on national communications and/or other relevant information, so as to prevent maladaptation and to ensure that adaptation actions are environmentally sound and will produce real benefits in support of sustainable development;

3.         Encourages Parties not included in Annex I to the Convention (non-Annex I Parties) to provide information, including in their national communications, and/or any other relevant information sources, on their specific needs and concerns arising from the adverse effects of climate change;

4.         Stresses the need for Parties included in Annex II to the Convention (Annex II Parties) to provide detailed information, including in their national communications, on support

¹ FCCC/SB/2000/2.

programmes to meet the specific needs and circumstances of developing country Parties arising from the adverse effects of climate change;

5.         Encourages Parties to exchange information on their experience regarding the adverse effects of climate change and on measures to meet their needs arising from these adverse effects;

6.         Underlines the importance of the ongoing work of the secretariat in compiling and disseminating information on methods and tools for evaluating impacts and adaptation strategies;

7.         Decides that the implementation of the following activities shall be supported through the Global Environment Facility (in accordance with decision -/CP.7) and other bilateral and multilateral sources:

(a) Information and methodologies:

(i)   Improving data collection and information gathering, as well as their analysis, interpretation and dissemination to end-users;

(ii)  Integrating climate change considerations into sustainable development planning;

(iii) Providing training in specialized fields relevant to adaptation such as climate and hydroclimate studies, geographical information systems, environmental impact assessment, modelling, integrated coastal zone management, s
oil and water conservation and soil restoration;

(iv) Strengthening existing and, where needed, establishing national and regional systematic observation and monitoring networks (sea-level rise, climate and hydrological monitoring stations, fire hazards, land degradation, floods, cyclones and droughts);

(v)  Strengthening existing and, where needed, establishing national and regional centres and institutions for the provision of research, training, education and scientific and technical support in specialized fields relevant to climate change, utilizing information technology as much as possible;

(vi) Strengthening existing and, where needed, establishing national and regional research programmes on climate variability and climate change, oriented towards improving knowledge of the climate system at the regional level, and creating national and regional scientific capability;

(vii)                                Supporting education and training in, and public awareness of, climate change related issues, for example through workshops and information dissemination;

(b) Vulnerability and adaptation:

(i)   Supporting enabling activities for vulnerability and adaptation assessment;

(ii)  Enhancing technical training for integrated climate change impact and vulnerability and adaptation assessments across all relevant sectors, and environmental management related to climate change;

(iii) Enhancing capacity, including institutional capacity, to integrate adaptation into sustainable development programmes;

(iv) Promoting the transfer of adaptation technologies;

(v)  Establishing pilot or demonstration projects to show how adaptation planning and assessment can be practically translated into projects that will provide real benefits, and may be integrated into national policy and sustainable development planning, on the basis of information provided in the national communications from non-Annex I Parties and/or other relevant sources, and of the staged approach endorsed by the Conference of the Parties in its decision 11/CP.1;

(vi) Supporting capacity-building, including institutional capacity, for preventive measures, planning, preparedness of disasters relating to climate change, including contingency planning, in particular, for droughts and floods in areas prone to extreme weather events;

(vii)                                Strengthening existing and, where needed, establishing early warning systems for extreme weather events in an integrated and interdisciplinary manner to assist developing country Parties, in particular those most vulnerable to climate change;

8. Decides that the implementation of the following activities shall be supported through the special climate change fund (in accordance with decision -/CP.7) and/or the adaptation fund (in accordance with decision -/CP.7), and other bilateral and multilateral sources:

(a)              Starting to implement adaptation activities promptly where sufficient information is available to warrant such activities, inter alia, in the areas of water resources management, land management, agriculture, health, infrastructure development, fragile ecosystems, including mountainous ecosystems, and integrated coastal zone management;

(b)              Improving the monitoring of diseases and vectors affected by climate change, and related forecasting and early-warning systems, and in this context improving disease control and prevention;

(c)              Supporting capacity-building, including institutional capacity, for preventive measures, planning, preparedness and management of disasters relating to climate change, including contingency planning, in particular, for droughts and floods in areas prone to extreme weather events;

(d)              Strengthening existing and, where needed, establishing national and regional centres and information networks for rapid response to extreme weather events, utilizing information technology as much as possible;

9.         Decides to consider, at its eighth session, the implementation of insurance-related actions to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change, based on the outcome of the workshops referred to in paragraphs 38 and 39 below;

10.       Requests the Subsidiary Body for Scientific and Technological Advice and the Subsidiary Body for Implementation to review, at their subsequent sessions, the progress of the above-mentioned activities and make recommendations thereon to the Conference of the Parties at its eighth session;

II. IMPLEMENTATION OF ARTICLE 4.9 OF THE CONVENTION

11.       Decides to establish a work programme for the implementation of Article 4, paragraph 9, of the Convention, which would include activities covered under paragraphs 16 to 20 below, as well as the following:

(a)              Strengthening existing and, where needed, establishing, national climate change secretariats and/or focal points to enable the effective implementation of the Convention and the Kyoto Protocol, in the least developed country Parties;

(b)              Providing training, on an ongoing basis, in negotiating skills and language, where needed, to develop the capacity of negotiators from the least developed countries to participate effectively in the climate change process;

(c)              Supporting the preparation of national adaptation programmes of action;

12.       Decides that a least developed countries fund shall be established, in accordance with decision -/CP.7, to be operated by an entity entrusted with the operation of the financial mechanism, under the guidance of the Conference of the Parties, to support the work programme for the least developed countries. This work programme shall include, inter alia, the preparation and implementation of national adaptation programmes of action;

13.       Decides to develop the guidance referred to in paragraph 12 above, including expedited access to the fund referred to in paragraph 12 above, at its seventh session;

14.       Invites Annex II Parties to contribute financially to the programme mentioned in paragraph 11 above;

15.       Invites Annex II Parties to support least developed country Parties for the following activities:

(a)              Promotion of public awareness programmes to ensure the dissemination of information on climate change issues;

(b)              Development and transfer of technology, particularly adaptation technology, in accordance with decision -/CP.7;

(c)              Strengthening of the capacity of meteorological and hydrological services to collect, analyse, interpret and disseminate weather and climate information to support implementation of national adaptation programmes of action;

16.       Decides that support be provided for the development, by the leas
t developed countries, of national adaptation programmes of action which will serve as a simplified and direct channel of communication of information relating to the vulnerabilities and adaptation

needs of the least developed countries; the information contained in national adaptation programmes of action may constitute the first step in the preparation of initial national communications;

17.       Requests the subsidiary bodies to consider the recommendations relating to the guidelines for the preparation of national adaptation programmes of action and to forward, as appropriate, a draft decision for consideration by the Conference of the Parties at its seventh session;

18.       Requests the subsidiary bodies to consider the recommendations referred to in paragraph 19 below, concerning possible amendments to the terms of reference of the Consultative Group of Experts on National Communications from Parties not included in Annex I to the Convention, prepared with a view to providing technical advice for the preparation of national adaptation programmes of action, and to forward, as appropriate, a draft decision for consideration by the Conference of the Parties at its seventh session;

19.       Decides to consider, at its seventh session, the establishment of a least developed country group of experts, including its terms of reference, taking into account geographical balance, as well as the above-mentioned consideration of the terms of reference of the Consultative Group of Experts;

20.       Decides to assess, at its seventh session, the status of implementation of Article 4, paragraph 9, of the Convention and to consider further action thereon;

III. IMPACT OF THE IMPLEMENTATION OF RESPONSE MEASURES

21.       Stresses that Parties should take action consistent with the provisions of the Convention;

22.       Decides that the implementation of the activities included in paragraphs 25 to 32 below shall be supported through the Global Environment Facility (in accordance with decision -/CP.7), the special climate change fund (in accordance with decision -/CP.7), and other bilateral and multilateral sources:

23.       Encourages non-Annex I Parties to provide information, in their national communications and/or other relevant reports, on their specific needs and concerns arising from the impact of the implementation of response measures;

24.       Requests Annex II Parties to provide detailed information, in their national communications and/or any other relevant reports, on their existing and planned support programmes to meet the specific needs and concerns of developing country Parties arising from the impact of the implementation of response measures;

25.       Encourages Annex I and non-Annex I Parties to cooperate in creating favourable conditions for investment in sectors where such investment can contribute to economic diversification;

26.       Requests Annex II Parties to assist developing countries, in particular those most vulnerable to the impact of the implementation of response measures, in meeting their capacity-building needs for the implementation of programmes which address these impacts;

² See document FCCC/SBI/2001/7.

27.       Urges Parties to consider appropriate technological options in addressing the impact of response measures, consistent with national priorities and indigenous resources;

28.       Encourages Parties to cooperate in the technological development of non-energy uses of fossil fuels, and requests Annex II Parties to support developing country Parties to this end;

29.       Encourages Parties to cooperate in the development, diffusion and transfer of less greenhouse gas-emitting advanced fossil-fuel technologies, and/or technologies relating to fossil fuels, that capture and store greenhouse gases, and requests Annex II Parties to facilitate the participation of the least developed countries and other non-Annex I Parties in this effort;

30.       Urges Annex II Parties to provide financial and technological support for strengthening the capacity of developing country Parties identified in Article 4, paragraphs 8 and 9, of the Convention for improving efficiency in upstream and downstream activities relating to fossil fuels, taking into consideration the need to improve the environmental efficiency of these activities;

31.       Encourages Annex II Parties to promote investment in, and to support and cooperate with, developing country Parties in the development, production, distribution and transport of indigenous, less greenhouse gas-emitting, environmentally sound,³ energy sources, including natural gas, according to the national circumstances of each of these Parties;

32.       Urges Annex II Parties to provide support for research into, and the development and use of, renewable energy, including solar and wind energy, in developing country Parties;

33.       Decides to consider, at its eighth session, the implementation of insurance-related actions to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change, based on the outcome of the workshops referred to in paragraphs 37 and 38 below;

34.       Requests the Subsidiary Body for Scientific and Technological Advice and the Subsidiary Body for Implementation to consider, at their subsequent sessions, the response by Parties to the actions listed in paragraphs 25 to 32 above;

IV. FURTHER MULTILATERAL WORK RELATING TO ISSUES UNDER ARTICLE 4.8 AND 4.9 OF THE CONVENTION

35.       Requests the secretariat to organize regional workshops in order to facilitate information exchange and integrated assessments, including for adaptation;

36.       Requests the secretariat to organize a workshop, before the eighth session of the Conference of the Parties, on the status of modelling activities to assess the adverse effects of climate change and the impact of response measures already implemented on individual developing country Parties, including on how to enhance the participation of developing country experts in such efforts, and to report the results of this workshop to the Conference of the Parties at its eighth session. The terms of reference of this workshop will include assessments on approaches to minimize the adverse effects of response measures on developing countries;

Throughout this text, the term “environmentally sound” means “environmentally safe and sound” (Source: Agenda 21, chapter 1).

37.       Requests the secretariat to organize a workshop, to be held immediately before the workshop referred to in paragraph 38 below, and before the eighth session of the Conference of the Parties, on insurance and risk assessment in the context of climate change and extreme weather events, and to report the results of this workshop to the Conference of the Parties at its eighth session;

38.       Requests the secretariat to organize a workshop, to be held immediately after the workshop referred to in paragraph 37 above, and before the eighth session of the Conference of the Parties, on insurance-related actions to addre
ss the specific needs and concerns of developing country Parties arising from the adverse effects of climate change and from the impact of the implementation of response measures, and to report the results of this workshop to the Conference of the Parties at its eighth session;

39.       Requests the secretariat to organize a workshop, before the ninth session of the Conference of the Parties, on possible synergies and joint action with the other multilateral environmental conventions and agreements, such as the Convention to Combat Desertification, and to report the results of this workshop to the Conference of the Parties at its ninth session;

40.       Requests the secretariat to organize a workshop, before the ninth session of the Conference of the Parties, on the needs and options of non-Annex I Parties for economic diversification, and on support programmes by Annex II Parties to address these needs, and to report the results of this workshop to the Conference of the Parties at its ninth session;

E. ADDITIONAL GUIDANCE TO AN OPERATING ENTITY OF THE FINANCIAL MECHANISM

Decision -/CP.7

Additional guidance to an operating entity of the financial mechanism

The Conference of the Parties,

Recalling its decisions 11/CP.1, 10/CP.2, 11/CP.2, 12/CP.2, 2/CP.4, 8/CP.5 and 10/CP.5,

Recalling also its decision 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Noting the extension of funding through the expedited procedures of the Global Environment Facility (GEF) for countries to address capacity-building needs identified in decision 2/CP.4 enabling Parties to maintain and enhance relevant national capacities, and for the preparation of second national communications,

Noting also the launching of the GEF Country Dialogue Workshops, which have been designed to strengthen national coordination and capacity-building and to promote awareness- raising, and the results of the first phase of the GEF Capacity Development Initiative, a strategic partnership between the GEF Secretariat and the United Nations Development Programme, which were forwarded to Parties in accordance with decision 10/CP.5,

1. Decides that, in accordance with Articles 4.3, 4.5 and 11.1 of the Convention, the GEF, as an operating entity of the financial mechanism, should provide financial resources to developing country Parties, in particular the least developed and the small island developing States amongst them, for the following activities, including those identified in paragraph 7 of decision -/CP.7:

Strengthening, in particularly vulnerable countries and regions identified in stage I activities and especially countries vulnerable to climate-related natural disasters, the implementation of country-driven stage II adaptation activities, pursuant to decision 2/CP.4, paragraph 1 (a), that build upon work done at the national level, either in the context of national communications or of in-depth national studies, including national adaptation programmes of action (NAPAs);

Establishing pilot or demonstration projects to show how adaptation planning and assessment can be practically translated into projects that will provide real benefits, and may be integrated into national policy and sustainable development planning, on the basis of information provided in the national communications, or of in-depth national studies, including NAPAs, and of the staged approach endorsed by the Conference of the Parties in its decision 11/CP.1;

Supporting the continuation of the “country-team” approach, which enhances the collection, management, archiving, analysis, interpretation and dissemination of data on climate change issues and increases national commitment to the implementation of the objective of the Convention;

