On May 2, 2oo8, the Enforcement Branch of the Kyoto Protocol’s Compliance Committee decided to proceed with an investigation of Canada’s failure to establish in a timely way a national registry for Kyoto-recognized emissions credits, a condition for Canada’s participation in the flexibility mechanisms of the Protocol (i.e., the Clean Development Mechanism, Joint Implementation and the ability to trade national emissions allowances). National registries are required of all Annex 1 country signatories to the Protocol and are linked to an international database (the International Transaction Log) that is used to monitor each country’s holdings and transfers of Kyoto-recognized emissions credits.

This decision follows the Compliance Committee’s Report, released April 11, 2008, which outlined the findings of a review conducted in Ottawa in November 2007 by a team of international experts from the UN Framework Convention on Climate Change secretariat. The team reviewed Canada’s Initial Report Under the Kyoto Protocol (the Initial Report) and supporting information, which described, among other things, how Canada has implemented its requirements to develop a national system to account for its greenhouse gas (GHG) emissions.

Although the Committee’s Report indicated that Canada had not yet established a national registry, it also noted that the Canadian government had awarded the contract to do so to Perrin Quarles Associates, the firm that established New Zealand’s national registry, and that is working on a registry for the Regional Greenhouse Gas Initiative, the cooperative effort led by northeastern and mid- Atlantic U.S. states to reduce regional GHG emissions through an emissions trading regime. According to the Committee’s Report, Canada’s registry is expected to be connected to the International Transaction Log by May 28, 2008, enabling live updates to the country’s inventory of credits by the second week of July 2008.

The Enforcement Branch’s investigation is a timely reminder that there are enforcement mechanisms under the Kyoto Protocol. It also indicates that the Enforcement Branch will, in the right circumstances, take action to deal with noncompliance. As a further signal of this intention, on April 17, 2008, the Enforcement Board issued a final decision declaring Greece to be out of compliance with the requirements of the Protocol to ensure its national system for GHG emissions accounting is properly maintained. As a result, Greece must now prepare a plan to return to compliance, and its right to trade in most Kyoto-recognized emissions credits has been (at least temporarily) suspended.

Canada’s recent action to establish a national registry is evidence that the federal government remains committed to complying with at least some of the country’s obligations under the Protocol. The government has also indicated a clear commitment to reducing the country’s GHG emissions over the long term. It is, however, equally clear that the current government believes it would be irresponsible to attempt to comply with the country’s obligation under the Protocol to reduce its GHG emissions by 6% below 1990 levels between 2008 and 2012. That issue will crystallize at the end of the Protocol’s compliance period in 2012 when Annex I Parties (including Canada) will have 100 days after an international expert review of their final annual emissions inventory to achieve compliance with their commitments (e.g., by acquiring Kyoto-recognized emissions credits). If at the end of this 100 day period, a party’s emissions are still greater than its commitment under the Protocol, the Enforcement Branch may declare the party to be in non-compliance, prevent it from making transfers under the Protocol’s emissions trading schemes and require it to make up the difference between its actual emissions and its Kyoto commitment, plus an additional 30% of that amount, during a second commitment period.

For further information about the Enforcement Branch’s review, please see

http://unfccc.int/files/kyoto_protocol/compliance/enforcement_branch/application/pdf/cc-2008-1-2_canada_eb__decision_on_preliminary_examination.pdf

and

http://unfccc.int/kyoto_protocol/compliance/enforcement_branch/items/3785.php