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Earth Community Organization (ECO)
the Global Community

Joy Hyvarinen and David Baldock
E-mail: jhyvarinen@hotmail.com or jhyvarinen@ieeplondon.org.uk

for Discussion Roundtables 47, 48 and 49

Table of Contents



The purpose of this paper is to provide a brief overview of issues related to climate change, agriculture and the EU and to consider related developments in the international climate negotiations. The paper focuses on carbon sequestration. The Sixth Conference of the Parties (COP 6) to the UN Framework Convention on Climate Change (UNFCCC) will take place in November 2000 in The Hague, the Netherlands. One of the most contentious issues on the agenda concerns the extent to which 'carbon sinks', including agriculture-related ones, will be included in the Kyoto Protocol. The EU and the US have taken very different approaches to this issue.

First, the paper describes the main Kyoto Protocol provisions and related decisions facing the UNFCCC Parties. It then looks at the links between climate change and the agriculture sector, before considering the EU's Common Agricultural Policy (CAP). In conclusion, the paper addresses some of the current negotiating issues.

The Kyoto Protocol Provisions: More Questions Than Answers

The Sixth Conference of the Parties (COP 6), which takes place in The Hague from 13-24 November, is aiming to take decisions which will determine what role 'land-use, land-use change and forestry' (LULUCF) will play in the achievement of greenhouse gas reduction targets under the Kyoto Protocol. These activities generate emissions, but also provide opportunities to reduce greenhouse gas concentrations through 'carbon sinks', ie by locking up carbon which might otherwise contribute to atmospheric greenhouse gas concentrations.

The Kyoto Protocol allows governments limited inclusion of sinks, but many crucial issues are currently unresolved. One of the main concerns is that large-scale inclusion of sinks in climate change programmes could discourage Parties from taking action to reduce emissions. How the Protocol provisions are interpreted will also have a major impact on what the emissions reduction targets agreed for industrialised countries mean in practice.

According to the two main Kyoto Protocol provisions:

Net changes in emissions resulting from direct human-induced afforestation, reforestation and deforestation since 1990, measured as verifiable changes in carbon stocks, will count towards Protocol targets (Article 3.3).

Parties are to decide ' which, additional human-induced activities related to agricultural soils and the land-use change and forestry categories ..' will be included (Article 3.4)

Even the relatively clear first provision raises a host of yet to be answered questions. How can the large, widely recognised scientific uncertainties related to measurement of sink contributions be dealt with? How can sink contributions be reported and verified, as required by the Protocol? How should 'human-induced' be defined? Can reforestation include replanting wooded areas immediately after felling?

The second provision raises even more complex issues. The contribution of agriculture, including the role of soil carbon, is one of the major issues to be resolved under Article 3.4. Certain agricultural practices can reduce emissions and result in increased carbon sequestration, for example through less intensive farming practices, reduced tillage and good soil management. The reversion of agricultural land to natural ecosystems has significant potential for carbon sequestration. However, as with other sink categories, there are major challenges, including large scientific uncertainties and problems with verifiability. For example, soil carbon content is extremely difficult to monitor at reasonable cost.

A further provision (Article 3.7) allows countries whose LULUCF 'sector' was a source of net emissions in the Protocol's base year 1990 to include these emissions in calculating their targets. This provision applies mainly to Australia, effectively reducing its target by increasing emissions in the baseline year.

Issues for COP 6: Difficult Decisions

The Fourth Conference of the Parties (COP 4), which took place in Buenos Aires in 1998, decided that Parties would agree a draft decision at COP 6 this year, for subsequent formal adoption by the Kyoto Protocol Parties, concerning:

definitions related to afforestation, reforestation and deforestation under Article 3.3. These terms are currently undefined. Loose definitions risk undermining the environmental integrity of the Protocol.

which additional human-induced activities related to ' agricultural soils and the land-use change and forestry categories ' could be included in the Kyoto Protocol in accordance with Article 3.4.