Enhancing the capacity of their subregional and/or regional information networks to enable such networks to serve as repositories of climate change related information on vulnerability and adaptation assessments and geographic information systems;

Improving climate change related data collection (for example, local emission and regional factors) and information-gathering, as well as the analysis, interpretation and dissemination of these data to national policy makers and other end-users;

Strengthening and, where necessary, establishing:

National, subregional or regional databases on climate change;

Subregional and/or regional climate change related institutions and “centres of excellence”, to enable these institutions and centres to provide a supportive framework, which would include information retrieval and technical support;

Developing and implementing, as appropriate, prioritized projects identified in their national communications;

Undertaking more in-depth public awareness and education activities and community involvement and participation in climate change issues;

Building the capacity, including, where appropriate, institutional capacity, for preventive measures, planning, preparedness for disasters related to climate change, including in particular, contingency planning for droughts and floods in areas prone to extreme weather events;

Strengthening existing and, where needed, establishing early warning systems for extreme weather events in an integrated and interdisciplinary manner to assist developing country Parties, in particular those most vulnerable to climate change;

Supporting the continuation of GEF-related programmes which assist Parties that are at various stages of preparing and/or completing their initial national communications;

2. Invites the GEF:

(a)              To continue its efforts to minimize the time between the approval of project concepts, the development and approval of the related projects, and the disbursement of funds by its implementing/executing agencies to the recipient countries of those projects;

(b)              Further to streamline its project cycle with a view to making project preparations simpler, more transparent and country-driven. In this regard, the project cycles of its implementing/executing agencies should be coordinated with the GEF project cycle;

(c)              To urge its implementing/executing agencies to be more responsive to requests for GEF assistance from developing country Parties for climate change related project activities aimed at implementing the guidance of the Conference of the Parties;

(d)              Further to encourage the use of national and regional experts and/or consultants to enhance project development and implementation; in this regard, it should make its list of national and regional experts and/or consultants publicly available;

(e)              To give consideration to measures to increase opportunities available to developing country Parties for accessing GEF funds for climate change activities aimed at

implementing the guidance of the Conference of the Parties, including a review of the adequacy of the number of implementing/executing agencies available to deliver GEF programmes and projects;

3.          Urges the GEF to adopt a streamlined and expedited approach to financing activities within the framework for capacity-building in developing countries (non-Annex I Parties) contained in decision -/CP.7;

4.         Requests the GEF to include in its report to the Conference of the Parties at its eighth session the specific steps it has taken to implement the provisions of this decision and to include information on its implementation of the framework for capacity-building in developing countries (non-Annex I Parties) contained in

decision -/CP.7;

5.         Requests the GEF, as an operating entity of the financial mechanism, to provide financial support to implement the capacity-building framework annexed to decision -/CP.7 and further to support, enhance and implement its capacity-building activities in accordance with this framework.

F. FUNDING UNDER THE CONVENTION

Decision -/CP.7 Funding under the Convention

The Conference of the Parties,

Recalling the relevant provisions of the United Nations Framework Convention on Climate Change, and in particular its Article 4.1, 4.3, 4.4, 4.5, 4.7, 4.8, 4.9, 4.10 and Article 11,

Recalling also its decisions 11/CP.1 and 15/CP.1,

Recalling further its decisions 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Noting that, by its decisions -/CP.7, and -/CP.7, provisions have been made for funding the implementation of capacity-building activities in Parties not included in Annex I, and that additional guidance has been given to the Global Environment Facility to that effect,

Welcoming the statements made by most Parties included in Annex II¹ on their willingness to commit themselves to provide funding,

Welcoming also the joint political declaration made by the European Community and its member States, together with Canada, Iceland, New Zealand, Norway and Switzerland on their preparedness to contribute collectively €450 million / US $410 million annually by 2005, with this level to be reviewed in 2008,

1. Decides that:

(a)              There is a need for funding, including funding that is new and additional to contributions which are allocated to the climate change focal area of the Global Environment Facility and to multilateral and bilateral funding, for the implementation of the Convention;

(b)              Predictable and adequate levels of funding shall be made available to Parties not included in Annex I;

(c)              In order to meet the commitments under Article 4.1, 4.3, 4.4, 4.5, 4.8 and 4.9, Parties included in Annex II, and other Parties included in Annex I, that are in a position to do so, should provide funding for developing country Parties, through the following channels:

(i)   Increased Global Environment Facility replenishment;

(ii)  The special climate change fund to be established under this decision;

(iii) The least developed countries fund to be established under this decision;

(iv) Bilateral and multilateral sources;

Joint political declaration by the European Community and its member States, together with Canada, Iceland, New Zealand, Norway and Switzerland, and a statement by Japan. For the text of the political declaration and the statement by Japan, see document FCCC/CP/2001/MISC.4.

(d)              Appropriate modalities for burden sharing among the Parties included in Annex II need to be developed;

(e)              Parties included in Annex II shall report on their financial contributions on an annual basis;

(f)               The Conference of the Parties shall review the reports referred to in subparagraph (e) above on an annual basis;

2.         Decides also that a special climate change fund shall be established to finance activities, programmes and measures, relating to climate change, that are complementary to those funded by the resources allocated to the climate change focal area of Global Environment Facility and by bilateral and multilateral funding, in the following areas:

(a)              Adaptation, in accordance with paragraph 8 of decision -/CP.7;

(b)              Transfer of technologies, in accordance with decision -/CP.7;

(c)              Energy, transport, industry, agriculture, forestry and waste management;

(d)              Activities to assist developing country Parties referred to under Article 4, paragraph 8 (h), in diversifying their economies, in accordance with decision -/CP.7;

3.         Decides further that Parties included in Annex II, and other Parties included in Annex I that are in a position to do so, shall be invited to contribute to the fund, which shall be operated by an entity entrusted with the operation of the financial mechanism, under the guidance of the Conference of the Parties;

4.         Invites the entity referred to in paragraph 3 above to make the necessary arrangements for this purpose and report thereon to the eighth session of the Conference of the Parties for appropriate action;

5.         Decides to provide guidance to the entity referred to in paragraph 3 above on the modalities for operating this fund, including expedited access;

6.         Decides also that a least developed countries fund shall be established, which shall be operated by an entity entrusted with the operation of the financial mechanism, under the guidance of the Conference of the Parties, to support a work programme for the least developed countries. This work programme shall include, inter alia, national adaptation programmes of action in accordance with Section II (Implementation of Article 4, paragraph 9, of the Convention) of decision -/CP.7;

7.         Invites the entity referred to in paragraph 6 above to make the necessary arrangements for this purpose and report thereon to the eighth session of the Conference of the Parties for appropriate action;

8.         Decides to provide guidance to the entity referred to in paragraph 6 above on the modalities for operating this fund, including expedited access;

9.          Welcomes the intention expressed by Canada to contribute C$10 million, to enable the prompt start of this fund.

G. ACTIVITIES IMPLEMENTED JOINTLY UNDER THE PILOT PHASE

Decision -/CP.7 Activities implemented jointly under the pilot phase

The Conference of the Parties,

Recalling its decisions 5/CP.1 and 13/CP.5,

Recalling further its decisions 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Taking note of the fourth synthesis
report on activities implemented jointly under the 12 pilot phase¹ and the draft revised uniform reporting format,²

Having considered the conclusions of the Subsidiary Body for Scientific and Technological Advice and the Subsidiary Body for Implementation at the first part of their thirteenth sessions,³

Acknowledging that participating in activities implemented jointly under the pilot phase provides an important opportunity for learning by doing,

Further acknowledging the importance of offering opportunities to participate in activities implemented jointly under the pilot phase to those Parties that have not yet experienced such activities,

Noting that the geographical distribution of activities implemented jointly under the pilot phase remains unbalanced despite recent improvements,

1.         Decides to continue the pilot phase for activities implemented jointly;

2.         Requests the secretariat to organize before the sixteenth session of the subsidiary bodies a workshop on the draft revised uniform reporting format providing an opportunity to Parties to exchange views on and understand further the methodological issues related to the format;

3.          Urges Parties reporting on activities implemented jointly under the pilot phase to submit joint reports through the designated national authority of one Party, which should provide proof that the designated national authorities of all the other Parties involved concur with the reports.

¹ FCCC/SB/2000/6.

² FCCC/SB/2000/6/Add.1.

³ See FCCC/SBSTA/2000/10 and FCCC/SBI/2000/10.

H. MATTERS RELATING TO ARTICLE 3, PARAGRAPH 14, OF THE KYOTO PROTOCOL

Decision -/CP.7

Matters relating to Article 3, paragraph 14, of the Kyoto Protocol

The Conference of the Parties,

Having considered matters relating to Article 3, paragraph 14, of the Kyoto Protocol,

Recalling its decision 8/CP.4, particularly as it refers to decision 5/CP.4,

Recalling also its decision 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its first session, adopt the following decision.

Draft decision -/CMP.1 Matters relating to Article 3, paragraph 14, of the Kyoto Protocol

The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol,

Determined to protect the climate system for present and future generations,

Having considered matters relating to Article 3, paragraph 14, of the Kyoto Protocol,

Recalling decisions 8/CP.4 and 5/CP.4,

Recalling also decisions 5/CP.4 and 12/CP.5,

Reiterating that the extent to which developing country Parties will effectively implement their commitments will depend on the effective implementation by the developed country Parties of their commitments related to financial resources and transfer of technology and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of the developing country Parties,

Reiterating that Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities and accordingly, that the developed country Parties should take the lead in combating climate change and the adverse effects thereof,

Recognizing that developing country Parties that would have to bear a disproportionate or abnormal burden under the Convention should be given full consideration,

Recognizing that low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change,

Recognizing the special difficulties of those countries, especially developing countries, whose economies are particularly dependent on fossil fuel production, use and exportation, as a consequence of action taken to limit greenhouse gas emissions,

1.         Decides to establish a process for the implementation of Article 3, paragraph 14, of the Kyoto Protocol, including exchange of information and the development of methodologies on the assessment of adverse social, environmental and economic impacts on developing country Parties, particularly those identified in Article 4, paragraphs 8 and 9, of the Convention, and of their minimization; among the issues to be considered shall be the establishment of funding, insurance and transfer of technology;

2.         Recognizes that minimizing the impact of the implementation of Article 3, paragraph 1, of the Kyoto Protocol is a development concern affecting both the industrialized and developing countries. Each Party included in Annex I commits itself to take fully into account the consequences of these actions on developing countries, and to prevent or minimize their adverse effects on developing countries; these Parties consider such action as a cost-effectiveness measure;

3.         Requests each Party included in Annex I to provide information, as part of the necessary supplementary information to its annual inventory report, in accordance with the guidelines under Article 7, paragraph 1, of the Kyoto Protocol, relating to how it is striving, under Article 3, paragraph 14, of the Kyoto Protocol, to implement the commitments mentioned in Article 3, paragraph 1, of the Kyoto Protocol in such a way as to minimize adverse social, environmental and economic impacts on developing country Parties, particularly those identified in Article 4, paragraphs 8 and 9, of the Convention, and further requests those Parties to incorporate, in this respect, information on action identified in paragraph 8 below, based on methodologies identified at the workshop referred to in paragraph 11 below;

4.         Decides that the information referred to in paragraph 3 above shall be considered by the facilitative branch of the compliance committee;

5.         Invites Parties not included in Annex I to provide information on their specific needs and concerns related to the adverse social, environmental and economic impacts arising from the implementation of commitments under Article 3, paragraph 1, of the Kyoto Protocol, and requests Parties included in Annex II to the Convention to provide support for that purpose;

6.         Decides to develop guidelines before the second session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol to help determine if Parties included in Annex I are striving to minimize adverse effects, including the adverse effects of climate change, effects on international trade, and social, envi
ronmental and economic impacts on other Parties, especially developing country Parties, and in particular those identified in Article 4, paragraphs 8 and 9, of the Convention, based on methodologies identified at the workshop referred to in paragraph 11 below;

7.         Invites the Intergovernmental Panel on Climate Change, in cooperation with other relevant organizations, to prepare a technical paper on geological carbon storage technologies,

covering current information, and report on it for the consideration of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its second session;

8.         Agrees that Parties included in Annex II to the Convention, and other Parties included in Annex I in a position to do so, should give priority, in implementing their commitments under Article 3, paragraph 14, of the Kyoto Protocol, to the following actions:

(a)              The progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and subsidies in all greenhouse gas emitting sectors, taking into account the need for energy price reforms to reflect market prices and externalities, in pursuit of the objective of the Convention;

(b)              Removing subsidies associated with the use of environmentally unsound and unsafe technologies;

(c)              Cooperating in the technological development of non-energy uses of fossil fuels, and supporting developing country Parties to this end;

(d)              Cooperating in the development, diffusion and transfer of less greenhouse gas- emitting advanced fossil-fuel technologies, and/or technologies relating to fossil fuels that capture and store greenhouse gases, and encouraging their wider use; and facilitating the participation of the least developed countries and other Parties not included in Annex I in this effort;

(e)              Strengthening the capacity of developing country Parties identified in Article 4, paragraphs 8 and 9, of the Convention for improving efficiency in upstream and downstream activities relating to fossil fuels, taking into consideration the need to improve the environmental efficiency of these activities;

(f)               Assisting developing country Parties which are highly dependent on the export and consumption of fossil fuels in diversifying their economies;

9.         Encourages Parties included in Annex I to adopt policies and measures that will result in reductions in emissions of greenhouse gases, as an effective contribution to minimizing the adverse effects of climate change, and to provide information on these policies and measures in their national communications;

10.       Decides to review the actions taken by Parties included in Annex I, in accordance with this decision, and to consider, at its third session, what further actions are necessary; among the issues to be considered shall be the establishment of funding, insurance and transfer of technology, pursuant to Article 3, paragraph 14;

11.       Requests the secretariat to organize, before the second session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, a workshop on reporting methodologies on ways to minimize adverse social, environmental and economic impacts on developing country Parties of the implementation of policies and measures by Parties included in Annex I in achieving their quantified emission limitation and reduction commitments under Article 3, paragraph 1;

12.       Requests the Subsidiary Body for Scientific and Technological Advice and the Subsidiary Body for Implementation to consider the output of the workshop referred to in paragraph 11 above, and to make recommendations thereon to the second session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol.

