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Technical paper

Summary of the Panama Climate Change Talks

(01 October – 07 October 2011)

Prepared by: Daniela Stoycheva- climate change policy advisor UNDP BRC

Bratislava, Slovakia, 19 October 2011

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Contents

Introduction ................................................................................................................................................... 3

1. Sessions of the Ad-hoc Working Groups ...................................................................................... 5

1.1. AWG-LCA 14.3 ........................................................................................................................ 5

1.2. The AWG-KP 16.3 ................................................................................................................. 12

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Introduction

From 01 to 07 October governments convened in Panama City to continue negotiations on the basis of the

Cancun Agreements in order to prepare for the Conference in Durban. The two Ad Working Groups had

renewed their sessions:

1. Third part of the 16th session of the Ad Hoc Working Group on Further Commitments for Annex

I Parties under the Kyoto Protocol (AWG-KP 16.3) ;

2. Third part of the 14th session of the Ad Hoc Working Group on Long-term Cooperative Action

under the Convention (AWG-LCA 14.3).

The work of both AWG-KP and AWG-LCA continued based on agendas adopted during the Bangkok

meeting (April 2011). The AWG-KP’s was undertaken in a contact group on further commitments for

Annex I Parties under the Kyoto Protocol, with work on specific issues in spin-off groups.

The AWG-LCA worked on all agenda items in informal groups under the contact group, taking into

account recommendations made at the June session in Bonn for focused in-depth work to facilitate

progress on technical issues.

As a result of the Cancun Agreement (2010) a number of institutional mechanisms were established to

deal with adaptation, mitigation, financing, technology transfer, REDD+ and capacity building to lead to

a new treaty for post-2012 global climate change regime. The Cancun decisions set in place the working

groups and committees to develop the details of operationalization of the mechanisms in 2011, to be

agreed at COP17/CMP7 in Durban, South Africa in 2012. However the establishment of the Second

Commitment Period (SCP) of the Kyoto Protocol, with the respective emission reductions by the

developed countries, is still not close to finding a solution. Additionally in order to reach the required by

the science 2C target there is a need for the all the major economies to undertake significant emission

reductions. At this session Denmark announced rise of its target to 40%.

A week of formal climate negotiations in Panama ended with progress on drafting those decision texts

that will allow governments to push ahead agreement in Durban. This includes meeting deadlines for the

launch of the new Adaptation Committee, Technology Mechanism and Green Climate Fund which were

agreed at last year in Cancun under the Convention track. In Durban the open question over the Second

Commitment Period of the Kyoto Protocol should be resolved as well as the shape of a formal Review

between 2013 and 2015, which was agreed in Cancun as a reality check on progress towards the

temperature goal. ―Clarity on an effective, credible Review is most important, especially in light of the

fact that the sum total of current national pledges to reduce global emissions falls 40% short of keeping

below 2C and that gap will have to be filled in the future‖ said Ms Cristiana Figueres, executive secretary

of the UNFCCC.

On various agenda items Parties are invited to provide submissions (by 21 October), which the Secretariat

will compile by 20 November. On all agenda items Parties were encouraged to further discuss and

exchange views informally in between sessions in order to reach some form of agreement at COP 17.

Meetings ahead

The meeting in Panama City was the last formal negotiating session in 2011 before the COP17/CMP7.

The COP17/CMP7 will take place in Durban, South Africa from 28 November to 09 December 2011.

There is still no agreement for the venue of COP 18, Parties are still choosing between South Korea and

Qatar. This should find its solution in Durban. COP 19 should come from Eastern Europe (possibly

Hungary).

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Regional perspective:

From the perspective of Russian Federation and Ukraine, it should be mentioned that the issue of

the carryover of the surplus AAUs is still on the table;

Russian Federation will not join a Second Commitment Period under the Kyoto Protocol;

For the EITs (mainly Belarus, Russia, Ukraine) and Turkey the negotiations on the draft decisions

allowing them access to financial, technological and capacity building support in the post 2012

regime (for Turkey participation in market based mechanisms as well) are still ongoing, possibly

with a positive solution in Durban;

The continuation of the CDM and JI is of a great importance for all the countries in the region;

Attention should be paid to the new reporting requirements, for which capacity building will be

needed in the countries;

In general speedy operationalization of all the envisaged mechanisms in the Cancun Agreements

is of a high priority for all the countries; however attention should be paid to the details. For that

reason submissions are advantageous.