Reaching agreement on these two decisions has emerged as perhaps the most hotly contested agenda item in the preparatory negotiations for COP 6. Some countries are arguing for broad inclusion of sinks as a cost-effective way of reaching targets, which can generate other benefits, such as conservation of biodiversity. However, there are widespread concerns that broad inclusion of LULUCF categories could result in a de facto renegotiation of the targets in the Kyoto Protocol. This could occur if countries with large sink potential were allowed to count these sinks against their already agreed targets. In particular, there are concerns that the decisions on carbon sinks could be formulated in a way that would allow some countries to take credit for reporting business-as-usual, ie for activities that would take place even in the absence of the Kyoto Protocol.

Significant questions arise in relation to the Kyoto mechanisms, in particular the Clean Development Mechanism (CDM). This permits industrialised countries to count emissions reductions achieved through CDM projects in developing countries, for example a project to promote energy efficient technology, towards their own national reduction targets. As developing countries do not have targets under the Protocol, the CDM could constitute a major 'loophole' in the Protocol. The possible inclusion of forestry in CDM projects is particularly controversial. Joint Implementation projects, which take place between industrialised countries, explicitly include carbon sinks. The possibility of including sinks in international emissions trading raises a range of issues, including questions related to permanence and liability (eg what would happen if a forest, which has formed the basis for a traded emissions permit, is destroyed by fire?).

Countries such as the US, Canada, Japan and Russia are arguing for inclusion in the Protocol of a range of additional activities, for example agricultural land management and urban greening. Bolivia, Costa Rica and several other developing countries are arguing for inclusion of LULUCF projects in the CDM. The EU has taken a much more cautious approach, emphasising the many scientific and other concerns related to carbon sinks.

In May 2000, the Intergovernmental Panel on Climate Change (IPCC) released its Special Report on Land-Use, Land-Use Change and Forestry. This provides the scientific basis for decisions in the UNFCCC process. The IPCC found that additional activities under Article 3.4 could be defined broadly (eg as forest, cropland or rangeland management) or narrowly (eg changes in tillage method, irrigation water management, fertilisation or crop selection). A land-based accounting system would be most appropriate for the first category, while an activity-based one would be most appropriate for the latter.

The IPCC's findings confirmed that extensive incorporation of carbon sinks in the Kyoto Protocol could have a very significant effect on the commitments that countries have made. Much depends on which categories would be included and how they would be defined, but there is potential for the greenhouse gas reduction targets of some industrialised countries to change so much that they allow increased emissions - the complete opposite of what the Protocol is intended to achieve.

Agriculture and Climate Change: Challenges and Opportunities

The general trend in industrialised countries is continuing intensification of agriculture, although the pattern is complex. Organic farming is increasing, especially in the EU. In most industrialised countries, the agriculture sector is heavily subsidised. Agriculture is also at the centre of global trade policy debates.

There are multiple linkages between climate change and agriculture. Most obviously, agriculture is a source of greenhouse gas emissions. Agriculture can be energy intensive, although energy-related agriculture emissions account for a small percentage of total emissions in, for example, the EU and the US. However, agriculture is a particularly important source of methane, mainly from cattle (45 per cent of EU methane emissions) and nitrous oxide emissions, mainly from fertiliser use (46 per cent of EU N20 emissions). Conversion of forests and other natural or semi-natural ecosystems to agricultural land is a significant source of emissions in some countries. On the other hand, adaptation to the impacts of climate change is now a major challenge for agriculture worldwide. The distribution of crops is likely to change significantly. Water resources, already under significant strain in many countries, will be affected. The ranges of pests and diseases will change. These impacts and consequent changes in agricultural production will in turn have impacts on global trade patterns.