I. FUNDING UNDER THE KYOTO PROTOCOL

Decision -/CP.7 Funding under the Kyoto Protocol

The Conference of the Parties,

Recalling Articles 10, 11 and 12, paragraph 8, of the Kyoto Protocol,

Recalling also its decisions 11/CP.1 and 15/CP.1,

Recalling further its decision 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Recognizing that funding should be made available to Parties not included in Annex I, which is new and additional to contributions under the Convention,

Recognizing also that appropriate modalities for burden sharing need to be developed,

Welcoming the statements made by most Parties included in Annex II¹ on their willingness to commit themselves to provide funding,

Welcoming also the joint political declaration made by the European Community and its member States, together with Canada, Iceland, New Zealand, Norway and Switzerland, on their preparedness to collectively contribute €450 million/US $410 million annually by 2005, with this level to be reviewed in 2008,

1.               Decides that an adaptation fund shall be established to finance concrete adaptation projects and programmes in developing country Parties that are Parties to the Protocol, as well as activities identified in paragraph 8 of decision -/CP.7;

2.               Decides also that the adaptation fund shall be financed from the share of proceeds on the clean development mechanism project activities and other sources of funding;

3.               Decides further that Parties included in Annex I that intend to ratify the Kyoto Protocol are invited to provide funding, which will be additional to the share of proceeds on clean development mechanism project activities;

4.               Decides also that the adaptation fund shall be operated and managed by an entity entrusted with the operation of the financial mechanism of the Convention, under the guidance of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, with guidance to be provided by the Conference of the Parties in the period prior to entry into force of the Kyoto Protocol;

5.               Invites the entity referred to in paragraph 4 above to make the necessary arrangements for this purpose;

Joint political declaration by the European Community and its member States, together with Canada, Iceland, New Zealand, Norway and Switzerland, and a statement by Japan. For the text of the political declaration and the statement by Japan see document FCCC/CP/2001/MISC.4.

6.               Decides that Parties included in Annex I that intend to ratify the

Kyoto Protocol shall report on their financial contributions to the fund on an annual basis;

7.               Decides also to review the reports referred to in paragraph 6 above on an annual basis, and that, upon entry into force of the Kyoto Protocol, such reports are to be reviewed by the Conference of the Parties serving as the meeting of the Parties to the Kyoto Proto
col.

J. WORK PROGRAMME ON MECHANISMS (DECISIONS 7/CP.4 AND 14/CP.4)

1. Principles, nature and scope of the mechanisms pursuant to Articles 6, 12 and 17 of the Kyoto Protocol

Decision -/CP.7 (Mechanisms)

Principles, nature and scope of the mechanisms pursuant to Articles 6, 12 and 17 of the Kyoto Protocol

The Conference of the Parties,

Recalling its decision 1/CP.3, in particular paragraphs 5 (b), (c) and (e),

Further recalling its decisions 7/CP.4, 8/CP.4, 9/CP.4, 14/CP.5 and 5/CP.6, as appropriate,

Reaffirming the preamble to the Convention,

Recognizing that, in using the mechanisms, Parties shall be guided by the objective and principles contained in Articles 2 and 3 and by Article 4, paragraph 7, of the Convention,

Further recognizing that the Kyoto Protocol has not created or bestowed any right, title or entitlement to emissions of any kind on Parties included in Annex I,

Emphasizing that the Parties included in Annex I shall implement domestic action in accordance with national circumstances and with a view to reducing emissions in a manner conducive to narrowing per capita differences between developed and developing country Parties while working towards achievement of the ultimate objective of the Convention,

Affirming that the use of the mechanisms shall be supplemental to domestic action and that domestic action shall thus constitute a significant element of the effort made by each Party included in Annex I to meet its quantified emission limitation and reduction commitments under Article 3, paragraph 1,

Further emphasizing that environmental integrity is to be achieved through sound modalities, rules and guidelines for the mechanisms, sound and strong principles and rules governing land use, land-use change and forestry activities and a strong compliance regime,

Aware of decisions -/CP.7 (Article 6), -/CP.7 (Article 12), -/CP.7 (Article 17), -/CP.7 (Compliance), -/CP.7 (Land use, land-use change and forestry) and -/CP.7 (Modalities for accounting of assigned amounts),

Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, at its first session, adopt the following decision:

Draft decision -/CMP.1 (Mechanisms)

Principles, nature and scope of the mechanisms pursuant to Articles 6, 12 and 17 of the Kyoto Protocol

The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol,

Recalling decision 1/CP.3, in particular paragraphs 5 (b), (c) and (e),

Further recalling decisions 7/CP.4, 8/CP.4, 9/CP.4, 14/CP.5, 5/CP.6, -/CP.7 (Article 6), -/CP.7 (Article 12), -/CP.7 (Article 17), -/CP.7 (Compliance), -/CP.7 (Land use, land-use change and forestry), and -/CP.7 (Modalities for the accounting of assigned amounts), as appropriate,

Reaffirming the preamble to the Convention,

Recognizing that, in using the mechanisms, Parties shall be guided by the objective and principles contained in Articles 2 and 3 and by Article 4, paragraph 7, of the Convention,

Further recognizing that the Kyoto Protocol has not created or bestowed any right, title or entitlement to emissions of any kind on Parties included in Annex I,

Emphasizing that the Parties included in Annex I shall implement domestic action in accordance with national circumstances and with a view to reducing emissions in a manner conducive to narrowing per capita differences between developed and developing country Parties while working towards achievement of the ultimate objective of the Convention,

Further emphasizing that environmental integrity is to be achieved through sound modalities, rules and guidelines for the mechanisms, sound and strong principles and rules governing land use, land-use change and forestry activities, and a strong compliance regime,

Aware of its decisions -/CMP.1 (Article 6), -/CMP.1 (Article 12), -/CMP.1 (Article 17) and -/CMP.1 (Modalities for accounting of assigned amounts),

1.               Decides that the use of the mechanisms shall be supplemental to domestic action and that domestic action shall thus constitute a significant element of the effort made by each Party included in Annex I to meet its quantified emission limitation and reduction commitments under Article 3, paragraph 1;

2.               Requests the Parties included in Annex I to provide relevant information in relation to paragraph 1 above, in accordance with Article 7 of the Kyoto Protocol, for review under its Article 8;

3.               Decides that the provision of such information shall take into account reporting on demonstrable progress as contained in decision -/CP.7 (Article 7);

4.               Requests the facilitative branch of the Compliance Committee to address questions of implementation with respect to paragraphs 2. and 3. above;

5.               Decides that the eligibility to participate in the mechanisms by a Party included in Annex I shall be dependent on its compliance with methodological and reporting requirements under Article 5, paragraphs 1 and 2, and Article 7, paragraphs 1 and 4, of the Kyoto Protocol. Oversight of this provision will be provided by the enforcement branch of the compliance committee, in accordance with the procedures and mechanisms relating to compliance as contained in decision -/CP.7 (Compliance), assuming approval of such procedures and mechanisms by the Conference of the Parties serving as the meeting of the Parties in decision form in addition to any amendment entailing legally binding consequences, noting that it is the prerogative of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol to decide on the legal form of the procedures and mechanisms relating to compliance”;

6.               Decides that certified emission reductions, emission reduction units and assigned amount units under Articles 6, 12 and 17 may be used to meet commitments under Article 3, paragraph 1, of the Parties included in Annex I, and can be added as provided for in Article 3, paragraphs 10, 11 and 12; and that emission reduction units and assigned amount units can be subtracted as provided for in Article 3, paragraphs 10 and 11, in conformity with the provisions on registries (decision -/CP.7 Modalities for accounting of assigned amount), without altering the quantified emission limitation and reduction commitments inscribed in Annex B to the Kyoto Protocol.

2. Guidelines for the implementation of Article 6 of the Kyoto Protocol

Decision -/CP.7 (Article 6) Guidelines for the implementation of Article 6 of the Kyoto Protocol

The Conference of the Parties,

Recalling its decision 5/CP.6, containing Buenos Aires Plan of Action,

Aware of its decisions -/CP.7 (Mechanisms), -/CP.7 (Article 12), -/CP.7 (Article 17), -/CP.7 (Compliance), -/CP.7 (Land use, land-use change and forestry) and -/CP.7 (Modalities for t
he accounting of assigned amounts),

Affirming that it is the host Party’s prerogative to confirm whether an Article 6 project activity assists it in achieving sustainable development,

Recognizing that Parties included in Annex I are to refrain from using emission reduction units generated from nuclear facilities to meet their commitments under Article 3, paragraph 1,

1.               Urges the Parties included in Annex II to facilitate the participation in projects under Article 6 of Parties included in Annex I with commitments inscribed in Annex B that are undergoing the process of transition to a market economy;

2.               Invites Parties included in Annex I to finance the administrative expenses for operating joint implementation under Article 6 by making contributions to the UNFCCC Trust Fund for Supplementary Activities in order to facilitate preparatory work by the secretariat, if necessary;

3.               Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, at its first session, adopt the following decision:

Draft decision -/CMP.1 (Article 6) Guidelines for the implementation of Article 6 of the Kyoto Protocol

The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol,

Aware of its decisions -/CMP.1 (Mechanisms), -/CMP.1 (Article 12), -/CMP.1 (Article 17), -/CMP.1 (Land use, land-use change and forestry), – /CMP.1 (Modalities for accounting of assigned amounts) and -/CMP.1 (Compliance),

1. Decides to confirm and give full effect to any actions taken pursuant to decision – /CP.7 (Article 6) and to any other relevant decisions by the Conference of the Parties, as appropriate;

2.               Decides to adopt the guidelines for the implementation of Article 6 of the Kyoto Protocol contained in the annex below;

3.               Decides to establish the Article 6 supervisory committee to supervise, inter alia, the verification of ERUs generated by Article 6 project activities at its first session;

4.               Decides that projects under Article 6 aimed at enhancing anthropogenic removals by sinks shall conform to definitions, accounting rules, modalities and guidelines for Article 3, paragraphs 3 and 4, of the Kyoto Protocol;

5.               Decides that projects starting as of the year 2000 may be eligible as Article 6 and that ERUs shall only be issued for a crediting period starting after the year 2008, if they meet the requirements of the guidelines for the implementation of Article 6 of the Kyoto Protocol as set out in the annex below;

6.               Urges the Parties included in Annex II to facilitate the participation in Article 6 projects of Parties included in Annex I with commitments inscribed in Annex B that are undergoing the process of transition to a market economy;

7.               Decides that any administrative costs arising from procedures contained in the annex below relating to the functions of the Article 6 supervisory committee shall be borne by both the Annex I Parties and the project participants according to specifications set out in decision -/CMP.1;

8.               Decides further that any future revision of the guidelines for the implementation of Article 6 shall be decided in accordance with the rules of procedure of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, as applied. The first review shall be carried out no later than one year after the end of the first commitment period, based on recommendations by the Article 6 supervisory committee and by the Subsidiary Body for Implementation drawing on technical advice of the Subsidiary Body for Scientific and Technological Advice, as needed. Further reviews shall be carried out periodically thereafter. Any revision of the decision shall not affect ongoing Article 6 projects.

ANNEX

Guidelines for the implementation of Article 6 of the Kyoto Protocol

A. Definitions

1.         For the purpose of this annex the definitions contained in Article 1 and the provisions of Article 14 shall apply. Furthermore:

An “emission reduction unit” or “ERU” is a unit issued pursuant to Article 6 and requirements thereunder and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

A “certified emission reduction” or “CER” is a unit issued pursuant to Article 12 and requirements thereunder, and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

An “assigned amount unit” or “AAU” is a unit issued pursuant to the relevant provisions on registries in decision -/CMP.1 (Modalities for the accounting of assigned amounts), and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

A “removal unit” or “RMU” is a unit issued pursuant to the relevant provisions on registries in decision -/CMP.1 (Modalities for the accounting of assigned amounts), and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5

(a) “Stakeholders” means the public, including individuals, groups or communities affected, or likely to be affected, by the project.

B. Role of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol

2.         The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (COP/MOP) shall provide guidance regarding the implementation of Article 6 and exercise authority over an Article 6 supervisory committee.

C. Article 6 supervisory committee

3.         The Article 6 supervisory committee shall supervise, inter alia, the verification of ERUs generated by Article 6 project activities, referred to in section E below and be responsible for:

Reporting on its activities to each session of the COP/MOP;

The accreditation of independent entities in accordance with standards and procedures contained in Appendix A below;

The review of standards and procedures for the accreditation of independent entities in Appendix A below, giving consideration to relevant work of the executive board of the clean development mechanism (CDM) and, as appropriate, making recommendations to the COP/MOP on revisions to these standards and procedures;

The review and revision of reporting guidelines and criteria for baselines and monitoring in Appendix B below, for consideration by the COP/MOP, giving consideration to relevant work of the executive board of the clean development mechanism (CDM), as appropr
iate;

The elaboration of the Article 6 project design document, for consideration by the COP/MOP, taking into consideration Appendix B of the Annex on modalities and procedures for a clean development mechanism and giving consideration to relevant work of the executive board of the clean development mechanism (CDM), as appropriate.

The review procedure set out in paragraph 0;

The elaboration of any rules of procedure additional to those contained in this annex, for consideration by the COP/MOP.

4.         The Article 6 supervisory committee shall comprise ten members from Parties to the Kyoto Protocol, as follows:

(a)              Three members from Parties¹ included in Annex I that are undergoing the process of transition to a market economy;

(b)              Three members from Parties included in Annex I not referred to in subparagraph (a) above;

(c)              Three members from Parties not included in Annex I;

(d)              One member from the small island developing States.

