A regulatory analysis of international climate change regulation

The political challenges impeding the negotiation of a comprehensive multilateral agreement on international climate change have received a great deal of attention. A question that has gone somewhat overlooked is what essential components an effective regulatory scheme to reduce greenhouse gas emissions should contain. The objective of this article is to examine the regulatory architecture of current international arrangements relating to global climate change regulation. A systematic analysis of the structure, substantive composition, and administrative characteristics of the UNFCCC and Kyoto Protocol is undertaken. The analytical standard against which the agreements are examined is whether current international regulatory arrangements satisfy the basic requirements of regulatory coherence. The analysis identifies how the present scheme consists of a complex institutional structure that lacks a substantive regulatory core. The implications of the absence of functional and effective mechanisms to govern greenhouse gas emission reductions are considered in relation to the principles of good regulatory design. This, in turn, provides useful insights into how a better regulatory scheme might be designed.

The Australian response to climate change : business as usual or legal innovation?

Through international agreement to the United Nations Framework Convention on Climate Change and the Kyoto Protocol the global community has acknowledged that climate change is a global problem and sought to achieve reductions in global emissions, within a sufficient timeframe, to avoid dangerous anthropogenic interference with the climate system. The sheer magnitude of emissions reductions required within such an urgent timeframe presents a challenge to conventional regulatory approaches both internationally and within Australia. The phenomenon of climate change is temporally and geographically challenging and it is scientifically complex and uncertain. The purpose of this paper is to analyse the current Australian legal response to climate change and to examine the legal measures which have been proposed to promote carbon trading, energy efficiency, renewable energy, and carbon sequestration initiatives across Australia. As this paper illustrates, the current Australian approach is clearly ineffective and the law as it stands overwhelmingly inadequate to address Australia’s emissions and meet the enormity of the challenges posed by climate change. Consequently, the government should look towards a more effective legal framework to achieve rapid and urgent transformations in the selection of energy sources, energy use and sequestration initiatives across the Australian community.

From the bottom-up : redesigning the international legal response to anthropogenic climate change

The design of the Kyoto Protocol renders it incapable of effectively responding to the problem of anthropogenic climate change. Therefore, this article explores the opportunity to construct a new, principled legal approach to respond to climate change that is premised on nationally derived legal responses. To do so, this article considers the theoretical foundation of the international legal response to climate change – Hardin's "The Tragedy of the Commons‟ – and the systemic design faults of the Kyoto Protocol. This article also suggests four principles – a judicious mix of legal instruments, flexibility, intrinsic legal coherence, and quantifiable and achievable targets for the reduction of greenhouse gas intensity – that are necessary to guide the creation of a nationally derived legal response to climate change. This approach is intended to provide the catalyst for new bilateral and multilateral arrangements that can, with the passing of time, generate sufficient momentum to drive the creation of a new and effective cooperative international legal framework to mitigate anthropogenic climate change.

Carbon financing and the Australian emissions trading scheme : less emissions, more opportunities?

The introduction by the Australian federal government of its Carbon Pollution Reduction Scheme was a decisive step in the transformation of Australia into a low carbon economy. Since the release of the Scheme, however, political discourse relating to environmental sustainability and climate change in Australia has focused primarily on political, scientific and economic issues. Insufficient attention has been paid to the financial opportunities which commoditisation of the carbon market may offer, and little emphasis has been placed on the legal implications for the creation of a "new" asset and market. This article seeks to shed some light on the discernable opportunities which the Scheme should provide to participants in the Australian and international debt markets.