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The below summary should be considered in the contexts of the Cancun Agreements and the previous

sessions of the AWGs (Technical papers for those were produced and disseminated). It does not represent

a full report of the third meetings of the AWGs, rather highlighting main discussions and outcomes.

1. Sessions of the Ad-hoc Working Groups

1.1. AWG-LCA 14.3

The AWG-LCA agreed to consider its items in a single contact group, chaired by AWG-LCA Chair

Daniel Reifsnyder. Parties agreed to undertake the group’s work through informal consultations on:

Shared vision

Developed country mitigation

Developing country NAMAs

REDD+

Sectoral approaches and sector-specific actions

Various approaches, including opportunities for using markets to enhance the cost-effectiveness

of, and to promote, mitigation actions (market and non-market approaches)

Response measures

Adaptation

Finance

Technology

Capacity building

Review of the long-term global goal

Legal options for the agreed outcome

Other matters—economies in transition and countries whose special circumstances have been

recognized by the COP

The conference room papers (CRPs) containing submissions by Parties are available electronically at

UNFCCC website at < http://unfccc.int/meetings/ad_hoc_working_groups/lca/items/4578.php >

Access to all the in-sessional documents of the LCA is available at

http://unfccc.int/meetings/ad_hoc_working_groups/lca/items/6189.php

On a Shared vision, work resulted in a bulky text to be forwarded to Durban as a non-paper. As the text

at the moment consists of all submissions by the Parties it is far from agreed and the form of a draft

decision. There will be a need for intersession consultations to further streamline the text. Still the main

issues are to identify the goal for peaking of the global emissions (with respect to both time and the level

of the peaking emissions), and global goal for emissions reductions in 2050. Proposals for reducing global

emissions of developed countries are in several options in a form of economy wide emission reduction

targets: 30, 40, 45, 50% from 1990 levels by 2020 and 80, 95% by 2050; 50% by 2017 and 100% by

2040; 40% by 2017, 45% by 2020 and at least 95% by 2050. As years for global peaking of emissions

were proposed the following years - 2013, 2015, and 2017.

Many other issues were proposed for consideration such as: establishment of global goals for finance,

technology, adaptation and capacity building. Additionally are included issues related to trade (non

introduction of tariffs for climate change purposes on developing countries); response measures;

intellectual property rights; human rights; rights of mother earth; right to survive; an international climate

court of justice; warfare (stopping wars and diversion of military to combating climate change). Many of

these are very controversial, and in principle do not belong to the shared vision as defined in the BAP.

This may cause a lot of problems in Durban.

On Mitigation by developed countries: In the informal group were discussed IAR, biennial reports and

level of ambition (paragraphs 36-38 in Decision 1/CP.16). As a result 3 non-papers by the co-facilitators

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were produced: possible elements of a draft for biennial reports of developed countries; possible

elements of modalities for IAR; and a summary of discussion on paragraphs 36-38 (level of ambition).

On level of ambition, parties examined options and means to increase mitigation commitments and

advance work in the lead-up to Durban. Some developed countries requested a ―common space‖ to

discuss the level of ambition for both AWGs - KP and LCA, which many developing countries opposed,

underscoring the different nature and content of the provisions on the level of ambition for developed

countries and the provisions on NAMAs for developing countries (paragraphs 48-51 of decision 1/CP.16).

The main political problem is that USA is not in the KP regime, three other countries stated that they will

not join Second Commitment period (Canada, Japan, Russia) and the need for the major developing

countries to undertake significant mitigation actions (as only with the efforts of the developed countries

the 2 degree C target is not achievable). Additionally some countries (Australia, New Zealand even EU)

see the SCP only as a transition toward a global treaty.

The work on MRV for developed countries advanced, this is of importance for the progress of the whole

package as is of a main priority for USA. It resulted in quite comprehensive papers on: 1) Possible

elements of draft guidelines for biennial reports of developed country Parties (Non-paper by the

facilitator) and 2) Possible elements of modalities and procedures for international assessment and review

(Non-paper by the facilitator).