5.         Members, including alternate members, of the Article 6 supervisory committee shall be nominated by the relevant constituencies referred to in paragraph 4 and be elected by the COP/MOP. The COP/MOP shall elect to the Article 6 supervisory committee five members and five alternate members for a term of two years and five members and five alternate members for a term of three years. Thereafter, the COP/MOP shall elect, every year, five new members and five alternate members for a term of two years. Appointment pursuant to paragraph 12 below shall count as one term. The members, and alternate members, shall remain in office until their successors are elected;

6.         Members of the Article 6 supervisory committee may be eligible to serve a maximum of two consecutive terms. Terms as alternate members do not count.

7.         The Article 6 supervisory committee shall elect annually a chairperson and vice- chairperson from among its members, with one being from a Party included in Annex I and the other being from a Party not included in Annex I. The positions of chairperson and vice-chairperson shall alternate annually between a member from a Party included in Annex I and a member from a Party not included in Annex I.

In the context of this annex, “Party” refers to a Party to the Kyoto Protocol, unless otherwise specified.

8.         The COP/MOP shall elect an alternate member for each member of the Article 6 supervisory committee based on the criteria in paragraphs 4, 5 and 6 above. The nomination by a constituency of a candidate member shall be accompanied by a nomination of a candidate alternate member from the same constituency.

9.         The Article 6 supervisory committee shall meet at least two times each year, whenever possible in conjunction with the meetings of the subsidiary bodies, unless decided otherwise. All documentation for the Article 6 supervisory committee meetings shall be made available to alternate members.

10.      Members, including alternate members, of the Article 6 supervisory committee shall:

Serve in their personal capacities and shall have recognized competence relating to climate change issues and in relevant technical and policy fields. The cost of participation of members and of alternate members from developing country Parties and other Parties eligible under UNFCCC practice shall be covered by the budget for the Article 6 supervisory committee;

Have no pecuniary or financial interest in any aspect of an Article 6 project;

Subject to their responsibility to the Article 6 supervisory committee, not disclose any confidential or proprietary information coming to their knowledge by reason of their duties for the Article 6 supervisory committee. The duty of a member, including an alternate member, not to disclose confidential information constitutes an obligation in respect to that member, including an alternate member, and shall remain an obligation after the expiration or termination of that member’s, including an alternate member’s, function for the Article 6 supervisory committee;

Be bound by the rules of procedure of the Article 6 supervisory committee;

(a) Take a written oath of service witnessed by the Secretary-General of the United Nations or his/her authorized representative before assuming his or her duties.

11.       The Article 6 supervisory committee may suspend and recommend to the COP/MOP the termination of the membership of a particular member, or alternate members, for cause including, inter alia, breach of the conflict of interest provisions, breach of the confidentiality provisions, or failure to attend two consecutive meetings of the Article 6 supervisory committee without proper justification.

12.       If a member, or alternate member, of the Article 6 supervisory committee resigns or is otherwise unable to complete the assigned term of office or to perform the functions of that office, the Article 6 supervisory committee may decide, bearing in mind the proximity of the next session of the COP/MOP, to appoint another member, or alternate member, to replace the said member for the remainder of that member’s mandate. In such a case, the Article 6 supervisory committee shall take into account any views expressed by the group that had nominated the member.

13.       The Article 6 supervisory committee shall draw on the expertise necessary to perform its functions, in particular taking into account national accreditation procedures.

14.       At least two thirds of the members of the Article 6 supervisory, representing a majority of members from Parties included in Annex I and a majority of members from Parties not included in Annex I, must be present to constitute a quorum.

15.       Decisions by the Article 6 supervisory committee shall be adopted by consensus, whenever possible. If all efforts at reaching a consensus have been exhausted and no agreement has been reached, decisions shall as a last resort be adopted by a three-fourths majority vote of the members present and voting at the meeting. Members abstaining from voting shall be considered as not voting.

16.       The full text of all decisions of the Article 6 supervisory committee shall be made publicly available. Decisions shall be made available in all six official languages of the United Nations.

17.       The working language of the Article 6 supervisory committee shall be English.

18.       Meetings of the Article 6 supervisory committee shall be open to attendance, as observers, by all Parties, by all UNFCCC accredited observers and stakeholders, except where otherwise decided by the Article 6 supervisory committee.

19.       The secretariat shall service the Article 6 supervisory committee.

D. Participation requirements

20.       A Party involved in an Article 6 project shall inform the secretariat of:

(a)              Its designated focal point for
approving projects pursuant to Article 6, paragraph 1 (a);

(b)              Its national guidelines and procedures for approving Article 6 projects, including the consideration of stakeholders’ comments, as well as monitoring and verification.

21.       Subject to the provisions of paragraph 22, a Party included in Annex I with a commitment inscribed in Annex B is eligible to transfer and/or acquire ERUs issued in accordance with the relevant provisions, if it is in compliance with the following eligibility requirements:

(a)              It is a Party to the Kyoto Protocol;

(b)              It has established its assigned amount pursuant to Article 3, paragraphs 7 and 8, in accordance with the modalities for the accounting of assigned amount under Article 7, paragraph 4;

(c)              It has in place a national system for the estimation of anthropogenic emissions by sources and anthropogenic removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, in accordance with Article 5, paragraph 1, and the requirements in the guidelines decided thereunder;

(d)              It has in place a national registry in accordance with Article 7, paragraph 4, and the requirements in the guidelines decided thereunder;

(e)              It has submitted annually the most recent required inventory, in accordance with Article 5, paragraph 2, and Article 7, paragraph 1, and the requirements in the guidelines decided

thereunder, including the national inventory report and the common reporting format. For the first commitment period, the quality assessment needed for the purpose of determining eligibility to use the mechanisms shall be limited to the parts of the inventory pertaining to emissions of greenhouse gases from sources/sector categories from Annex A to the Kyoto Protocol and the submission of the annual inventory on sinks”;

(f) It submits the supplementary information on assigned amount in accordance with Article 7, paragraph 1, and the requirements in the guidelines decided thereunder and makes any additions to, and subtractions from, assigned amount pursuant to Article 3, paragraphs 7 and 8, including for the activities under Article 3, paragraphs 3 and 4, in accordance with Article 7, paragraph 4, and the requirements in the guidelines decided thereunder.

22.       A Party included in Annex I with a commitment inscribed in Annex B shall be considered:

To meet the eligibility requirements referred to in paragraph 21 above after 16 months have elapsed since the submission of its report to facilitate the establishment of its assigned amount pursuant to Article 3, paragraphs 7 and 8, and to demonstrate its capacity to account for its emissions and assigned amount, in accordance with the modalities adopted for the accounting of assigned amount under Article 7, paragraph 4, unless the enforcement branch of the compliance committee finds, in accordance with decision -/CP.7 (Compliance), that the Party does not meet these requirements, or, at an earlier date, if the enforcement branch of the compliance committee has decided that it is not proceeding with any questions of implementation relating to these requirements indicated in reports of the expert review teams under Article 8 of the Kyoto Protocol, and has transmitted this information to the secretariat;

To continue to meet the eligibility requirements referred to in paragraph 21 above unless and until the enforcement branch of the compliance committee decides that the Party does not meet one or more of the eligibility requirements, has suspended the Party’s eligibility, and has transmitted this information to the secretariat.

23.       Where it is considered to meet the eligibility requirements set out in paragraph 21 above, a host Party may verify reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks from an Article 6 project as being additional to any that would otherwise occur, in accordance with Article 6, paragraph 1 (b). Upon such verification, the host Party may issue the appropriate quantity of ERUs in accordance with the relevant provisions of decision -/CMP.1 (Modalities for the accounting of assigned amounts).

24.       Where a host Party does not meet the eligibility requirements set out in paragraph 21 above, the verification of reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks from an Article 6 project as being additional to any that would otherwise occur, in accordance with Article 6, paragraph 1 (b), shall occur through the verification procedure under the Article 6 supervisory committee, as set out in section E below. The host Party may however only issue and transfer ERUs upon meeting the requirements in paragraphs 21 (a) to (c) and 21 (e) above.

25.       A host Party which meets the requirements in paragraph 21 above may at any time elect to use the verification procedure under the Article 6 supervisory committee.

26.       The provisions in Article 6, paragraph 4, shall pertain, inter alia, to the requirements of paragraph 21 above.

The secretariat shall maintain a publicly accessible list of Parties that meet the eligibility requirements and that have been suspended in accordance with relevant provisions contained in decision -/CP.7 (Compliance).

27.       A Party hosting an Article 6 project shall make publicly available, directly or through the secretariat, information on the project in accordance with the reporting guidelines set out in Appendix B below and the requirements contained in decision -/CMP.1 (Modalities for the accounting of assigned amounts).

A Party that authorizes legal entities to participate in Article 6 projects shall remain responsible for the fulfilment of its obligations under the Kyoto Protocol and shall ensure that such participation is consistent with this annex. Legal entities may only transfer or acquire ERUs if the authorizing Party is eligible to do so at that time.

E. Verification procedure under the Article 6 supervisory committee

The verification procedure under the Article 6 supervisory committee is the determination by an independent entity, accredited pursuant to Appendix A below, of whether a project and the ensuing reductions of anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks meet the relevant requirements of Article 6 and these guidelines.

Project participants shall submit to an accredited independent entity a project design document that contains all information needed for the determination of whether the project:

Has been approved by the Parties involved;

Would result in a reduction of anthropogenic emissions by sources or an enhancement of anthropogenic removals by sinks that is additional to any that would otherwise occur; and

Has an appropriate baseline and monitoring plan in accordance with the criteria set out in Appendix B below.

The accredited independent entity shall make the project design document publicly available through the secretariat, subject to confidentiality provisions set out in paragraph 0 below, and receive comments from Parties, stakeholders and
UNFCCC accredited observers on the project design document and any supporting information for 30 days from the date the project design document is made publicly available.

The accredited independent entity shall determine whether:

The project has been approved by the Parties involved;

The project would result in a reduction of anthropogenic emissions by sources or an enhancement of anthropogenic removals by sinks that is additional to any that would otherwise occur;

The project has an appropriate baseline and monitoring plan in accordance with the criteria set out in Appendix B below; and

Project participants have submitted to the accredited independent entity documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts, in accordance with procedures as determined by the host Party, and, if those impacts are considered significant by the project participants or the host Party, have undertaken an environmental impact assessment in accordance with procedures as required by the host Party.

The accredited independent entity shall make its determination publicly available through the secretariat, together with an explanation of its reasons, including a summary of comments received and a report of how due account was taken of these.

The determination regarding a project design document shall be deemed final 45 days after the date on which the determination is made public, unless a Party involved in the project or three of the members of the Article 6 supervisory committee request a review by the Article 6 supervisory committee. If such a review is requested, the Article 6 supervisory committee shall finalize the review as soon as possible, but no later than 6 months or at the second meeting following the request for review. The Article 6 supervisory committee shall communicate its decision on the determination and the reasons for it to the project participants and the public. Its decision shall be final.

28.       Project participants shall submit to an accredited independent entity a report in accordance with the monitoring plan on reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks that have already occurred. The report shall be made publicly available.

The accredited independent entity shall, upon receipt of a report referred to under paragraph 28, make a determination of the reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks reported by project participants in accordance with Appendix B below, provided that they were monitored and calculated in accordance with paragraph 0.

29.       The accredited independent entity shall make its determination under paragraph 0 publicly available through the secretariat, together with an explanation of its reasons.

The determination regarding reported reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks shall be deemed final 15 days after the date on which it is made public, unless a Party involved in the project or three of the members of the Article 6 supervisory committee request a review by the Article 6 supervisory committee. If such a review is requested, the Article 6 supervisory committee shall:

(a)              At its next meeting or no later than 30 days after the formal request for the review decide on its course of action. If it decides that the request has merit it shall perform a review;

(b)              Complete its review within 30 days following its decision to perform the review;

(c)              Inform the project participants of the outcome of the review, and make public its decision and the reasons for it.

Information obtained from project participants marked as proprietary or confidential shall not be disclosed without the written consent of the provider of the information, except as required by applicable national law of the host Party. Information used to determine whether reductions in anthropogenic emissions by sources or enhancements of anthropogenic removals by sinks are

additional, to describe the baseline methodology and its application, and to support an environmental impact assessment referred to in paragraph 0 0 shall not be considered as proprietary or confidential.

Any provisions relating to the commitment period reserve or other limitations to transfers under Article 17 shall not apply to transfers by a Party of ERUs issued into its national registry that were verified in accordance with the verification procedure under the Article 6 supervisory committee.

The Article 6 supervisory committee shall suspend or withdraw the accreditation of an independent entity if it has carried out a review and found that the entity no longer meets the accreditation standards laid down in Appendix A. The Article 6 supervisory committee may suspend or withdraw accreditation only after the accredited independent entity has had the opportunity of a hearing and depending on the outcome of the hearing. The suspension or withdrawal is with immediate effect. The affected entity shall be notified, immediately and in writing, once the Article 6 supervisory committee has decided upon its suspension or withdrawal. The decision by the Article 6 supervisory committee on such a case shall be made public.

Verified projects shall not be affected by the suspension or withdrawal of the accreditation of an accredited independent entity unless significant deficiencies are identified in the determination referred to in paragraphs 0 or 0 above for which the entity was responsible. In this case, the Article 6 supervisory committee shall decide whether a different accredited independent entity shall be appointed to assess and, where appropriate, correct such deficiencies. If such an assessment reveals that excess ERUs have been transferred as a result of the deficiencies identified in the determination referred to in paragraphs 0 or 0 above, the independent entity whose accreditation has been withdrawn or suspended shall acquire an equivalent amount of AAUs and ERUs and place them in the holding account of the Party hosting the project within 30 days from the assessment mentioned above.

Any suspension or withdrawal of an accredited independent entity that adversely affects verified projects shall be decided on by the Article 6 supervisory committee only after the affected project participants have had the opportunity of a hearing.

Any costs related to the assessment referred to in paragraph 0 shall be borne by the accredited independent entity whose accreditation has been withdrawn or suspended.