Agricultural policy interacts with climate policy in many ways, especially where it influences land use, cropping patterns and soil management. For example, land-use changes such as conversion or reconversion of agricultural land can release or sequester carbon. Set-aside (ie deliberately not using farmland), encouraged by agricultural policies aimed at reducing production, can have a positive impact, especially if it is permanent. Restoration of degraded soils can contribute to maintaining traditional landscapes and biological diversity, while sequestering carbon. Policies that encourage organic and low-external input agriculture can reduce emissions and enhance carbon uptake.

Bioenergy production has emerged as an extremely important area for the agriculture sector. Increasingly recognised as a renewable energy source, bioenergy can also play an important role as a carbon sink. Bioenergy can be produced from, for example, trees, perennial grasses, crop residues and oilseeds (eg oilseed rape). Production can generate a range of benefits, for example employment opportunities in rural areas, as well as cleaner fuels. However, the cumulative environmental impact of bioenergy production is not necessarily always positive. For example, aggressive afforestation of agricultural land for bioenergy production could involve intensive methods, with a negative impact on biodiversity, or conflicts could arise in relation to land requirements for food production. However, bioenergy production offers great opportunities as a replacement for fossil fuels and as part of an environmentally sustainable agricultural strategy.

The Common Agricultural Policy (CAP): Slow Progress

The Common Agricultural Policy (CAP) regulates most aspects of agriculture in EU countries. There has been increasing concern about surpluses since the early 1980s, leading to a series of reforms, notably in 1984 and 1992. The 1992 reforms sought to lower market prices, in combination with direct payments to farmers in compensation.

In 1997, proposals to reform the CAP were a key part of the European Commission's Agenda 2000, a blueprint for future EU policy. The proposals aimed to ensure the competitiveness of EU agriculture, while promoting agriculture and rural development that integrates economic development, environmental protection and other rural priorities. The proposals also aimed to provide a basis for the EU's negotiating position in the World Trade Organisation (WTO).

In 1999, Member States reached agreement on the proposed reform package. The reforms do not go as far as the Commission had envisaged, but they made some significant changes to the CAP, including reductions in market support prices (eg a 20 per cent reduction for beef and 15 per cent for cereals). The concept of 'multifunctional agriculture' is central to the reform efforts. This implies an integrated approach, which encompasses the different functions of agriculture, such as food production, protection of the environment, maintenance of rural livelihoods and economic development.

The primary means of implementing this concept is through reduced incentives for production per se and greater emphasis on rural development, including agri-environmental schemes. A new rural development framework forms the 'second pillar' of the reformed CAP. It incorporates a number of incentives for afforestation and improved woodland management.

Rural development includes measures to promote environmentally sustainable agriculture through action at Member State level, through EU agri-environmental programmes. These are based on a contractual approach, which means paying farmers for providing environmental services and for applying environmentally sound agricultural practices. Examples include support for low external input and organic agriculture. The agri-environmental programmes are not aimed at addressing climate change, but have an indirect impact. Voluntary Codes of Good Agricultural Practice and other policies at national level complement these measures.

There is also a new provision for environmental 'cross-compliance', allowing national governments to impose environmental conditions on CAP payments. This could be used to promote climate-friendly agriculture, but has yet to be taken up by Member States on a significant scale.

Although the reform efforts have resulted in changes, the major focus of the CAP remains on production, suggesting that further intensification will occur. Implementation at Member State level of agri-environment programmes and cross-compliance schemes offer opportunities to reinforce climate change policies. However, funding for agri-environment programmes is very limited and cross-compliance schemes are only at an early stage of development.

The European Commission set out priority areas for action in the agriculture sector in 1998, which included appropriate afforestation measures and promotion of renewable energy crops. The growing urgency to address climate change, together with consumer concerns about food safety and production methods, should provide added impetus for a shift towards environmentally sustainable agriculture. The Kyoto Protocol specifically mentions promotion of sustainable agriculture as an area for action, as well as reduction of market imperfections and subsidies.