The guidelines for biennial reports of developed countries main objectives are from one side reporting on

the economy-wide emission reduction targets and to assist the IAR process later on, on the other hand to

report on the financial, technology transfer and capacity building support provided to the developing

countries.

On IAR (international assessment and review process), the main disagreements are still: on the output if

it will be a technical review or assessment report(s); on the frequency of IAR process will be conducted

annually or every two years for each developed country Party or will be determined by the Party’s share

of global greenhouse gas (GHG) emissions; and will it check meeting the targets by the developed

countries.

It is important to integrate biennial reports and IAR into existing reporting to avoid duplication. Divergent

views were expressed among developing and developed countries on compliance, with the former saying

that comparability and compliance are key objectives of the IAR process. Some developed countries

disagreed, saying a compliance process had not been agreed to.

On the way forward, parties agreed to set deadlines for submissions (21 October) and prepare a revised

version before Durban.

On Mitigation by developing countries: The areas identified in Bonn remain very much unchanged.

Only some discussions on paragraphs 48-511 of 1/CP.16 in a form of co-facilitators summary happened in

Panama.

1 48. Agrees that developing country Parties will take nationally appropriate mitigation actions in the context of sustainable development, supported and enabled by technology, financing and capacity-building, aimed at achieving a deviation in emissions relative to ‘business as usual’ emissions in 2020; 49. Takes note of nationally appropriate mitigation actions to be implemented by Parties not included in Annex I to the Convention as communicated by them and contained in document FCCC/AWGLCA/2011/INF.15 (to be issued); 50. Invites developing countries that wish to voluntarily inform the Conference of the Parties of their intention to implement nationally appropriate mitigation actions in association with this decision to submit information on those actions to the secretariat;

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Discussions covered: achieving deviation in emissions relative to ―business as usual‖ emissions in 2020;

how to take forward the NAMAs currently compiled in the Cancun Agreement; formats and processes

envisaged for Parties who may wish to voluntarily inform the Conference of the Parties of their intention

to implement NAMAs; future work required to understand the diversity of mitigation actions submitted,

underlying assumptions and any support needed for their implementation.

On BAU deviation: developing countries think that the concept of ambition did not apply

to them and there is no need to regularly update the list of NAMAs and to submit new or

updated information on mitigation actions.

On support needed for the implementation of NAMAs: a decision on financing to support preparation

and implementation of NAMAs is necessary, including support for institutional arrangements at the

national level.

On the diversity of mitigation actions: Developed Parties called for more comprehensive information

on the mitigation actions of developing countries, with the aim of understanding the diversity of

actions as well as the effects of the actions. The use of a common template for NAMAs was very

contradictory as that could undermine

The main work was on MRV, which resolved one of the crunch issues of special importance for USA.

The following papers were produced:

Possible elements of draft guidelines for biannual reports from non Annex I Parties in the form of a

non-paper by co-facilitators

Possible elements of modalities and procedures for international consultations and analysis in the form

of a non-paper by co-facilitators

Registry in the form of a non-paper by co-facilitators

Biennial reports: main objectives are to assist non-Annex I Parties in meeting their reporting

requirements and to encourage and to facilitate the presentation of information on finance, technology and

the capacity- building support needed and received.

Numerous delegates expressed the need for capacity building in helping the developing countries to

prepare the biennial reports.

ICA (international consultations and analysis): Agreement was around: objective of ICA is improved

transparency of mitigation actions and effects, need for different frequencies of ICA for different

countries; Capacity building and learning-by-doing are important aspects of ICA – but there are capacity

constraints at present and building capacity takes time; Full-time’ experts (as well as national experts)

may be needed to help prepare ICA.

Possible elements of ICA decision in Durban: timing and frequency; scope; content of analysis; output;

format for international consultations.

There is a need expedited funding for reporting in order to get inputs for ICA ready to be used for 2013-

2015 review. (GEF6 has money from 01.07.2014). Biennial reporting on LULUCF are especially

challenging. Developing countries insist that ICA is not supposed to analyze countries performance.

