UNFCCC adopts Bali Action Plan

The Action Plan adopted at Bali on Saturday strongly supports private-sector investment as a means of addressing climate change and recommends incentives for such investment. This will be of interest to investors in the Kyoto Protocol’s Clean Development Mechanism (CDM) and Joint Implementation (JI) projects, as well as those operating them, as the global carbon market is likely to benefit from the decisions reached in Bali. The Action Plan may also ultimately result in the implementation of a third phase for the EU Emissions Trading Scheme (EU ETS), which would start in 2013, to coincide with a new post-Kyoto emission reduction commitment period, which will be of interest to both current and likely future participants to the EU ETS.

The Bali Action Plan charts the course for a new negotiating process to be concluded by 2009 that is intended to lead to a post-2012 international agreement on climate change. By ending negotiations in 2009, the aim is to give all parties time to implement the recommendations with little or no gap between the Kyoto Protocol’s first commitment period (2008-2012) and a possible new emission reduction commitment period.

The Action Plan includes a mandate to address the following key issues:

• the setting up of a “long-term global goal for emission reductions” which could eventually lead to a new international emission reduction commitment period post 2012. To achieve this, developed countries are expected to take on “measurable, reportable and verifiable” emission reduction commitments, whereas developing countries would also be expected to take on “measurable, reportable and verifiable” mitigation actions with the help of technical and financial support from developed countries;
• the development of “cooperative sectoral approaches and sector-specific actions” at national and international level to address climate change by including “opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions”; and
• the “removal of obstacles to, and provision of financial and other incentives for, scaling up” the development and transfer of clean energy technologies from developed countries to developing countries.