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AGBM-4, held from 8-19 July 1996 during the Second Conference of the Parties (COP-2) in Geneva, completed its in-depth analyses of the likely elements of a protocol or another legal instrument, and appeared ready to move forward to the preparation of a negotiating text. Most of the discussions dealt with approaches to policies and measures, QELROs, and an assessment of the likely impact of new commitments for Annex I Parties on developing countries. Upon the conclusion of COP-2, delegates noted the "Geneva Declaration," which endorsed the Intergovernmental Panel on Climate Change (IPCC) conclusions and called for legally binding objectives and significant reductions in GHG emissions. COP-2 also saw a significant shift in position by the US, which for the first time supported a legally binding agreement to fulfill the Berlin Mandate. However, even as Parties prepared to strengthen commitments, COP-2 highlighted the sharpest differences between them.

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On 3 December, the COP President introduced a discussion on the development and transfer of technologies. CHINA, supported by INDIA and IRAN, observed two tendencies: developed countries are only interested in transfer of technical information, while developing countries deem technology transfer on non-commercial and preferential terms most important; and some countries emphasize market mechanisms. She called for action from developed countries consistent with Agenda 21, the FCCC and previous COP resolutions, and recommended that that the issue be taken up as a separate item at COP-4. SOUTH AFRICA said access to technology and transfer of technical know-how would play a crucial role in meeting the energy implications of moving towards sustainable development. JAPAN outlined the Kyoto Initiative to strengthen assistance for developing countries in their efforts to combat global warming, to be operated through the national Official Development Assistance programme. The programme will offer concessional loans to promote training, cooperation on energy-saving technology, new and renewable energy sources, forest conservation and afforestation, and will establish information networks and workshops. INDIA, supported by IRAN, called for the operationalization of FCCC provisions relating to state-of-the-art environmentally sound technologies (EST), in the new legal instrument. The following report describes the discussions held in the resumed AGBM-8, the COP-3 Plenary, the High-Level Segment and the COW, and includes an article-by-article description of the Kyoto Protocol. Under Kuwait's proposed amendment, Parties would provide financial resources, including the transfer of technology, to the extent that the COP decides they are needed by the developing country Parties. KUWAIT said the developing countries can only lower emissions through technology, but resources made available to date have been inadequate. The EU, supported by the US and JAPAN, said donors should not place their resources in the hands of the COP. SAUDI ARABIA said the amendment came in reaction to the EU proposal, which upsets the Convention's "delicate balance." Sergio Selaya Bonilla (Honduras) conducted consultations on the EU's proposal and Bakary Kante (Senegal) on Kuwait's proposal throughout the week. The EU proposal was later withdrawn. The Kuwait proposal was not accepted. McDonald's, Chipotle Raising Prices In California ... After State Increases Fast-Food Workers' Wages AGBM-6 met from 3-7 March 1997 in Bonn. Delegates met in "non-groups" to exchange views and "streamlined" the framework compilation text by merging or eliminating some overlapping provisions within the myriad of proposals. This brought the process one step, albeit a small one, closer to fulfilling its mandate. Much of the discussion centered on a proposal from the EU for a 15% cut in a "basket" of greenhouse gases by the year 2010 compared to 1990 levels. Other proposals emerged in the eleventh hour, signaling that AGBM-6, despite the hopes of many observers, had yet to foster much progress on several fundamental points.

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ARTICLES 14 AND 15: These articles were agreed in the negotiating group on I&Ms. Under 14 (Secretariat) and 15 (Subsidiary Bodies), the FCCC Secretariat and Subsidiary Bodies will also serve the Protocol.

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The establishment of QELROs excluded the LUCF category, but allowed GHG removal by "new activities" to be counted towards compliance if "verifiable." The "new activities" would be defined on the basis of advice from the IPCC and agreed upon by the COP.In the final Plenary, delegates adopted a draft decision on methodological issues related to the protocol (FCCC/CP/1997/L.5). It reaffirms that: Also controversial were the issues of emissions trading, the use of sinks/sources and banking credits. Those who questioned the wisdom of such mechanisms recalled the Convention's goal of emission reductions and voiced the fear that such measures would exacerbate the gap between the countries.

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Following adoption of Article 4 by the COW, SAMOA noted that "hot air" trading, the possibility that Parties whose emissions were already below 1990 levels could trade them as new reductions, was not sufficiently dealt with, and that this could permit evasion at large scale. He said he accepted the article in the belief that only the EU would take advantage of the arrangements.

