Report from the meeting of the Advisory Committee to the Capacity for Climate Protection in CEE project

12 May 2000, Szentendre, Hungary

The second Advisory Committee (AC) meeting had the following objectives:

• To outline CEE priorities for COP6;
• To review and provide input to the NGO papers on energy reform and transport development trends in CEE;
• To further explore the interface between energy market development and climate issues as they relate to energy sector reform in CEE and accession to the EU.
• To inform members and partner NGOs about the G8 environmental ministers meeting and its outcomes and about the "Best Practices" workshop
• To review the project status and make recommendations for activities and issues to be addressed over the coming year.

Zsuzsanna Ivanyi, the REC project manager, reviewed the activities of the project during the past year and answered questions by AC members and partner NGOs. The review was followed by presentations and discussions on: CEE priorities for COP6, the interface between climate protection objectives, energy reform and EU enlargement; activities and substantive issues for the coming year of the project. The following is a summary of the discussions and recommendations made the AC.

A.	COP6 and CEE countries: The Advisory Committee discussed priorities for COP6 and the issues that are of special interest to CEE countries and NGOs. The following substantive and strategy questions are of particular importance for CEE governments in the forthcoming negotiations:

• COP decisions on the mechanisms: In the CEE context, Joint Implementation (JI) is a preferable mechanism to emissions trading because JI provides, in effect, earmarked financing, will channel investment to GHG emissions reduction and will support the overall goals of the Convention and the Protocol. This, however, is not the case with emissions trading. Revenues from it are likely to be integrated into the overall state revenues and then distributed through the general budget to make up deficits or meet overall development needs. In consequence, there will be no guarantees that revenues from emissions trading will support the goals of the Convention or technological innovation in sectors relevant to GHG emission reduction. To be a viable option, however, JI should be designed so that it can be competitive as compared to CDM. A simpler JI system and decisions on a number of related issues will help achieve this goal. The following decisions will support JI in CEE countries:
  

  a.	simplifying the project cycle. A simpler JI cycle (compared to CDM) is likely to make JI more competitive and attract investment through its mechanisms to the Economies in Transition (EITs). The Polish position is that third-party validation and verification should be eliminated and should be performed by the countries/parties to a JI agreement. The country papers by the NGO partners as well as discussions of AIJ at the previous AC meeting however suggest that Economies in Transition do not currently have capacity for baseline assessment, and there are numerous problems with the negotiation of credit sharing agreements. Further analysis and discussions are needed to assess whether eliminating third party validation and verification is feasible and whether it can/should be substituted by a stronger public oversight of JI in host countries.
  b.	adoption of simple, ready-made, user-friendly baselines;
  c.	consensus and a decision on retroactive crediting;
  d.	a favorable decision on renewables so that they are JI-eligible (this implies a decision on how to treat and measure "avoided emissions");
  e.	a decision on AIJ;
  f.	It was noted, in general, that a simpler JI system will require much greater transparency of decisions, disclosure and review of baseline assessments, information about project performance, clear guidance on "commercially viable" projects' eligibility for JI as well as a stronger role for NGOs and the public in host countries. In addition to the greater need for transparency in JI, the CEE governments will have to build transparent transaction tracking systems and NGOs will have to be able to monitor transactions. It will also require a special effort to train and involve CEE businesses.

  
  
• Need for consultations: CEE governments and negotiators need to consult and identify areas where they can express common positions at COP6.
  
  
• NGO expectations: NGOs expect:
  

  a.	that CEE governments will ratify the Protocol before 2002 and will advocate commitments by others to do the same at COP6.
  b.	a COP decision to the effect that nuclear energy will not be eligible for JI or CDM;
  c.	that JI will be tied to sustainable development goals;

C.

G8 Environmental Ministers Meeting and the "Best Practices" workshop: The definition and criteria for assessment of "best practices" in domestic policies and measures provided insights of possible approaches to assess current efforts by CEE countries. Future work of the project can focus on "best practices" in policies and measures in CEE. Project work can also build on the definitions and criteria developed by the workshop. Such work can build on the analysis and country reports on energy, accession, economic instruments which have either been completed or in preparation.

D.	The AC recommendations for activities in the forthcoming year:

• Substantive issues: AC discussions highlighted the importance of a project focus on:
  

  a)	NGOs' role in JI: The project can assess the role of public oversight of decisions and performance of JI;
  b)	Ensuring transparent system of measurement and reporting: rather than focusing on countries' capacity to meet the requirements under Art. 5, 7, 8 of the Protocol.
  c)	Further work and assessment of domestic policies and measures is needed. This should be linked with the EU enlargement and its implications for the "climate" performance of CEE.
  d)	Economic instruments and the climate commitments.

  
  
• Activities:
  

  a)	the grants should be designed to follow up on last year's work and address the issues defined in points A, B, C. Specifically, the grants will help NGOs build on last-year's work on energy and transport sector development. They should also support in-country outreach;
  b)	Instead of the grants focusing on Art. 5,7,8 a survey of national systems under Art. 5,7,8 by NGO partners and a background paper by the project partners will be sufficient to identify needed capacity by CEE;
  c)	The two WRI notes on JI national programs and public participation in JI and CDM will be completed and published. The REC will organize an event or use existing opportunities for discussions and outreach (an AC meeting, NGO workshop, ministerial consultations)
  d)	The work on energy reform, accession and climate protection will be completed.
  e)	A paper on economic instruments for climate protection will be developed and presented at the Environmental Ministers' meeting in June;
  f)	Efforts will be made to hold a meeting of the CEE Environmental Ministers in Oct. 2000 to coordinate positions for the COP6;
  g)	A workshop will be organized on energy, accession and climate issues instead of the currently planned workshop on national systems under Art. 5,7,8. The workshop will build on work already done as well as new work to be undertaken by NGOs with this year's grants.
  h)	Opportunities will be identified to engage businesses;
  i)	The Romanian member of the AC will be supported to seek funding for a publication of the report on AIJ in Romanian;
  j)	The REC will host a booth at the SBSTA in June. The following materials will be exhibited at the booth: the report on AIJ; a fact sheet on AIJ; a paper on economic instruments for climate protection in CEE; a strategic environmental assessment (including CO2) of the transport corridor from Poland through Slovakia to the Czech Republic, information about the web site. NGO partners and CANCEE members are invited to use the booth to distribute and promote their materials.
  k)	Based on results of the forthcoming internet discussion on AIJ, another discussion on policies, measures and accession can be organized;
  l)	Fact sheets should be published in local languages. Future fact sheets will be based on notes, reports and country papers produced by the project.