COP-7 Update - November 8 

The negotiations continue today, in closed sessions, and aim to conclude tomorrow afternoon. The following key sticking points remain and have been sent to Ministers for final resolution:

Fungibility of emissions allowances, and credits generated under Joint Implementation and the Clean Development Mechanism.  Enron strongly supports full fungibility among allowances and credits.

The nature of compliance rules under the market-based mechanisms still need to be agreed upon. Specifically, whether the eligibility requirements to participate in the mechanisms are deemed as mandatory and whether parties that wish to use the mechanisms must agree to the compliance rules under Protocol.  Enron supports strong compliance rules and eligibility criteria, but urges that once a credit generating project has been approved by oversight bodies (CDM Executive Board; JI Supervisory Body) that the credits are secure (assuming no project-oriented defaults).

Sinks - 1) how sinks allowances will be able to be used in the first commitment period, 2008 - 2012 (hierarchy of credit submission). The Bonn Agreement stated that sinks allowances could not be banked.  The European Union seeks agreement on the order of submission of all credits used for compliance in the first commitment period.  2) Russia's request for an increase in its domestic sinks allocation in the first budget period.  The European Union has the most problem with increasing Russia's allocation and is working bilaterally with Russia to resolve this issue.  From an Enron perspective, the amount of Russian sinks allowances will likely impact prices and demand for greenhouse gas emissions allowances and credits, especially in the first commitment period. 

The nature and scope of what must be reported by national governments is still being debated.  Many of these are technical issues, but are important to ensure the integrity of the emissions trading system and tracking of national compliance with treaty obligations.

Of note, the oversight body of the Clean Development Mechanism, the Executive Board, has been largely appointed and is set to meet tomorrow afternoon.  Some of the countries represented as full members include Brazil, Costa Rica, Morocco, and Antigua and Barbuda. Amb. John Ashe (Antigua and Barbuda), a leader of this process (and good contact), will likely be elected to serve as the President of Executive Board.

Amb. Raul Estrada (Argentina), the man largely associated with hammering out the Kyoto Protocol, has been appointed to serve as a Chair of one of the key implementing bodies of the Conference of the Parties.  His leadership in the process is important as we work with TGS on greenhouse emission reduction projects. 

Under Secretary Paula Dobriansky made a formal statement to the conference plenary last night.  Of significance, it said that the science on climate change was uncertain, which was criticized in the hallways by many delegations and observers. 

The U.S. delegation will meet with industry twice today.

The Pew Center on Global Climate Change has posted a good outline of some of the key issues to be resolved at COP-7, please take a look at it if you would like additional background or feel free to send me an email.

http://www.pewclimate.org/cop7/update_110601.cfm

Again, if you would like to contact me please try via email or call me at +41793453046.

All the best,

Lisa