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United States Submission on Adjustments under Article 5.2 Submitted to the UN Framework Convention on Climate Change (UNFCCC) Secretariat, February 1, 2000

Released by the Bureau of Oceans and International Environmental and Scientific Affairs, U.S. Department of State, February 4, 2000

As the United States noted previously, the provision of high-quality greenhouse gas emission inventories will be essential for verification of Parties' attainment of assigned amounts. If an inventory fails to meet the IPCC methodological requirements as elaborated by good practice, Parties may not have sufficient confidence in the quality of the submitted emissions estimates to verify compliance with Article 3.1. For this reason, adjustments under Article 5.2 will be necessary to ensure confidence that the overall inventory is not underestimated. The remainder of this paper further elaborates our views on the procedures and methodologies for adjustments. It should be read and understood in conjunction with our previous submission contained in FCCC/SBSTA/1999/Misc.9.

At the October session of the subsidiary bodies, Parties agreed that adjustments should be applied only when inventory data are incomplete and/or calculated in a way that is not consistent with the IPCC 1996 Revised Guidelines as elaborated by good practice. In the US view, adjustments should be used for any and all inventory deficiencies that fall under this category to ensure that Parties' compliance with Article 3.1 can be verified at the end of the commitment period.

Generally, the application of adjustments under Article 5.2 will prevent a Party from being in non-compliance with 5.2, provided that

• Parties can agree on methodologies for adjustments that are sufficiently conservative so as to give appropriate assurance that inventory estimates are not underestimated; and
• the inventory problems are not egregious.

For egregious inventory problems, adjustments would be calculated (to provide a number by which to verify compliance with Article 3.1 at the end of the period), but the adjustments would not be considered to resolve the compliance problem. These cases would be referred to the compliance procedure, and a Party would potentially be subject to whatever pre-agreed outcome results from such a case, such as loss of access to one or more Kyoto mechanisms because of failure to meet eligibility requirements.

To ensure consistency and objectivity in the review process and in any consequences that may arise, Parties will need to elaborate clear guidelines for distinguishing between minor and egregious inventory problems. In developing a functional definition of an egregious problem, the purpose of adjustments under Article 5.2 should be considered. Egregious problems should be narrowly defined as those that are so serious as to substantially undermine confidence in the Party's inventory. Parties should establish objective criteria for this determination. Further analysis is needed to determine the best approach to this issue and the appropriate classification of specific inventory problems.

Since the adjustment procedure would occur as part of the annual inventory review process, the inventory review team should be responsible for identification of problems and the calculation of adjustments, in accordance with review guidelines. Straightforward and detailed guidelines for identification of inventory problems and for calculation of adjustments will enable the review team to perform its task objectively and consistently, and will assist the compliance body in deciding which cases to take up, in accordance with its screening rules. Since identification of egregious inventory reporting problems (adjusted or not) by the review team could lead to the loss of a Party's eligibility to participate in the mechanisms, inventory review guidelines must leave no ambiguity about what constitutes an egregious problem. Additionally, the review team must have the necessary technical expertise to both determine the need for and calculate adjustments.

We wish to reiterate that adjustments should only be applied after the Party concerned has been provided with the opportunity to correct the problem. The adjusted estimate would be reflected in the official accounting of the Party's emissions and assigned amount, and used as the basis for verifying the Party's compliance with Article 3.1. (See related discussion in the US submission on Articles 7 and 8.) The attached flowchart (revised since our previous submission) lays out the steps in the adjustment procedure.

To ensure objectivity and consistency in their application, methodologies for calculating adjustments must be determined in advance, by type of inventory problem and by source category. The agreed methodologies must ensure that adjustments are sufficiently conservative to protect the environment and the interest of other Parties that emissions are not underestimated. The United States believes that the methodologies for adjustment should be simple and straightforward; they should not be resource intensive.

Detailed options for adjustment methodologies, as well as consideration of their applicability to specific inventory deficiencies are provided in the technical attachment to this text.

Adjustment Procedure

Click for chart (12 kb PDF file).

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