Sequestration through forestry and agriculture

Current climate mitigation policies have not fully resolved contentious issues regarding the inclusion of carbon sequestration through changes in forestry and agricultural management practices. Terrestrial carbon sinks could be a low-cost mitigation option that fosters conservation and development, yet issues related to accurately documenting the amount of carbon sequestered undermine confidence that emission offsets through sequestration are equivalent to emission reductions. From an atmospheric perspective, net of CO2 removals through sequestration are equivalent to emission reductions over a given period of time. But carbon will not remain sequestered in biomass or soils indefinitely and investments in sequestration could stifle investments in reducing emissions from other sources. Many international climate agreements cap emissions from some countries or sectors but enable participation of uncapped countries or sectors for forestry and agricultural sequestration. This structure can prompt emission increases in parts of the uncapped entities that weaken the value of emission reductions earned through sequestration. This has been a minor issue under the Clean Development Mechanism of the Kyoto Protocol. Reduced emissions through deforestation and degradation is susceptible to the same problems. The purpose of this article is to review the science, politics, and policy that form the basis of arguments for and against the inclusion forestry and agricultural sequestration as a component of current and future international climate mitigation policies.

Legal issues in carbon farming : biosequestration, carbon pricing, and carbon rights

This paper critically analyses the proposed Australian regulatory approach to the crediting of biological sequestration activities (biosequestration) under the Australian Carbon Farming Initiative and its interaction with State-based carbon rights, the national carbon-pricing mechanism, and the international Kyoto Protocol and carbon-trading markets. Norms and principles have been established by the Kyoto Protocol to guide the creation of additional, verifiable, and permanent credits from biosequestration activities. This paper examines the proposed arrangements under the Australian Carbon Farming Initiative and Carbon Pricing Mechanism to determine whether they are consistent with those international norms and standards. This paper identifies a number of anomalies associated with the legal treatment of additionality and permanence and issuance of carbon credits within the Australian schemes. In light of this, the paper considers the possible legal implications for the national and international transfer, surrender and use of these offset credits.

Real estate issues associated with the implementation of a carbon trading framework : a rural landholders perspective

The issue of carbon sequestration rights has become topical following the United Nations Convention on Climate Change and the subsequent Kyoto Protocol which identified emissions trading as one of the mechanisms to reduce greenhouse gas emissions. The Australian Government has responded by initiating the Garnaut Climate Change Review which in its final report, proposed that an emissions trading scheme be introduced and set out some of the desirable features of such a trading scheme. This proposal has been the subject of much debate and at this stage there still seems to be little clarity surrounding the topic of emissions trading in Australia. The treatment of rights to carbon sequestered in vegetation is also an issue when reconciled with the system of land tenure and ownership in many jurisdictions. These carbon property rights are treated differently in different Australian and international jurisdictions ranging from recognition of their new and unique nature to fitting them within a more established common law framework, e.g.a profit a prendre. This paper identifies the treatment of these sequestered carbon rights within the wider property rights framework in Australia and considers issues that this treatment may inflict on land holders when there is a fracturing of ownership between the rights of the carbon in vegetation and the ownership of the land.

Offsetting greenhouse gas emissions through biological carbon sequestration in North Eastern Australia

The Kyoto Protocol recognises trees as a sink of carbon and a valid means to offset greenhouse gas emissions and meet internationally agreed emissions targets. This study details biological carbon sequestration rates for common plantation species Araucaria cunninghamii (hoop pine), Eucalyptus cloeziana, Eucalyptus argophloia, Pinus elliottii and Pinus caribaea var hondurensis and individual land areas required in north-eastern Australia to offset greenhouse gas emissions of 1000tCO 2e. The 3PG simulation model was used to predict above and below-ground estimates of biomass carbon for a range of soil productivity conditions for six representative locations in agricultural regions of north-eastern Australia. The total area required to offset 1000tCO 2e ranges from 1ha of E. cloeziana under high productivity conditions in coastal North Queensland to 45ha of hoop pine in low productivity conditions of inland Central Queensland. These areas must remain planted for a minimum of 30years to meet the offset of 1000tCO 2e.