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Delegates next considered reports from the FCCC subsidiary bodies. Tibor Farag (Hungary) introduced the report and draft decisions of the Subsidiary Body on Scientific and Technological Advice (SBSTA) (FCCC/SBSTA/1997/14). Delegates noted the report of SBSTA and adopted its draft decisions on cooperation with the Intergovernmental Panel on Climate Change (IPCC) and the development of observational networks. Joint SBSTA/SBI draft decisions were adopted on the development and transfer of technology and activities implemented jointly (AIJ). INDIA, on behalf of the G-77/CHINA, and supported by CHINA and INDONESIA, reiterated its objection to the concept of emissions trading, stating that it is extraneous to the Berlin Mandate and would not lead to GHG emissions limitation and reduction. CHINA drew attention to the fact that budget periods appeared under each option, and recalled the G-77/China's objection to this concept. BRAZIL and ICELAND indicated that the issue of sinks needed to be sorted out before settling targets for QELROs. BRAZIL noted the value of the third option as a basis for compromise. It was agreed that consultations on the matter would continue during COP-3.

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Article 11 describes financial resources, noting that Parties shall take into account FCCC Articles 4.4-4.9 in implementing Protocol Article 10. It states that Annex II Parties' shall, in accordance with FCCC Articles 4.3 and 11, and through the FCCC financial mechanism: provide new and additional financial resources to meet agreed full costs incurred by developing country Parties in advancing commitments in Protocol paragraph 10(a); and also provide financial resources needed by developing country Parties to meet full incremental costs of activities in Article 10, including technology transfer. Implementation of existing commitments shall take into account the need for adequacy and predictability in the flow of funds. The article also permits provision of financial resources through bilateral, regional and other multilateral channels. Commitment Periods: On 2 December, the Article 3 negotiating group focused on emission budgets. Meira Filho reported to the COW on 5 December on the consultations on "multi-year targets," formerly known as "budgets." He stated that problems arose from confusion between the terms "emission budgets" and "budget periods." These were replaced with "total emissions" and "commitment periods," respectively. He said there was increasing agreement that the range for "commitment periods" should be five years. The CDM shall be subject to the authority and guidance of the MOP and supervised by an executive board of the CDM. Each project's emission reductions shall be certified by operational entities designated by the MOP based on: voluntary participation by each Party involved; real, measurable and long-term climate change mitigation benefits; and emission reductions additional to any occurring in the absence of the certified project activity. The CDM shall assist in arranging project funding as necessary. Dr. Johny Lahure (Luxembourg), on behalf of the EU, rejected differentiation that makes targets weaker. Instead, it must guarantee comparable commitments for major economies at least. Flexibility resulting in environmentally detrimental loopholes is unacceptable. He supported: the "three plus three" gas proposal; trading along with strong targets and domestic action, monitoring, sanctions and market safeguards; and JI with rules and safeguards. He said mandatory, internationally coordinated P&Ms are indispensable. Suggestions that developing countries should take up new commitments are not helpful to the negotiations and contrary to the Berlin Mandate. Mobilizing new and additional resources through the financial mechanism could foster voluntary limitation of developing country GHG emissions.US Vice President Albert Gore Jr. reiterated the US commitment to reduce emissions by 30% of projected levels by 2010 and key elements of the US proposal. He announced increased US flexibility for working towards a commitment with realistic targets and time tables, market mechanisms, and participation of key developing countries. SWITZERLAND, supported by the US, said that GEF should be established as the permanent FCCC financial mechanism. The G-77/CHINA referred to the provision of financial resources and the transfer of technology as fundamental to implementation of the Convention by non-Annex I Parties. He pointed out that both were developed countries' obligations under the Convention and should not be used to push developing countries to accept new commitments or to accept a market-based approach under the protocol. The PHILIPPINES mentioned problems experienced with implementing agencies and said that they should be more aware of decisions taken by the GEF Council. INDIA, BHUTAN, BANGLADESH and KIRIBATI highlighted the importance of obtaining GEF financing for national communications. The US said GEF had made an effort to meet the needs of FCCC Parties and expressed disappointment that the review of the financial mechanism had not concluded. He also pointed to the need for finding innovative sources of financing involving the private sector. The GEF's report was noted. VENEZUELA, SAUDI ARABIA and KUWAIT objected to adopting incomplete rules. ARGENTINA and the Alliance of Small Island States (AOSIS) supported the draft decision. The EU supported the draft decision but suggested that rule 22 was already agreed. The President called for consultations and said the COP would continue to apply the draft rules except rule 42. Delegates spent a considerable portion of the final debate on Article 3 debating newly inserted paragraphs in the Chair's text related to emissions trading. Delegates agreed to place the text to a separate article (see Article 16 bis) of the protocol and including a reference to future work on trading in a COP decision. Developing countries rejected the concept of voluntary commitments as they linked the output of emissions with development and progress, which they said was their highest priority. They stressed that the Berlin Mandate had not called on developing countries to take responsibility for what was essentially the result of industrialized countries' action. They stressed that developed countries should take the lead and follow the principle of "common but differentiated responsibilities." AOSIS called for the strongest emissions cuts as they spoke of certain disaster in the face of political paralysis. Oil-producing countries called for establishment of a compensation mechanism should full implementation be carried out.