APPENDIX A

Standards and procedures for the accreditation of independent entities 1. An independent entity shall:

(a)              Be a legal entity (either a domestic legal entity or an international organization) and provide documentation of this status;

(b)              Employ a sufficient number of persons having the necessary competence to perform all necessary functions relevant to the verification of ERUs generated by Article 6

projects relating to the type, range and volume of work performed, under a responsible senior executive;

(c)              Have the financial stability, insurance coverage and resources required for its activities;

(d)              Have sufficient arrangements to cover legal and financial liabilities arising from its activities;

(e)              Have documented internal procedures for carrying out its functions including, inter alia, procedures for the allocation of responsibilities within the organization and for handling complaints; these procedures shall be made publicly available;

(f)               Have the necessary expertise to carry out the functions specified in this and relevant decisions by the COP/MOP, and in particular have sufficient knowledge and understanding of:

(i)   The guidelines for the operation of Article 6, relevant decisions of the COP/MOP and of the Article 6 supervisory committee;

(ii)  Environmental issues relevant to verification of Article 6 projects;

(iii) The technical aspects of Article 6 activity relevant to environmental issues, including expertise in the setting of baselines and monitoring of emissions and other environmental impacts;

(iv) Relevant environmental auditing requirements and methodologies;

(v)  Methodologies for the accounting of anthropogenic emissions by sources and/or anthropogenic removals by sinks;

(g)              Have a management structure that has overall responsibility for performance and implementation of the entity’s functions, including quality assurance procedures, and all relevant decisions relating to verification. The applicant independent entity shall make available:

(i)   The names, qualifications, experience and terms of reference of the senior executive, board members, senior officers and other relevant personnel;

(ii)  An organizational chart showing lines of authority, responsibility and allocation of functions stemming from the senior executive;

(iii) Its policy and procedures for conducting quality assurance procedures;

(iv) Administrative procedures, including document control;

(v)  Its policy and procedures for the recruitment and training of independent entity personnel, for ensuring their competence for all necessary functions, and for monitoring their performance;

(vi) Its procedures for handling complaints, appeals and disputes;

(h)              Not have pending any judicial process for malpractice, fraud and/or other activity incompatible with its functions as an accredited independent entity.

2.

An applicant independent entity shall meet the following operational requirements:

(a)              Work in a credible, independent, non-discriminatory and transparent manner, complying with applicable national law and meeting, in particular, the following requirements:

(i)   An applicant independent entity shall have a documented structure, which safeguards impartiality, including provisions to ensure the impartiality of its operations;

(ii)  If it is part of a larger organization, and where parts of that organization are, or may become, involved in the identification, development or financing of any Article 6 project, the applicant independent entity shall:

–     Make a declaration of all the organization’s actual and potential Article 6 activities;

–     Clearly define the links with other parts of the organization, demonstrating that no conflicts of interest exist;

–     Demonstrate that no actual or potential conflict of interest exists between its functions as an accredited independent entity and any other functions that it may have, and demonstrate how business is managed to minimize any identified risk to impartiality. The demonstration shall cover all potential sources of conflict of interest, whether they arise from within the applicant independent entity or from the activities of related bodies;

–     Demonstrate that it, together with its senior executive and staff, is not involved in any commercial, financial or other processes which might influence its judgement or endanger trust in its independence of judgement and integrity in relation to its activities, and that it complies with any rules applicable in this respect;

(b)              Have adequate arrangements to safeguard confidentiality of the information obtained from Article 6 project participants in accordance with provisions contained in the annex on guidelines for the implementation of Article 6.

APPENDIX B Criteria for baseline setting and monitoring

Criteria for baseline setting

1. The baseline for an Article 6 project is the scenario that reasonably represents the anthropogenic emissions by sources or anthropogenic removals by sinks of greenhouse gases that would occur in the absence of the proposed project. A baseline shall cover emissions from all gases, sectors and source categories listed in Annex A and anthropogenic removals by sinks within the project boundary.

2.         A baseline shall be established:

(a)              On a project-specific basis and/or using a multi-project emission factor;

(b)              In a transparent manner with regard to the choice of approaches, assumptions, methodologies, parameters, data sources and key factors;

(c)              Taking into account relevant national and/or sectoral policies and circumstances, such as sectoral reform initiatives, local fuel availability, power sector expansion plans, and the economic situation in the project sector;

(d)              In such a way that ERUs cannot be earned for decreases in activity levels outside the project activity or due to force majeure;

(e)              Taking account of uncertainties and using conservative assumptions.

3.         Project participants shall justify their choice of baseline.

Monitoring

4.         Project participants shall include, as part of the project design document, a monitoring plan that provides for:

(a)              The collection and archiving of all relevant data necessary for estimating or measuring anthropogenic emissions by sources and/or anthropogenic removals by sinks of greenhouse gases occurring within the project boundary during the crediting period;

(b)              The collection and archiving of all relevant data necessary for determining the baseline of anthropogenic emissions by sources and/or anthropogenic removals by sinks of greenhouse gases within the project boundary during the crediting period;

(c)              The identification of all potential sources of, and the collection and archiving of data on increased anthropogenic emissions by sources and/or reduced anthropogenic remov
als by sinks of greenhouse gases outside the project boundary that are significant and reasonably attributable to the project during the crediting period. The project boundary shall encompass all anthropogenic emissions by sources and/or removals by sinks of greenhouse gases under the control of the project participants that are significant and reasonably attributable to the Article 6 project;

(d)              The collection and archiving of information about environmental impacts, in accordance with procedures as required by the host Party, where applicable;

(e)              Quality assurance and control procedures for the monitoring process;

(f)               Procedures for the periodic calculation of the reductions of anthropogenic emissions by sources and/or enhancements of anthropogenic removals by sinks by the proposed Article 6 project, and for leakage effects, if any. Leakage is defined as the net change of anthropogenic emissions by sources and/or removals by sinks of greenhouse gases which occurs outside the project boundary, and that is measurable and attributable to the Article 6 project;

(g)             Documentation of all steps involved in the calculations referred to in subparagraphs (b) and (f) above.

5.         Revisions, if any, to the monitoring plan to improve its accuracy and/or completeness of information shall be justified by project participants and shall be submitted for the determination referred to in paragraph 0 of the annex on Guidelines for the implementation of Article 6 by the accredited independent entity.

6.         The implementation of the monitoring plan and its revisions, as applicable, shall be a condition for verification.

3. Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol

Decision -/CP.7 (Article 12)

Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol

The Conference of the Parties,

Recalling Article 12 of the Kyoto Protocol which provides that the purpose of the clean development mechanism shall be to assist Parties not included in Annex I to the Convention in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3 of the Kyoto Protocol,

Recalling also its decision 5/CP.6, containing the Bonn Agreements on the Implementation of the Buenos Aires Plan of Action,

Aware of its decisions -/CP.7 (Mechanisms) and -/CP.7 (Land use, land-use change and forestry),

Affirming that it is the host Party’s prerogative to confirm whether a clean development mechanism project activity assists it in achieving sustainable development,

Recognizing that Parties included in Annex I are to refrain from using certified emission reductions generated from nuclear facilities to meet their commitments under Article 3, paragraph 1,

Bearing in mind the need to promote equitable geographic distribution of clean development mechanism project activities at regional and subregional levels,

Emphasizing that public funding for clean development mechanism projects from Parties in Annex I is not to result in the diversion of official development assistance and is to be separate from and not counted towards the financial obligations of Parties included in Annex I,

Further emphasizing that clean development mechanism project activities should lead to the transfer of environmentally safe and sound technology and know-how in addition to that required under Article 4, paragraph 5, of the Convention and Article 10 of the Kyoto Protocol,

Recognizing the need for guidance for project participants and designated operational entities, in particular for establishing reliable, transparent and conservative baselines, to assess whether clean development mechanism project activities are in accordance with the additionality criterion in Article 12, paragraph 5 (c), of the Kyoto Protocol,

1. Decides to facilitate a prompt start for a clean development mechanism by adopting the modalities and procedures contained in the annex below;

2.               Decides that, for the purposes of this decision, the Conference of the Parties shall assume the responsibilities of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol as set out in the annex below on modalities and procedures;

3.               Invites nominations for membership in the executive board:

(a)              For facilitating the prompt start of the clean development mechanism, from Parties to the Convention to be submitted to the President of the Conference of the Parties by its seventh session, with a view to the Conference of the Parties electing the members of the executive board at that session;

(b)              Upon the entry into force of the Kyoto Protocol, those members of the executive board of the clean development mechanism whose countries have not ratified or acceded to the Protocol shall be replaced by new members nominated by the same constituencies. The election of such new members shall be held at the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its first session;

4.               Decides that, prior to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, the executive board and any designated operational entities shall operate in the same manner as the executive board and designated operational entities of the clean development mechanism as set out in the annex below;

5.               Decides that the executive board shall convene its first meeting immediately upon the election of its members;

6.               Decides that the executive board shall include in its work plan until the eighth session of the Conference of the Parties, inter alia, the following tasks:

(a)              To develop and agree on its rules of procedure and recommend them to the Conference of the Parties for adoption, applying draft rules until then;

(b)              To accredit operational entities and designate them, on a provisional basis, pending the designation by the Conference of the Parties at its eighth session;

(c)              To develop and recommend to the Conference of the Parties, at its eighth session, simplified modalities and procedures for the following small-scale clean development mechanism project activities:

(i)   Renewable energy project activities with a maximum output capacity equivalent of up to 15 megawatts (or an appropriate equivalent);

(ii)  Energy efficiency improvement project activities which reduce energy consumption, on the supply and/or demand side, by up to the equivalent of 15 gigawatthours per year;

(iii) Other
project activities that both reduce anthropogenic emissions by sources and that directly emit less than 15 kilotonnes of carbon dioxide equivalent annually;

(d)              To prepare recommendations on any relevant matter, including on Appendix C to the annex below, for consideration by the Conference of the Parties at its eighth session;

(e) To identify modalities for seeking collaboration with the Subsidiary Body for Scientific and Technological Advice on methodological and scientific issues;

7.               Decides:

(a)              That the eligibility of land use, land-use change and forestry project activities under Article 12 is limited to afforestation and reforestation;

(b)              That for the first commitment period, the total of additions to a Party’s assigned amount resulting from eligible land use, land use change and forestry project activities under Article 12 shall not exceed one per cent of base year emissions of that Party, times five;

(c)              That the treatment of land use, land use change and forestry project activities under Article 12 in future commitment periods shall be decided as part of the negotiations on the second commitment period;

8.               Requests the secretariat to organize a workshop before the sixteenth session of the Subsidiary Body for Scientific and Technological Advice with the aim to recommend terms of reference and an agenda for the work to be conducted under paragraph 10. (b) below on the basis of, inter alia, submissions by Parties referred to in paragraph 9. below;

9.               Invites Parties to provide submissions to the secretariat by 1 February 2002 on the organization of the workshop referred to in paragraph 8. above, and to express their views on the terms of reference and the agenda for the work to be conducted under paragraph 10. (b) below;

10.            Requests the Subsidiary Body for Scientific and Technological Advice:

(a)              To develop at its sixteenth session terms of reference and an agenda for the work to be conducted under paragraph (b) below, taking into consideration, inter alia, the outcome of the workshop mentioned in paragraph 8. above;

(b)              To develop definitions and modalities for including afforestation and reforestation project activities under Article 12 in the first commitment period, taking into account the issues of non-permanence, additionality, leakage, uncertainties and socio-economic and environmental impacts, including impacts on biodiversity and natural ecosystems, and being guided by the principles in the preamble to decision -/CMP.1 (Land use, land-use change and forestry) and the terms of reference referred to in paragraph (a) above, with the aim of adopting a decision on these definitions and modalities at the ninth session of the Conference of the Parties, to be forwarded to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its first session;

11.             Decides that the decision by the Conference of the Parties at its ninth session, on definitions and modalities for inclusion of afforestation and reforestation project activities under Article 12, for the first commitment period, referred to in paragraph 10. (b) above, shall be in the form of an annex on modalities and procedures for afforestation and reforestation project activities for a clean development mechanism reflecting, mutatis mutandis, the annex to this decision on modalities and procedures for the a clean development mechanism;

12.             Decides that certified emission reductions shall only be issued for a crediting period starting after the date of registration of a CDM project activity;

13.             Further decides that a project activity starting as of the year 2000 and prior to the adoption of this decision, shall be eligible for validation and registration as a clean development mechanism project activity if submitted for registration before 31 December 2005. If registered, the crediting period for such project activities may start prior to the date of its registration but not earlier than 1 January 2000;

14.             Requests Parties included in Annex I to start implementing measures to assist Parties not included in Annex I, in particular the least developed and small island developing States among them, with building capacity in order to facilitate their participation in the clean development mechanism, taking into account relevant decisions by the Conference of the Parties on capacity building and on the financial mechanism of the Convention;

15.             Decides:

(a)              That the share of proceeds to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation, as referred to in Article 12, paragraph 8, of the Kyoto Protocol, shall be two per cent of the certified emission reductions issued for a clean development mechanism project activity;

(b)              That clean development mechanism project activities in least developed country Parties shall be exempt from the share of proceeds to assist with the costs of adaptation;

16.             Decides that the level of the share of proceeds to cover administrative expenses of the clean development mechanism shall be determined by the Conference of the Parties upon the recommendation of the executive board;

17.             Invites Parties to finance the administrative expenses for operating the clean development mechanism by making contributions to the UNFCCC Trust Fund for Supplementary Activities. Such contributions shall be reimbursed, if requested, in accordance with procedures and a timetable to be determined by the Conference of the Parties upon the recommendation of the executive board. Until the Conference of the Parties determines a percentage for the share of proceeds for the administrative expenses, the executive board shall charge a fee to recover any project related expenses;

18.             Requests the secretariat to perform any functions assigned to it in this decision and in the annex below;

19.             Decides to assess progress made regarding the clean development mechanism and to take appropriate action, as necessary. Any revision of the decision shall not affect clean development mechanism project activities already registered;

20.             Recommends that the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, at its first session, adopt the following decision:

Draft decision -/CMP.1 (Article 12)

Modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol

The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol,

Recalling the provisions of Articles 3 and 12 of the Kyoto Protocol,

Bearing in mind that, in accordance with Article 12, the purpose of the clean devel
opment mechanism is to assist Parties not included in Annex I to the Convention in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3 of the Kyoto Protocol,

Aware of its decisions -/CMP.1 (Mechanisms), -/CMP.1 (Article 6), -/CMP.1 (Article 17), -/CMP.1 (Land use, land-use change and forestry), -/CMP.1 (Modalities for accounting of assigned amounts) and -/CMP.1 (Compliance),

Cognizant of decision -/CP.7 on modalities and procedures for a clean development mechanism as defined in Article 12 of the Kyoto Protocol,

1.               Decides to confirm and give full effect to any actions taken pursuant to decision -/CP.7 (Article 12) and to any other relevant decisions by the Conference of the Parties, as appropriate;

2.               Adopts the modalities and procedures for a clean development mechanism contained in the annex below;

3.               Invites the executive board to review the simplified modalities, procedures and the definition of small-scale project activities referred to in paragraph 6. (c) of decision -/CP.7 (Article 12) and, if necessary, make appropriate recommendations to the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol;

4.               Decides further that any future revision of the modalities and procedures for a clean development mechanism shall be decided in accordance with the rules of procedure of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, as applied. The first review shall be carried out no later than one year after the end of the first commitment period, based on recommendations by the executive board and by the Subsidiary Body for Implementation drawing on technical advice from the Subsidiary Body for Scientific and Technological Advice, as needed. Further reviews shall be carried out periodically thereafter. Any revision of the decision shall not affect clean development mechanism project activities already registered.