On Registry: Parties agreed that the main function of the registry will be to collect information on

NAMAs seeking international support and to mach those to the support available from developed

51. Requests the secretariat to organize workshops to understand the diversity of mitigation actions submitted, underlying assumptions and any support needed for the implementation of these actions, noting different national circumstances and the respective capabilities of developing country Parties;

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countries; that the domestically implemented NAMAs will be recorded in a separate section; and on the

main pieces of information on NAMAs to be submitted to the registry seeking for support. SBI will

further elaborate the features of the registry.

Still remains to be decided how exactly the matching will happen (the registry will do it on a search base

or the GCF will do it following guidance by COP); the format for the NAMAs submitted, while

developed countries wishing to see more formalized approach, the developing countries want full

flexibility.

On REDD+: financing the activities and the sources of funding were mostly discussed in the informal

group. As funding sources, several possible sources were identified: public funding at national and

international levels; Green Climate Fund; and market mechanism. All sources should be complementary.

Result-based actions for the third phase of REDD (full implementation) were suggested by some parties.

By COP 17, parties under the LCA are requested to explore financing options for the full implementation

of REDD+ results-based actions. Parties agreed that public financing should play a greater role in the

readiness phase, but that a basket of alternative financing options should be considered for the third phase.

By COP 17, parties under the SBSTA are requested to develop modalities relating to reference levels and

forest monitoring systems; develop guidance relating to safeguards; and develop modalities for MRV

anthropogenic forest-related emissions by sources and removals by sinks, forest carbon stocks and forest

area changes resulting from the implementation of REDD + activities.

Parties agreed to work on definitions of forests, reference levels, and monitoring.

The group had produced a non-paper, which is referred to as a ―placeholder text‖ containing elements for

operational parts of a draft decision.

On Sectoral approaches and sector-specific actions discussion, general framework was discussed and

also three sectors were mentioned: agriculture, aviation and international transport. Parties had divergent

views on the textual options, which are contained in a Facilitator’s note to go forward to Durban.

On the general framework, a joint submission (FCCC/AWGLCA/2011/CRP.22) by a number of

developing countries emphasized: the importance of food security; the need to avoid barriers and

distortions in international trade; and the importance of economic and social development in the context

of sectoral approaches.

On agriculture, parties considered language and worked to identify shared views on aspects of food

security, trade, economic development and poverty eradication. Parties agreed to work towards further

streamlining it based on submissions, with input from the Panama Facilitator’s guidance paper and the

Bonn Facilitator’s note.

On international aviation and shipping, parties reflected on options for text. Some developed countries

welcomed progress made by the International Maritime Organization (IMO) at the 62nd session of the

Marine Environment Protection Committee, while other parties doubted the extent to which the measures

will be applied globally due to the majority rather than consensus decision.

Parties were encouraged to further discuss and exchange views in order to reach some form of agreement

at COP 17.

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On Various approaches, including opportunities for using markets to enhance the cost-effectiveness of,

and to promote, mitigation actions (market and non-market approaches): An 18-page compilation of

proposals was produced, which is categorized under eight headings: preamble; principles and objectives

for various approaches; evaluating existing approaches and lessons learned; conditionalities; framework

for various approaches; new approaches; work programme; and readiness.

The text on market based approaches consists of many options and do not provide much clarity on the

type of the market mechanisms, generally the intention is to decide to establish new market approaches at

COP17, including wide spectrum of approaches, amongst which project-based and sector-based

approaches.

On Non-market-based approaches, the following approaches are listed: new international mechanism,

incentive-based and voluntary in nature, to ensure the avoidance/reduction of emissions relative to the net

level of emissions in broad sectors of the economy, policies and measures to substantially modify

consumption patterns in all relevant sectors, intellectual property rights, support the development and

enhancement of endogenous capacities and technologies of developing countries, to promote, facilitate

and finance efforts by and in developing countries in the fields of education, training and public

awareness related to climate change, to progressively reduce the production and consumption of

hydrofluorocarbons, to share information and experiences. There is a proposal to consider the

establishment of mechanisms, at COP18, that enhance the cost-effectiveness of, and promote mitigation

actions such as: subsidies; taxes; Regulation and environmental law; consumption and production;

education and capacity-building; net reduction and avoidance of greenhouse gas emissions; warfare

impact of greenhouse gas emissions; technology; precautionary measures;

Parties will review and streamline the compilation document before Durban, and that it will be used as the

basis of discussion for a draft decision.