Implementing the Clean Development Mechanism in Fiji : opportunities and barriers in the energy sector

The Clean Development Mechanism (CDM) has been praised for its ingenuity in mobilising finance to implement sustainable development practices in non-industrialised countries (known as Non-Annex 1 parties under the Kyoto Protocol). During the first commitment period of the Kyoto Protocol (2008-2012), a large number of clean development mechanism projects have been registered with the CDM board. In addition to the large number of registered CDM projects, there are significant numbers of proposed projects stalled in implementation due to the cumbersome and lengthy CDM approval process. Despite this regulatory criticism it is recognised that the role performed by the CDM is essential for achieving a significant reduction in global green house gas emissions. This is because the CDM funds sustainable development in countries that lack capacity to do so on their own. It is anticipated that some form of CDM instrument will continue post the 2012 timeframe and that reform of the mechanism will be focused around making the mechanism’s approval and implementation processes faster and more efficient.

Opportunities for forest finance under the International climate change regime

The international climate change regime has the potential to increase revenue available for forest restoration projects in Commonwealth nations. There are three mechanisms which could be used to fund forest projects aimed at forest conservation, forest restoration and sustainable forest management. The first forest funding opportunity arises under the clean development mechanism, a flexibility mechanism of the Kyoto Protocol. The clean development mechanism allows Annex I parties (industrialised nations) to invest in emission reduction activities in non-Annex 1 (developing countries) and the establishment of forest sinks is an eligible clean development mechanism activity. Secondly, parties to the Kyoto Protocol are able to include sustainable forest management activities in their national carbon accounting. The international rules concerning this are called the Land-Use, Land-Use Change and Forestry Guidelines. Thirdly, it is anticipated that at the upcoming Copenhagen negotiations that a Reduced Emissions from Deforestation and Degradation (REDD) instrument will be created. This will provide a direct funding mechanism for those developing countries with tropical forests. Payments made under a REDD arrangement will be based upon the developing country with tropical forest cover agreeing to protect and conserve a designated forest estate. These three funding options available under the international climate change regime demonstrate that there is potential for forest finance within the regime. These opportunities are however hindered by a number of technical and policy barriers which prevent the ability of the regime to significantly increase funding for forest projects. There are two types of carbon markets, compliance carbon markets (Kyoto based) and voluntary carbon markets. Voluntary carbon markets are more flexible then compliance markets and as such offer potential to increase revenue available for sustainable forest projects.

Assessment of the application of contingent valuation theory to bio-sequestered carbon

The issue of carbon sequestration rights has become topical following the United Nations Convention on Climate Change (United Nations 1992 at page 1414) and the subsequent Kyoto Protocol (United Nations Climate Change Secretariat 1998) which identified emissions trading as one of the mechanisms to reduce greenhouse gas emissions. Australian states have responded by creating a legal framework for the recognition of rights to bio-sequestered carbon. There is a lack of uniformity in the approach of each state to the recognition of these rights, which vary from the creation of new and novel interests in land to the adoption of more traditional rights such as a profit a prendre. Rights to bio-sequestered carbon are likely to have an impact on the utility, marketability, value and financing of rural land holdings. Despite the creation of the legal framework for recognition of rights to sequestrated carbon, there has been a delay in the introduction of a formalised carbon trading scheme in Australia. In the absence of an established carbon market, this paper addresses the applicability of contingent valuation theory to assess the value of bio-sequestered carbon rights to a rural land holder. Limitations and potential controversies associated with this application of contingent valuation theory are also addressed in this paper.

Climate change and reduction of emissions of greenhouse gases from ships : an appraisal

Article 2(2) of the Kyoto Protocol imposes an obligation only on certain developed countries, working through the International Maritime Organisation (IMO), to pursue the reduction of greenhouse gas (GHG) emissions from marine bunker fuels. The IMO recently took the initiative to adopt a new legal instrument for the reduction of shipgenerated greenhouse gas emissions. Some developing countries have suggested that the proposed IMO initiative should strictly adhere to Article 2(2) of the Kyoto Protocol and the principle of Common but Differentiated Responsibility (CBDR). Against this backdrop, this article intends to review the extent to which it is possible to propose an international legal instrument for the reduction of GHG emissions from marine bunker fuels which is applicable only to ships from developed countries considering the complex characteristics of the international shipping industry. This article also examines how far this approach is justifiable even within the framework of the CBDR principle.

