At COP 18 in Doha at the end of 2012, Parties decided how to deal with the large surplus of Assigned Amount Units (AAUs) from the first Kyoto commitment period (CP1) and how to prevent the accumulation of new surplus in the second commitment period (CP2) of the Kyoto Protocol.
Carbon Market Watch just released a policy brief that explains the decisions that were taken in Doha and examines their implications. You can download the policy brief here.
The compromise adopted in Doha has two main elements relating to surpluses from the first and second commitment period.
1. The decision does not limit the carry-over of surplus AAUs from CP1 but puts limits on their use in CP2. It also makes it impossible for countries without a reduction target in CP2 to sell their surplus to countries with a reduction target. In other words, Russia and other countries with surplus that do not join CP2 will not be able to sell units to CP2 countries. To underline their climate commitments, several countries made political declarations that they will not buy AAU surplus from CP1 in CP2.
2. Countries also decided to restrict the initial assigned amount (the number of AAUs a country initially receives for CP2) in order to avoid the build-up of new surplus. This amendment makes it impossible for countries to accumulate new surplus AAUs. This amendment may set an important precedent for future decisions on target setting.
The decisions on use restrictions of AAU surplus that were taken in Doha are complex. The new Carbon Market Watch policy brief tries to explain the issues in a balanced way and discusses the impacts of the Doha surplus decisions on the second commitment period and beyond.