On Response measure: A Facilitator’s note, which summarizes the main issues of discussion and party

submissions, was issued.

In the informal group, developing country parties discussed, and expressed appreciation for several

workshops which were held before Panama: Joint Workshop on Matters relating to Article 2.3 (adverse

impacts of policies and measures) and 3.14 (adverse impacts of response measures), held 19-20

September 2011; workshop on promoting risk management approaches on the specific needs and

concerns of developing country parties arising from the impact of the implementation of response

measures (decision 1/CP.10), held 21 September 2011; and the joint SBI/SBSTA forum on the impact of

the implementation of response measures, held in June 2011.

The Facilitator’s note containing a summary of discussions and issues still have the main questions:

whether discussions should take place under the AWG-LCA and the objective of such discussions;

whether the draft text should be used as a basis for negotiations; and whether the group has a mandate to

discuss trade.

On Adaptation: In the informal group on adaptation, parties shared views on the operationalization of,

composition of, and modalities and procedures for, the new Adaptation Committee, highlighting links to

other institutions, national adaptation plans and the Green Climate Fund. The group had agreed to a draft

decision text based on a consolidated text, which incorporates views expressed and submissions from

eight parties; however text still needs to be negotiated, especially regarding the composition and

procedures of the Adaptation Committee.

Parties discussed possible activities for the Committee, including: providing guidance and technical

support to parties upon request, including through workshops and meetings; compiling, reviewing,

synthesizing and disseminating information, knowledge, experiences and good practices, including

through regional centers and networks, and national entities; developing and preparing targeted reports,

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technical papers, guidance materials, methodologies, web-based resources and other knowledge products;

and creating channels and mechanisms to exchange information, knowledge and expertise, including

through the creation of networks at the regional and international levels.

On Technology: despite of expressed divergent views on the role of the CTCN, parties agreed on the

revised second draft text as a basis for discussions for draft decision text in Durban. The revised text

contains language amongst others on: the proposed mission, functions, architecture, roles and

responsibilities network, budget, financial means and estimate of expected funding, governance,

organizational structure, reporting and review, and terms of agreement for the CTCN. Submissions were

received from the G-77/China and the EU, and a joint submission was received from Japan and the US,

which highlighted selection process for the host of the CTCN, financing of the CTCN, and clarity on the

interaction between the TEC and the CTCN.

On Finance: The main focus of discussions was on the new Standing Committee. Parties also considered

long-term finance. The group produced draft Co-Facilitators’ consolidated text, one on long-term finance

and one on the Standing Committee. Parties’ comments, along with additional submissions, will be

incorporated into revised text for Durban.

On the Standing Committee, the agreement is that it should be operationalized by COP 17 in Durban.

However, there were divergent views on whether the Standing Committee’s role should be advisory or

supervisory. On the Committee’s role and functions, parties exchanged views on: the distinction between

improving coherence and coordination in the delivery of climate change financing, and rationalization of

the financial mechanism; the role of the Standing Committee in MRV of support; and the Committee’s

relationship with the COP.

Parties expressed concerns in regard to the fragmentation of climate change financing within and outside

the Convention, and the coordination function that the Standing Committee could exercise, such as

identifying financing gaps, providing an overview of financial resources within and outside the

Convention, and collecting information on financial flows and progress towards global goals. On MRV of

support, discussions were around: whether MRV is restricted to mitigation; the need for instruments such

as a registry; and mechanisms under the Convention to address MRV.

On Capacity building: A compilation of submissions in a draft text to be the basis of discussions to be

taken further in Durban was produced.

Discussions in the informal group addressed the need for more coherence of capacity building under the

different UNFCCC processes and emphasized the cross-cutting nature of capacity building. Parties

discussed gaps in the delivery of capacity building as either integrated elements of projects and

programmes or stand-alone activities. Parties discussed where, and how, capacity building is integrated in

the mandates and work programmes of the LDC Expert Group (LEG) and the Consultative Group of

Experts (CGE).