Currently, forty-four per cent of the EU's land area is under agricultural management. Ensuring that this area is managed in a climate-friendly way could help to reinforce other agricultural and rural development policies. However, this is a considerable challenge. In principle, progress should be made as a result of the current commitment to integrate environmental objectives into other EU policies, including the CAP. However, progress on climate-related issues has been slow.

International Negotiating Issues: The EU and The US

The EU has frequently had difficulties reconciling different Member State views in a strong, coordinated negotiating position on climate change. However, in June the EU Environment Council laid the basis for the current position on carbon sinks, which has several strong elements, with the following statement:

'The Council has serious concerns about the scale and the scientific and other uncertainties and risks associated with sinks. The Council therefore takes the position that a decision on the inclusion of defined and limited activities associated with further sources and sinks (Article 3.4) shall not apply in the first commitment period, except if these concerns are met.'

This position would in effect seem to rule out inclusion of additional sinks, including agriculture, in the first commitment period, as it is highly unlikely that the range of concerns associated with further sink categories could be resolved easily. The first commitment period, during which targets are to be met, covers 2008-12. The Council noted that criteria will be needed to develop rules and guidelines for the application of Article 3.4 before targets are agreed for the second commitment period.

The EU's potential sink contribution is comparatively small, which clearly influences its stance on the issue, although this varies significantly among Member States (Sweden and Finland for example have considerable sink potential). The EU could make use of CDM projects, but has still chosen to take a cautious approach. Referring to its concerns about sinks, the Council found that:

'These considerations apply even more strongly to sinks in the CDM, and the Council therefore believes these should not be included, in accordance with the provisions of the Protocol.'

The general expectation has been that COP 6 will result in agreement on a package of implementation issues contained in the so-called Buenos Aires Plan of Action. There is pressure to define the rules for implementation of the Kyoto Protocol, so that governments have a clear picture of what the commitments involve and, consequently, are able to ratify the Protocol. This is expected to require tough negotiations, involving the EU, the US, Russia and developing countries.

The main issues include the rules for the 'flexibility mechanisms' (international emissions trading, the CDM and Joint Implementation), the compliance regime and sinks. The expectation is that a deal at COP 6 would involve hard bargaining and trade-offs in last minute negotiations, although some issues might be resolved in informal bilateral contacts, or at Ministerial level, prior to COP 6.

At the moment, carbon sinks look set to form the centrepiece of a major EU-US clash. The US is insisting on inclusion of broad carbon sink categories (eg land management), which critics say would allow the US to count business-as-usual as a reduction under its Kyoto target.

However, recent press reports have suggested that the US, now, does not expect to finalise agreement on all issues at COP 6. This could raise several possibilities. For example, the press reports could indicate a wish to delay agreement on an implementation package. Blocking agreement on a package could result in other governments not being able to ratify the Kyoto Protocol and bring it into force without the US. The press statements could also be simpler negotiating tactics. The Presidential election may play a role. On the other hand, bringing the Kyoto Protocol into force without the US has received increasing attention. One possibility is that the US signal that it does not expect an acceptable agreement to be reached at COP 6 may be confirmation that other governments need to find ways of moving forward without the US.

The US has often had its own way in the climate negotiations. However, the EU has made progress in staking out a strong negotiating position for COP 6. The US and its allies could even be in for some surprises. Agreement on the rules for implementation of the Kyoto Protocol, including the role of carbon sinks, will include a complex package of compromises and trade-offs among the many issues on the negotiating table. The challenge for the EU will be to find the right balance between its own set of negotiating objectives and the various compromises that other countries are willing to make. The EU will need to make smart choices to achieve the best possible outcome. Among other things, this will mean making trade-offs only in return for real concessions.
IEEP, an independent institute with its own research programme, also undertakes work for external clients and sponsors in a range of policy areas. For further information about IEEP, see web site at http://www.ieep.org.uk or contact any staff member.

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