Fraud risk and the visibility of carbon

In recent years, carbon has been increasingly rendered ‘visible’ both discursively and through political processes that have imbued it with economic value. Greenhouse gas (GHG) emissions have been constructed as social and environmental costs and their reduction or avoidance as social and economic gain. The ‘marketisation’ of carbon, which has been facilitated through various compliance schemes such as the European Union Emissions Trading Scheme (EU ETS), the Kyoto Protocol, the proposed Australian Emissions Reduction Scheme and through the voluntary carbon credit market, have attempted to bring carbon into the ‘foreground’ as an economic liability and/or opportunity. Accompanying the increasing economic visibility of carbon are reports of frauds and scams – the ‘gaming of carbon markets’(Chan 2010). As Lohmann (2010: 21) points out, ‘what are conventionally classed as scams or frauds are an inevitable feature of carbon offset markets, not something that could be eliminated by regulation targeting the specific businesses or state agencies involved’. This paper critiques the disparate discourses of fraud risk in carbon markets and examines cases of fraud within emerging landscapes of green criminology.

Climate change and IMO technical and operational measures for reduction of emissions of greenhouse gas from ships

According to a study conducted by the International Maritime organisation (IMO) shipping sector is responsible for 3.3% of the global Greenhouse Gas (GHG) emissions. The 1997 Kyoto Protocol calls upon states to pursue limitation or reduction of emissions of GHG from marine bunker fuels working through the IMO. In 2011, 14 years after the adoption of the Kyoto Protocol, the Marine Environment Protection Committee (MEPC) of the IMO has adopted mandatory energy efficiency measures for international shipping which can be treated as the first ever mandatory global GHG reduction instrument for an international industry. The MEPC approved an amendment of Annex VI of the 1973 International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) to introduce a mandatory Energy Efficiency Design Index (EEDI) for new ships and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. Considering the growth projections of human population and world trade the technical and operational measures may not be able to reduce the amount of GHG emissions from international shipping in a satisfactory level. Therefore, the IMO is considering to introduce market-based mechanisms that may serve two purposes including providing a fiscal incentive for the maritime industry to invest in more energy efficient manner and off-setting of growing ship emissions. Some leading developing countries already voiced their serious reservations on the newly adopted IMO regulations stating that by imposing the same obligation on all countries, irrespective of their economic status, this amendment has rejected the Principle of Common but Differentiated Responsibility (the CBDR Principle), which has always been the cornerstone of international climate change law discourses. They also claimed that negotiation for a market based mechanism should not be continued without a clear commitment from the developed counters for promotion of technical co-operation and transfer of technology relating to the improvement of energy efficiency of ships. Against this backdrop, this article explores the challenges for the developing counters in the implementation of already adopted technical and operational measures.

The role of common but differentiated responsibility in the 2020 climate regime

The principle of common but differentiated responsibility (CBDR) will play a role in the 2020 Climate Regime. This Article starts by examining differential treatment within the international legal order, finding that it is ethically and practically difficult to implement an international climate instrument based on formal equality. There is evidence of state parties accepting differential responsibilities in a number of areas within the international legal order and the embedding of CBDR in the United Nations Framework Convention on Climate Change (UNFCCC), means that that differential commitments will lie at the heart of the 2020 climate regime. The UNFCCC applies the implementation method of differentiation, while the Kyoto Protocol applies both the obligation and implementation method of differentiation. It is suggested that the implementation model will be the differentiation model retained in the 2020 climate agreement. The Parties’ submissions under the Durban Platform are considered in order to gain an understanding of their positions on CBDR. While there are areas of contention including the role of principles in shaping obligations and the ongoing legal status of Annex I and Non-Annex I distinction, there is broad consensus among the parties in favour of differentiation by implementation with developed and major economies undertaking Quantified Emission Limitation and Reduction Objectives (economy wide targets) and developing countries that are not major economies undertaking sectoral targets.