ANNEX

Modalities and procedures for a clean development mechanism

A. Definitions

1.         For the purposes of this annex the definitions contained in Article 1 and the provisions of Article 14 shall apply. Furthermore:

(a)              An “emission reduction unit” or “ERU” is a unit issued pursuant to Article 6 and requirements thereunder and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

(b)              A “certified emission reduction” or “CER” is a unit issued pursuant to Article 12 and requirements thereunder, and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

(c)              An “assigned amount unit” or “AAU” is a unit issued pursuant to the relevant provisions on registries in decision -/CMP.1 (Modalities for the accounting of assigned amounts), and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

(d)              A “removal unit” or “RMU” is a unit issued pursuant to the relevant provisions on registries in decision -/CMP.1 (Modalities for the accounting of assigned amounts), and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5;

(e)              “Stakeholders” means the public, including individuals, groups or communities affected, or likely to be affected, by the proposed clean development mechanism project activity.

B. Role of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol

2.         The Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (COP/MOP) shall have authority over and provide guidance to the clean development mechanism (CDM).

3.         The COP/MOP shall provide guidance to the executive board by taking decisions on:

(a)              The recommendations made by the executive board on its rules of procedure;

(b)              The recommendations made by the executive board, in accordance with provisions of decision -/CP.7 (Article 12) and this annex;

(c)              The designation of operational entities accredited by the executive board in accordance with Article 12, paragraph 5, and accreditation standards contained in Appendix A below.

4. The COP/MOP shall further:

(a)              Review annual reports of the executive board;

(b)              Review the regional and subregional distribution of designated operational entities and take appropriate decisions to promote accreditation of such entities from developing country Parties;

(c)              Review the regional and subregional distribution of CDM project activities with a view to identifying systematic barriers to their equitable distribution and take appropriate decisions, based, inter alia, on a report by the executive board;

(d)              Assist in arranging funding of CDM project activities, as necessary.

C. Executive board

5. The executive board shall supervise the CDM, under the authority and guidance of the COP/MOP, and be fully accountable to the COP/MOP. In this context, the executive board shall:

(a)              Make recommendations to the COP/MOP on further modalities and procedures for the CDM, as appropriate;

(b)              Make recommendations to the COP/MOP on any amendments or additions to rules of procedure for the executive board contained in this annex, as appropriate;

(c)              Report on its activities to each session of the COP/MOP;

(d)              Approve new methodologies related to, inter alia, baselines, monitoring plans and project boundaries in accordance with the provisions of Appendix C below;

(e)              Review provisions with regard to simplified modalities, procedures and the definitions of small scale project activities and make recommendations to the COP/MOP;

(f)               Be responsible for the accreditation of operational entities, in accordance with accreditation standards contained in Appendix A below, and make recommendations to the COP/MOP for the designation of operational entities, in accordance with Article 12, paragraph 5. This responsibility includes:

(i)                                Decisions on re-accreditation, suspension and withdrawal of accreditation;

(ii)                                Operationalization of accreditation procedures and standards;

(g)              Review the accreditation standards in Appendix A below and make recommendations to COP/MOP for consideration, as appropriate;

(h)              Report to the COP/MOP on the regional and subregional distribution of CDM project activities with a view to identifying systematic or systemic barriers to their equitable distribution;

(i)               Make publicly available relevant information, submitted to it for this purpose, on proposed CDM project activities in need of funding and on investors seeking opportunities, in order to assist in arranging funding of CDM project activities, as necessary;

(j) Make any technical reports commissioned available to the public and provide a period of at least eight weeks for public comments on draft methodologies and guidance before documents are finalized and any recommendations are submitted to the COP/MOP for their consideration;

(k) Develop, maintain and make publicly available a repository of approved rules, procedures, methodologies and standards;

(l) Develop and maintain the CDM registry as defined in Appendix D below;

(m) Develop and maintain a publicly available database of CDM project activities containing information on registered project design documents, comments received, verification reports, its decisions as well as information on all CERs issued;

(n) Address issues relating to observance of modalities and procedures for the CDM by project participants and/or operational entities, and report on them to the COP/MOP;

(o) Elaborate and recommend to the COP/MOP for adoption at its next session procedures for conducting the reviews referred to in paragraphs 39 and 63 below including, inter alia, procedures to facilitate consideration of information from Parties, stakeholders and UNFCCC accredited observers. Until the adoption by the COP/MOP, the procedures shall be applied provisionally;

(p) Carry out any other functions ascribed to it in decision -/CP.7 (Article 12), the present annex and relevant decisions of the COP/MOP.

6.         Information obtained from CDM project participants marked as proprietary or confidential shall not be disclosed without the written consent of the provider of the information, except as required by national law. Information used to determine additionality as defined in paragraph 43 below, to describe the baseline methodology and its application and to support an environmental impact assessment referred to in paragraph 37 (c) below shall not be considered as proprietary or confidential.

7.         The executive board shall comprise ten members from Parties to the Kyoto Protocol, as follows: one member from each of the five United Nations regional groups; two other members from the Parties included in Annex I; two other members from the Parties not included in Annex I; and one representative of the small island developing States, taking into account the current practice in the Bureau of the Conference of the Parties.

8.         Members, including alternate members, of the executive board shall:

(a)              Be nominated by the relevant constituencies referred to in paragraph 7 above and elected by the COP/MOP. Vacancies shall be filled in the same way;

(b)              Be elected for a period of two years and be eligible to serve a maximum of two consecutive terms. Terms as alternate members do not count. Five members and five alternate members shall be elected initially for a term of three years and five members and five alternate members for a term of two years. Thereafter, the COP/MOP shall elect, every year, five new members, and five new alternate members, for a term of two years. Appointment pursuant to

paragraph 11 below shall count as one term. The members, and alternate members, shall remain in office until their successors are elected;

(c)              Possess appropriate technical and/or policy expertise and shall act in their personal capacity. The cost of participation of members, and of alternate members, from developing country Parties and other Parties eligible under UNFCCC practice shall be covered by the budget for the executive board;

(d)              Be bound by the rules of procedure of the executive board;

(e)              Take a written oath of service witnessed by the Secretary-General of the United Nations or his/her authorized representative before assuming his or her duties;

(f)               Have no pecuniary or financial interest in any aspect of a CDM project activity or any designated operational entity;

(g)              Subject to their responsibilities to the executive board, not disclose any confidential or proprietary information coming to their knowledge by reason of their duties for the executive board. The duty of the member, including alternate member, not to disclose confidential information constitutes an obligation in respect of that member, and alternate member, and shall remain an obligation after the expiration or termination of that member’s function for the executive board.

9.         The COP/MOP will elect an alternate for each member of the executive board based on the criteria in paragraphs 7 and 8 above. The nomination by a constituency of a candidate member shall be accompanied by a nomination for a candidate alternate member from the same constituency.

10.       The executive board may suspend and recommend to the COP/MOP the termination of the membership of a particular member, including an alternate member, for cause including, inter alia, breach of the conflict of interest provisions, breach of the confidentiality provisions, or failure to attend two consecutive meetings of the executive board without proper justification.

11.       If a member, or an alternate member, of the executive board resigns or is otherwise unable to complete the assigned term of office or to perform the functions of that office, the executive board may decide, bearing in mind the proximity of the next session of the COP/MOP, to appoint another member, or an alternate member, to replace the said member for the remainder of that member’s mandate from the same constituency.

12.       The executive board shall elect its own chair and vice-chair, with one being a member from a Party included in Annex I and the other being from a Party not included in Annex I. The positions of chair and vice-chair shall alternate annually between members from Parties included in Annex I and Parties not included in Annex I, respectively.

13.       The executive board shall meet as necessary but no less than three times a year, bearing in mind the provisions of paragraph 41 below. All documentation for executive board meetings shall be made available to alternate members.

14.       At least two thirds of the m
embers of the executive board, representing a majority of members from Parties included in Annex I and a majority of members from Parties not included in Annex I, must be present to constitute a quorum.

15.       Decisions by the executive board shall be taken by consensus, whenever possible. If all efforts at reaching a consensus have been exhausted, and no agreement reached, decisions shall be taken by a three-fourths majority of the members present and voting at the meeting. Members abstaining from voting shall be considered as not voting.

16.       Meetings of the executive board shall be open to attendance, as observers, by all Parties and by all UNFCCC accredited observers and stakeholders, except where otherwise decided by the executive board.

17.       The full text of all decisions of the executive board shall be made publicly available. The working language of the executive board shall be English. Decisions shall be made available in all six official languages of the United Nations.

18.       The executive board may establish committees, panels or working groups to assist in the performance of its functions. The executive board shall draw on the expertise necessary to perform its functions, including from the UNFCCC roster of experts. In this context, it shall take fully into account the consideration of regional balance.

19.       The secretariat shall service the executive board.

D. Accreditation and designation of operational entities

20.       The executive board shall:

(a)              Accredit operational entities which meet the accreditation standards contained in Appendix A below;

(b)              Recommend the designation of operational entities to the COP/MOP;

(c)              Maintain a publicly available list of all designated operational entities;

(d)              Review whether each designated operational entity continues to comply with the accreditation standards contained in Appendix A below and on this basis confirm whether to reaccredit each operational entity every three years;

(e)              Conduct spot-checking at any time and, on the basis of the results, decide to conduct the above-mentioned review, if warranted.

21.       The executive board may recommend to the COP/MOP to suspend or withdraw the designation of a designated operational entity if it has carried out a review and found that the entity no longer meets the accreditation standards or applicable provisions in decisions of the COP/MOP. The executive board may recommend the suspension or withdrawal of designation only after the designated operational entity has had the possibility of a hearing. The suspension or withdrawal is with immediate effect, on a provisional basis, once the executive board has made a recommendation, and remains in effect pending a final decision by the COP/MOP. The affected entity shall be notified, immediately and in writing, once the executive board has

recommended its suspension or withdrawal. The recommendation by the executive board and the decision by the COP/MOP on such a case shall be made public.

22.       Registered project activities shall not be affected by the suspension or withdrawal of designation of a designated operational entity unless significant deficiencies are identified in the relevant validation, verification or certification report for which the entity was responsible. In this case, the executive board shall decide whether a different designated operational entity shall be appointed to review, and where appropriate correct, such deficiencies. If such a review reveals that excess CERs were issued, the designated operational entity whose accreditation has been withdrawn or suspended shall acquire and transfer, within 30 days of the end of review, an amount of reduced tonnes of CO₂ equivalent equal to the excess CERs issued, as determined by the executive board, to a cancellation account maintained in the CDM registry by the executive board.

23.       Any suspension or withdrawal of a designated operational entity that adversely affects registered project activities shall be recommended by the executive board only after the affected project participants have had the possibility of a hearing.

24.       Any costs related to the review, referred to in paragraph 22 above, shall be borne by the designated operational entity whose designation has been withdrawn or suspended.

25.       The executive board may seek assistance in performing the functions in paragraph 20 above, in accordance with the provisions of paragraph 18 above.

E. Designated operational entities

26.       Designated operational entities shall be accountable to the COP/MOP through the executive board and shall comply with the modalities and procedures in decision -/CP.7 (Article 12) and the present annex, and relevant decisions of the COP/MOP and the executive board.

27.       A designated operational entity shall:

(a)              Validate proposed CDM project activities;

(b)              Verify and certify reductions in anthropogenic emissions by sources of greenhouse gases;

(c)              Comply with applicable laws of the Parties hosting CDM project activities when carrying out its functions referred to in subparagraph (e) below;

(d)              Demonstrate that it, and its subcontractors, have no real or potential conflict of interest with the participants in the CDM project activities for which it has been selected to carry out validation or verification and certification functions;

(e)              Perform one of the following functions related to a given CDM project activity: validation or verification and certification. Upon request, the executive board may, however, allow a single designated operational entity to perform all these functions within a single CDM project activity;

(f)               Maintain a publicly available list of all CDM project activities for which it has carried out validation, verification and certification;

(g)              Submit an annual activity report to the executive board;

(h)              Make information obtained from CDM project participants publicly available, as required by the executive board. Information marked as proprietary or confidential shall not be disclosed without the written consent of the provider of the information, except as required by national law. Information used to determine additionality as defined in paragraph 43 below, to describe the baseline methodology and its application and to support an environmental impact assessment referred to in paragraph 37 (c) below shall not be considered as proprietary or confidential.

F. Participation requirements

28.       Participation in a CDM project activity is voluntary.

29.       Parties participating in the CDM shall designate a national authority for the CDM.

30.       A Party not included in Annex I may participate in a CDM project activity if it is a Party to the Kyoto Protocol.

31.       Subject to the provisions of paragraph 32 below, a Party included in Annex I with a commitment inscribed in Annex B is eligible to use CERs, issued in accordance with the relevant provisions, to contribute to compliance with part of its commitment under Article 3, paragraph 1, if it is in compliance with the following eligibility requirements:

(a)              It is a Party to the Kyoto Protocol;

(b)              It has established its assigned amount pursuant to Article 3, paragraphs 7 and 8, in accordance with the modalities for the accounting of assigned amounts under Article 7, paragraph 4;

(c)              It has in place a national system for the estimation of anthropogenic emissions by sources and anthropogenic removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, in accordance with Article 5, paragraph 1, and the requirements in the guidelines decided thereunder;

(d)              It has in place a national registry in accordance with Article 7, paragraph 4, and the requirements in the guidelines decided thereunder;

(e)              It has submitted annually the most recent required inventory, in accordance with Article 5, paragraph 2, and Article 7, paragraph 1, and the requirements in the guidelines decided thereunder, including the national inventory report and the common reporting format. For the first commitment period, the quality assessment needed for the purpose of determining eligibility to use the mechanisms shall be limited to the parts of the inventory pertaining to emissions of greenhouse gases from sources/sector categories from Annex A to the Kyoto Protocol and the submission of the annual inventory on sinks”;

(f)               It submits the supplementary information on assigned amount in accordance with Article 7, paragraph 1, and the requirements in the guidelines decided thereunder and makes any additions to, and subtractions from, assigned amount pursuant to Article 3, paragraphs 7 and 8, including for the activities under Article 3, paragraphs 3 and 4, in accordance with Article 7, paragraph 4, and the requirements in the guidelines decided thereunder.

32.       A Party included in Annex I with a commitment inscribed in Annex B shall be considered:

(a)              To meet the eligibility requirements referred to in paragraph 31 above after 16 months have elapsed since the submission of its report to facilitate the establishment of its assigned amount pursuant to Article 3, paragraphs 7 and 8, and to demonstrate its capacity to account for its emissions and assigned amount, in accordance with the modalities adopted for the accounting of assigned amount under Article 7, paragraph 4, unless the enforcement branch of the compliance committee finds in accordance with decision -/CP.7 (Compliance) that the Party does not meet these requirements, or, at an earlier date, if the enforcement branch of the compliance committee has decided that it is not proceeding with any questions of implementation relating to these requirements indicated in reports of the expert review teams under Article 8 of the Kyoto Protocol, and has transmitted this information to the secretariat;

(b)              To continue to meet the eligibility requirements referred to in paragraph 31 above unless and until the enforcement branch of the compliance committee decides that the Party does not meet one or more of the eligibility requirements, has suspended the Party’s eligibility, and has transmitted this information to the secretariat.

33.       A Party that authorizes private and/or public entities to participate in Article 12 project activities shall remain responsible for the fulfilment of its obligations under the Kyoto Protocol and shall ensure that such participation is consistent with this annex. Private and/or public entities may only transfer and acquire CERs if the authorizing Party is eligible to do so at that time.

34.       The secretariat shall maintain publicly accessible lists of:

(a)              Parties not included in Annex I which are Parties to the Kyoto Protocol;

(b)              Parties included in Annex I that do not meet the requirements in paragraph 31 or have been suspended.

G. Validation and registration

35.       Validation is the process of independent evaluation of a project activity by a designated operational entity against the requirements of the CDM as set out in decision -/CP.7 (Article 12) and this annex, on the basis of the project design document, as outlined in Appendix B below.

36.       Registration is the formal acceptance by the executive board of a validated project as a CDM project activity. Registration is the prerequisite for the verification, certification and issuance of CERs related to that project activity.

37.       The designated operational entity selected by project participants to validate a project activity, being under a contractual arrangement with them, shall review the project design document and any supporting documentation to confirm that the following requirements have been met:

(a) The participation requirements as set out in paragraphs 28 to 30 above are satisfied;

(b)              Comments by local stakeholders have been invited, a summary of the comments received has been provided, and a report to the designated operational entity on how due account was taken of any comments has been received;

(c)              Project participants have submitted to the designated operational entity documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts and, if those impacts are considered significant by the project participants or the host Party, have undertaken an environmental impact assessment in accordance with procedures as required by the host Party;

(d)              The project activity is expected to result in a reduction in anthropogenic emissions by sources of greenhouse gases that are additional to any that would occur in the absence of the proposed project activity, in accordance with paragraphs 43 to 52 below;

(e)              The baseline and monitoring methodologies comply with requirements pertaining

to:

(i)   Methodologies previously approved by the executive board; or

(ii)  Modalities and procedures for establishing a new methodology, as set out in paragraph 38 below;

(f)               Provisions for monitoring, verification and reporting are in accordance with decision -/CP.7 (Article 12) and the present annex;

(g)              The project activity conforms to all other requirements for CDM project activities in decision -/CP.7 (Article 12) and the present annex, and relevant decisions by the COP/MOP and by the executive board.

38.       If the designated operatio
nal entity determines that the project activity intends to use a new baseline or monitoring methodology, as referred to in paragraph 37 (e) (ii) above, it shall, prior to a submission for registration of this project activity, forward the proposed methodology together with the draft project design document, including a description of the project and identification of the project participants to the executive board for review. The executive board shall expeditiously, if possible at its next meeting but not later than four months, review the proposed new methodology in accordance with the modalities and procedures of this annex. Once approved by the executive board it shall make the approved methodology publicly available along with any relevant guidance and the designated operational entity may proceed with the validation of the project activity and submit the project design document for registration. In the event that the COP/MOP requests the revision of an approved methodology, no CDM project activity may use this methodology. The project participants shall revise the methodology, as appropriate, taking into consideration any guidance received.

39.       A revision of a methodology shall be carried out in accordance with the modalities and procedures for establishing new methodologies as set out in paragraph 38 above. Any revision to an approved methodology shall only be applicable to project activities registered subsequent to the date of revision and shall not affect existing registered project activities during their crediting periods.

40. The designated operational entity shall:

(a)              Prior to the submission of the validation report to the executive board, have received from the project participants written approval of voluntary participation from the designated national authority of each Party involved, including confirmation by the host Party that the project activity assists it in achieving sustainable development;

(b)              In accordance with provisions on confidentiality contained in subparagraph 27 (h) above, make publicly available the project design document;

(c)              Receive, within 30 days, comments on the validation requirements from Parties, stakeholders and UNFCCC accredited non-governmental organizations and make them publicly available;

(d)              After the deadline for receipt of comments, make a determination as to whether, on the basis of the information provided and taking into account the comments received, the project activity should be validated;

(e)              Inform project participants of its determination on the validation of the project activity. Notification to the project participants will include:

(i)   Confirmation of validation and date of submission of the validation report to the executive board; or

(ii)  An explanation of reasons for non-acceptance if the project activity, as documented, is judged not to fulfil the requirements for validation;

(f)               Submit to the executive board, if it determines the proposed project activity to be valid, a request for registration in the form of a validation report including the project design document, the written approval of the host Party as referred to in subparagraph 40 (a) above and an explanation of how it has taken due account of comments received;

(g)              Make this validation report publicly available upon transmission to the executive

board.

41.       The registration by the executive board shall be deemed final 8 weeks after the date of receipt by the executive board of the request for registration, unless a Party involved in the project activity, or at least three members of the executive board, requests a review of the proposed CDM project activity. The review by the executive board shall be made in accordance with the following provisions:

(a)              It shal be related to issues associated with the validation requirements;

(b)              It shall be finalized no later than at the second meeting following the request for review, with the decision and the reasons for it being communicated to the project participants and the public.

42.       A proposed project activity that is not accepted may be reconsidered for validation and subsequent registration, after appropriate revisions, provided that it follows the procedures and meets the requirements for validation and registration, including those related to public comments.

43.       A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity.

44.       The baseline for a CDM project activity is the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases that would occur in the absence of the proposed project activity. A baseline shall cover emissions from all gases, sectors and source categories listed in Annex A within the project boundary. A baseline shall be deemed to reasonably represent the anthropogenic emissions by sources that would occur in the absence of the proposed project activity if it is derived using a baseline methodology referred to in paragraphs 37 and 38 above.

45.       A baseline shall be established:

(a)              By project participants in accordance with provisions for the use of approved and new methodologies, contained in decision -/CP.7 (Article 12) and the present annex;

(b)              In a transparent and conservative manner regarding the choice of approaches, assumptions, methodologies, parameters, data sources, key factors and additionality, and taking into account uncertainty;

(c)              On a project-specific basis;

(d)              In the case of small-scale CDM project activities which meet the criteria specified in decision -/CP.7 (Article 12) and relevant decisions by the COP/MOP, in accordance with simplified procedures developed for such activities;

(e)              Taking into account relevant national and/or sectoral policies and circumstances, such as sectoral reform initiatives, local fuel availability, power sector expansion plans, and the economic situation in the project sector.

46.       The baseline may include a scenario where future anthropogenic emissions by sources are projected to rise above current levels, due to the specific circumstances of the host Party.

47.       The baseline shall be defined in a way that CERs cannot be earned for decreases in activity levels outside the project activity or due to force majeure.

48.       In choosing a baseline methodology for a project activity, project participants shall select from among the following approaches the one deemed most appropriate for the project activity, taking into account any guidance by the executive board, and justify the appropriateness of their choice:

(a)              Existing actual or historical emissions, as applicable; or

(b)              Emissions from a technology that represents an economically attractive course of action, taking into account barriers to investment; or

(c)              The average emissions of similar project activities undertaken in the previous five years, in similar social, economic, environmental and technological circumstances, and whose performance is among the top 20 per cent of their category.

49.       Project participants shall select a crediting period for a proposed project activity from one of the following alternative approaches:

(a)              A maximum of seven years which may be renewed at most two times, provided that, for each renewal, a designated operational entity determines and informs the executive board that the original project baseline is still valid or has been updated taking account of new data where applicable; or

(b)              A maximum of ten years with no option of renewal.

50.       Reductions in anthropogenic emissions by sources shall be adjusted for leakage in accordance with the monitoring and verification provisions in paragraphs 59 and 62 (f) below, respectively.

51.       Leakage is defined as the net change of anthropogenic emissions by sources of greenhouse gases which occurs outside the project boundary, and which is measurable and attributable to the CDM project activity.

52.       The project boundary shall encompass all anthropogenic emissions by sources of greenhouse gases under the control of the project participants that are significant and reasonably attributable to the CDM project activity.

H. Monitoring

53.       Project participants shall include, as part of the project design document, a monitoring plan that provides for:

(a)              The collection and archiving of all relevant data necessary for estimating or measuring anthropogenic emissions by sources of greenhouse gases occurring within the project boundary during the crediting period;

(b)              The collection and archiving of all relevant data necessary for determining the baseline of anthropogenic emissions by sources of greenhouse gases within the project boundary during the crediting period;

(c)              The identification of all potential sources of, and the collection and archiving of data on, increased anthropogenic emissions by sources of greenhouse gases outside the project boundary that are significant and reasonably attributable to the project activity during the crediting period;

(d)              The collection and archiving of information relevant to the provisions in paragraph 37 (c) above;

(e)              Quality assurance and control procedures for the monitoring process;

(f)               Procedures for the periodic calculation of the reductions of anthropogenic emissions by sources by the proposed CDM project activity, and for leakage effects;

(g)             Documentation of all steps involved in the calculations referred to in paragraph 53 (c) and (f) above.

54.       A monitoring plan for a proposed project activity shall be based on a previously approved monitoring methodology or a new methodology, in accordance with paragraphs 37 and 38 above, that:

(a)              Is determined by the designated operational entity as appropriate to the circumstances of the proposed project activity and has been successfully applied elsewhere;

(b)              Reflects good monitoring practice appropriate to the type of project activity.

55.       For small-scale CDM project activities meeting the criteria specified in decision -/CP.7 (Article 12) and relevant decisions by the COP/MOP, project participants may use simplified modalities and procedures for small-scale projects.

56.       Project participants shall implement the monitoring plan contained in the registered project design document.

57.       Revisions, if any, to the monitoring plan to improve its accuracy and/or completeness of information shall be justified by project participants and shall be submitted for validation to a designated operational entity.

58.       The implementation of the registered monitoring plan and its revisions, as applicable, shall be a condition for verification, certification and the issuance of CERs.

59.       Subsequent to the monitoring and reporting of reductions in anthropogenic emissions, CERs resulting from a CDM project activity during a specified time period shall be calculated, applying the registered methodology, by subtracting the actual anthropogenic emissions by sources from baseline emissions and adjusting for leakage.

60.       The project participants shall provide to the designated operational entity, contracted by the project participants to perform the verification, a monitoring report in accordance with the registered monitoring plan set out in paragraph 53 above for the purpose of verification and certification.

I. Verification and certification

61.       Verification is the periodic independent review and ex post determination by the designated operational entity of the monitored reductions in anthropogenic emissions by sources of greenhouse gases that have occurred as a result of a registered CDM project activity during the verification period. Certification is the written assurance by the designated operational entity that, during a specified time period, a project activity achieved the reductions in anthropogenic emissions by sources of greenhouse gases as verified.

62.       In accordance with the provisions on confidentiality in paragraph 27 (h) above, the designated operational entity contracted by the project participants to perform the verification shall make the monitoring report publicly available, and shall:

(a) Determine whether the project documentation provided is in accordance with the requirements of the registered project design document and relevant provisions of decision -/CP.7 (Article 12) and the present annex;

(b)              Conduct on-site inspections, as appropriate, that may comprise, inter alia, a review of performance records, interviews with project participants and local stakeholders, collection of measurements, observation of established practices and testing of the accuracy of monitoring equipment;

(c)              If appropriate, use additional data from other sources;

(d)              Review monitoring results and verify that the monitoring methodologies for the estimation of reductions in anthropogenic emissions by sources have been applied correctly and their documentation is complete and transparent;

(e)              Recommend to the project participants appropriate changes to the monitoring methodology for any future crediting period, if necessary;

(f
)               Determine the reductions in anthropogenic emissions by sources of greenhouse gases that would not have occurred in the absence of the CDM project activity, based on the data and information derived under paragraph 62 (a) and obtained under paragraph 62 (b) and/or (c), as appropriate, using calculation procedures consistent with those contained in the registered project design document and in the monitoring plan;

(g)              Identify and inform the project participants of any concerns related to the conformity of the actual project activity and its operation with the registered project design document. Project participants shall address the concerns and supply relevant additional information;

(h)              Provide a verification report to the project participants, the Parties involved and the executive board. The report shall be made publicly available.

63.       The designated operational entity shall, based on its verification report, certify in writing that, during the specified time period, the project activity achieved the verified amount of reductions in anthropogenic emissions by sources of greenhouse gases that would not have occurred in the absence of the CDM project activity. It shall inform the project participants, Parties involved and the executive board of its certification decision in writing immediately upon completion of the certification process and make the certification report publicly available.

J. Issuance of certified emission reductions

64.       The certification report shall constitute a request for issuance to the executive board of CERs equal to the verified amount of reductions of anthropogenic emissions by sources of greenhouse gases.

65.       The issuance shall be considered final 15 days after the date of receipt of the request for issuance, unless a Party involved in the project activity, or at least three members of the executive board request a review of the proposed CDM project activity. Such a review shall be limited to issues of fraud, malfeasance or incompetence of the designated operational entities and be conducted as follows:

(a) Upon receipt of a request for such a review, the executive board, at its next meeting, shall decide on its course of action. If it decides that the request has merit it shall perform a review and decide whether the proposed issuance of CERs should be approved;

(b)              The executive board shall complete its review within 30 days following its decision to perform the review;

(c)              The executive board shall inform the project participants of the outcome of the review, and make public its decision regarding the approval of the proposed issuance of CERs and the reasons for it.

66. Upon being instructed by the executive board to issue CERs for a CDM project activity, the CDM registry administrator, working under the authority of the executive board, shall, promptly, issue the specified quantity of CERs into the pending account of the executive board in the CDM registry, in accordance with Appendix D below. Upon such issuance, the CDM registry administrator shall promptly:

(a)              Forward the quantity of CERs corresponding to the share of proceeds to cover administrative expenses and to assist in meeting costs of adaptation, respectively, in accordance with Article 12, paragraph 8, to the appropriate accounts in the CDM registry for the management of the share of proceeds;

(b)              Forward the remaining CERs to the registry accounts of Parties and project participants involved, in accordance with their request.

APPENDIX A Standards for the accreditation of operational entities 1. An operational entity shall:

(a)              Be a legal entity (either a domestic legal entity or an international organization) and provide documentation of this status;

(b)              Employ a sufficient number of persons having the necessary competence to perform validation, verification and certification functions relating to the type, range and volume of work performed, under a responsible senior executive;

(c)              Have the financial stability, insurance coverage and resources required for its activities;

(d)              Have sufficient arrangements to cover legal and financial liabilities arising from its activities;

(e)              Have documented internal procedures for carrying out its functions including, among others, procedures for the allocation of responsibility within the organization and for handling complaints; these procedures shall be made publicly available;

(f)               Have, or have access to, the necessary expertise to carry out the functions specified in modalities and procedures of the CDM and relevant decisions by the COP/MOP, in particular knowledge and understanding of:

(i) The modalities and procedures and guidelines for the operation of the CDM, relevant decisions of the COP/MOP and of the executive board;

(ii)  Issues, in particular environmental, relevant to validation, verification and certification of CDM project activities, as appropriate;

(iii) The technical aspects of CDM project activities relevant to environmental issues, including expertise in the setting of baselines and monitoring of emissions;

(iv) Relevant environmental auditing requirements and methodologies;

(v)  Methodologies for accounting of anthropogenic emissions by sources;

(vi) Regional and sectoral aspects;

(g)             Have a management structure that has overall responsibility for performance and implementation of the entity’s functions, including quality assurance procedures, and all relevant decisions relating to validation, verification and certification. The applicant operational entity shall make available:

(i)   The names, qualifications, experience and terms of reference of senior management personnel such as the senior executive, board members, senior officers and other relevant personnel;

(ii)  A organizational chart showing lines of authority, responsibility and allocation of functions stemming from senior management;

(iii) Its quality assurance policy and procedures;

(iv) Administrative procedures including document control;

(v)  Its policy and procedures for the recruitment and training of operational entity personnel, for ensuring their competence for all necessary functions for validation, verification and certification functions, and for monitoring their performance;

(vi) Its procedures for handling complaints, appeals and disputes;

(h)             Not have pending any judicial process for malpractice, fraud and/or other activity incompatible with its functions as a designated operational entity.

2. An applicant operational entity shall meet the following operational requirements:

(a
) Work in a credible, independent, non-discriminatory and transparent manner, complying with applicable national law and meeting, in particular, the following requirements:

(i)   An applicant operational entity shall have a documented structure, which safeguards impartiality, including provisions to ensure impartiality of its operations;

(ii)  If it is part of a larger organization, and where parts of that organization are, or may become, involved in the identification, development or financing of any CDM project activity, the applicant operational entity shall:

–     Make a declaration of all the organization’s actual and planned involvement in CDM project activities, if any, indicating which part of the organization is involved and in which particular CDM project activities;

–     Clearly define the links with other parts of the organization, demonstrating that no conflicts of interest exist;

–     Demonstrate that no conflict of interest exists between its functions as an operational entity and any other functions that it may have, and demonstrate how business is managed to minimize any identified risk to impartiality. The demonstration shall cover all sources of conflict of interest, whether they arise from within the applicant operational entity or from the activities of related bodies;

–     Demonstrate that it, together with its senior management and staff, is not involved in any commercial, financial or other processes which might influence its judgement or endanger trust in its independence of judgement and integrity in relation to its activities, and that it complies with any rules applicable in this respect;

(b) Have adequate arrangements to safeguard confidentiality of the information obtained from CDM project participants in accordance with provisions contained in this annex.

APPENDIX B Project design document

1.         The provisions of this appendix shall be interpreted in accordance with the annex on modalities and procedures for a CDM.

2.         The purpose of this appendix is to outline the information required in the project design document. A project activity shall be described in detail taking into account the provisions of the annex on modalities and procedures for a CDM, in particular, section G on validation and registration and section H on monitoring, in a project design document which shall include the following:

(a)             A description of the project comprising the project purpose, a technical description of the project, including how technology will be transferred, if any, and a description and justification of the project boundary;

(b)             Proposed baseline methodology in accordance with the annex on modalities and procedures for a CDM:

(i) Application of an approved methodology:

– Statement of which approved methodology has been selected;

–     Description of how the approved methodology will be applied in the context of the project;

(ii)  Application of a new methodology:

–     Description of the baseline methodology and justification of choice, including an assessment of strengths and weaknesses of the methodology;

–     Description of key parameters, data sources and assumptions used in the baseline estimate, and assessment of uncertainties;

–     Projections of baseline emissions;

–     Description of how the baseline methodology addresses potential leakage;

(iii) Other considerations, such as description of how national and/or sectoral policies and circumstances have been taken into account and explanation of how the baseline was established in a transparent and conservative manner;

(c)              Statement of the estimated operational lifetime of the project and which crediting period was selected;

(d)             Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity

(e)             Environmental impacts:

(i)   Documentation on the analysis of the environmental impacts, including transboundary impacts;

(ii)  If impacts are considered significant by the project participants or the host Party: conclusions and all references to support documentation of an environmental impact assessment that has been undertaken in accordance with the procedures as required by the host Party;

(f)               Information on sources of public funding for the project activity from Parties included in Annex I which shall provide an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of those Parties;

(g)              Stakeholder comments, including a brief description of the process, a summary of the comments received, and a report on how due account was taken of any comments received;

(h)             Monitoring plan:

(i) Identification of data needs and data quality with regard to accuracy, comparability, completeness and validity;

(ii)  Methodologies to be used for data collection and monitoring including quality assurance and quality control provisions for the monitoring, collecting and reporting;

(iii) In the case of a new monitoring methodology, provide a description of the methodology, including an assessment of strengths and weaknesses of the methodology and whether or not it has been applied successfully elsewhere;

(i) Calculations:

(i)   Description of formulae used to calculate and estimate anthropogenic emissions by sources of greenhouse gases of the CDM project activity within the project boundary;

(ii)  Description of formulae used to calculate and to project leakage, defined as: the net change of anthropogenic emissions by sources of greenhouse gases which occurs outside the CDM project activity boundary, and that is measurable and attributable to the CDM project activity;

(iii) The sum of (i) and (ii) above representing the CDM project activity emissions;

(iv) Description of formulae used to calculate and to project the anthropogenic emissions by sources of greenhouse gases of the baseline;

(v)  Description of formulae used to calculate and to project leakage of the baseline;

(vi) The sum of (iv) and (v) above represent the baseline emissions;

(vii)                               Difference between (vi) and (iii) above representing the emission reductions of the CDM project activity;

(j) References to support the above, if any.

APPENDIX C

Terms of reference for establishing guidelines on baselines
and monitoring methodologies

The executive board, drawing on experts in accordance with the modalities and procedures for a CDM, shall develop and recommend to the COP/MOP, inter alia:

(a) General guidance on methodologies relating to baselines and monitoring consistent with the principles set out in those modalities and procedures in order to:

(i)   Elaborate the provisions relating to baseline and monitoring methodologies contained in decision -/CP.7 (Article 12) and the annex above;

(ii)  Promote consistency, transparency and predictability;

(iii) Provide rigour to ensure that net reductions in anthropogenic emissions are real and measurable, and an accurate reflection of what has occurred within the project boundary;

(iv) Ensure applicability in different geographical regions and to those project categories which are eligible in accordance with decision -/CP.7 (Article 12) and relevant decisions of the COP/MOP;

(v)  Address the additionality requirement of Article 12, paragraph 5 (c), and paragraph 43 of the above annex;

(b) Specific guidance in the following areas:

(i)   Definition of project categories (e.g. based on sector, sub sector, project type, technology, geographic area) that show common methodological characteristics for baseline setting, and/or monitoring, including guidance on the level of geographic aggregation, taking into account data availability;

(ii)  Baseline methodologies deemed to reasonably represent what would have occurred in the absence of a project activity;

(iii) Monitoring methodologies that provide an accurate measure of actual reductions in anthropogenic emissions as a result of the project activity, taking into account the need for consistency and cost-effectiveness;

(iv) Decision trees and other methodological tools, where appropriate, to guide choices in order to ensure that the most appropriate methodologies are selected, taking into account relevant circumstances;

(v)  The appropriate level of standardization of methodologies to allow a reasonable estimation of what would have occurred in the absence of a project activity wherever possible and appropriate. Standardization should be conservative in order to prevent any overestimation of reductions in anthropogenic emissions;

(vi) Determination of project boundaries including accounting for all greenhouse gases that should be included as a part of the baseline, and monitoring. Relevance of leakage and recommendations for establishing appropriate project boundaries and methods for the ex post evaluation of the level of leakage;

(vii)                   Accounting for applicable national policies and specific national or regional circumstances, such as sectoral reform initiatives, local fuel

availability, power sector expansion plans, and the economic situation in the sector relevant to the project activity;

(viii) The breadth of the baseline, e.g. how the baseline makes comparisons between the technology/fuel used and other technologies/fuels in the sector;

(c) In developing the guidance in (a) and (b) above, the executive board shall take into account:

(i)   Current practices in the host country or an appropriate region, and observed trends;

(ii)  Least cost technology for the activity or project category.

APPENDIX D

Clean development mechanism registry requirements

1.         The executive board shall establish and maintain a CDM registry to ensure the accurate accounting of the issuance, holding, transfer and acquisition of CERs by Parties not included in Annex I. The executive board shall identify a registry administrator to maintain the registry under its authority.

2.         The CDM registry shall be in the form of a standardized electronic database which contains, inter alia, common data elements relevant to the issuance, holding, transfer and acquisition of CERs. The structure and data formats of the CDM registry shall conform to technical standards to be adopted by the COP/MOP for the purpose of ensuring the accurate, transparent and efficient exchange of data between national registries, the CDM registry and the independent transaction log.

3.         The CDM registry shall have the following accounts:

(a)              One pending account for the executive board, into which CERs are issued before being transferred to other accounts;

(b)              At least one holding account for each Party not included in Annex I hosting a CDM project activity or requesting an account;

(c)              At least one account for the purpose of cancelling ERUs, CERs, AAUs and RMUs equal to excess CERs issued, as determined by the executive board, where the accreditation of a designated operational entity has been withdrawn or suspended;

(d)              At least one account for the purpose of holding and transferring CERs corresponding to the share of proceeds to cover administrative expenses and to assist in meeting costs of adaptation in accordance with Article 12, paragraph 8. Such an account may not otherwise acquire ERUs, CERs , AAUs or RMUs.

4.

Each CER shall be held in only one account in one registry at a given time.

5.         Each account within the CDM registry shall have a unique account number comprising the following elements:

(a)              Party/organization identifier: the Party for which the account is maintained, using the two-letter country code defined by the International Organization for Standardization

(ISO 3166), or, in the cases of the pending account and an account for managing the CERs corresponding to the share of proceeds, the executive board or another appropriate organization;

(b)              A unique number: a number unique to that account for the Party or organization for which the account is maintained.

6.         Upon being instructed by the executive board to issue CERs for a CDM project activity, the registry administrator shall, in accordance with the transaction procedures set out in the modalities for the accounting of assigned amounts under Article 7, paragraph 4:

(a)              Issue the specified quantity of CERs into a pending account of the executive

board;

(b)              Forward the quantity of CERs corresponding to the share of proceeds to cover administrative expenses and to assist in meeting costs of adaptation in accordance with Article 12, paragraph 8, to the appropriate accounts in the CDM registry for holding and transferring such CERs;

(c)              Forward the remaining CERs to the registry accounts of project participants and Parties involved, as specified by their distribution agreement.

7.