On Review: An updated non-paper was issued on further definition of the Review’s scope and

development of review’s modalities.

Parties focused discussions on elements of the Facilitator’s note from the Bonn session. Many parties

highlighted the need to address modalities, followed by a consideration of scope. Some parties called for

their submissions to be better reflected in the Facilitator’s note while some requested the opportunity to

provide further input. A developing country cautioned against overlapping issues addressed in other

informal groups, suggesting that the group concentrate on what is feasible and practical in the Review.

Parties’ views differed on the definition of the scope, with some noting that it was adequately laid out in

the Cancun Agreements and others expressing the need for further definition.

The informal group on review of the global long term goal considered: scope, principles, process, inputs

and way forward:

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On scope of the review, dilemma was between focusing on the adequacy of the long-term global goal, or

to address implementation of the Convention and overall progress towards achieving the global goal.

Others suggested that the review should include consideration of whether the Convention’s structure

should be modified.

On key principles, debates were between the need for a party-driven process or principle of common but

differentiated responsibilities, equity and transparency.

On inputs, possible sources of information were identified: the IPCC’s AR4, IPCC working group

contributions to the Fifth Assessment Report (AR5), the proposed biennial reports and countries’ climate

policies and actions. Others suggested starting the process before 2013 and gathering inputs through a

clearinghouse mechanism.

On modalities, opinions were from using existing mechanisms (SBI, SBSTA) to undertake the review and

opposed the establishment of a new mechanism.

On Continued discussion of legal options with the aim of completing an agreed outcome: The

facilitator prepared a paper with a ―menu of legal options,‖ setting out a range of possible options for a

Durban outcome, including:

a legally binding instrument;

COP decisions, with various sub-options:

o a mandate to conclude an legally binding instrument with a clear roadmap;

o a declaration regarding the future instrument, leaving the legal form open;

o continuing discussions to identify the appropriate form of the different elements of the

agreed outcome;

o affirming the importance of an legally binding instrument;

o and continuing to address all the BAP pillars.

Under Other matters, the issues of EITs and Turkey were considered. During informal consultations,

parties discussed a draft COP 17 decision presented by Annex I countries with economies in transition,

addressing support for low-emission economic growth. The main request is that EITS shall not be

bound by legal commitments under post-2012 climate change arrangements to provide new and

additional financial resources, technology transfer and institutional capacity-building in support of

developing countries, although they may wish to consider to do so on a voluntary basis; and on the other

hand to receive capacity building, financial, technical and technology transfer assistance in order to

assist them in the development and implementation of their national low-emission development strategy

and action plans.

In informal consultations, parties exchanged views on Turkey’s draft text for a decision in Durban. The

draft decision proposed that in regard to mitigation, adaptation, technology development and transfer,

capacity building and finance, any agreement, decision or instrument adopted by the Parties shall provide

Turkey the flexibility and support given to those developing country parties whose economic and social

development indicators are similar to Turkey; that Turkey shall not be bound by legal commitments to

provide new and additional financial resources and/or support, including technology development and

transfer and capacity building under any agreement, decision or instrument adopted by the Parties; that

adequate financial resources provided through operating entities of the Financial Mechanism of the

Convention, funds under the Convention, market mechanisms and other delivery channels of finance

including inter alia bilateral and multilateral financial institutions and funds; technology development

and transfer support through technology mechanism and capacity building assistance shall be provided to

Turkey under the Convention and any agreement, decision or instrument adopted by the Parties in order

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for Turkey to address climate change. During the second informal meeting Turkey provided more

streamlined text accommodating some of the concerns expressed.

These proposals for draft decisions will be further discussed by Parties and possibly adopted in Durban.

1.2. The AWG-KP 16.3

AWG KP had an agreed agenda already in Bangkok, in Panama it had the third part of its 16th session

and was suspended to resume its fourth part at the next meeting in Durban. The contact group with its five

spin-off groups was resumed: Annex I parties’ further commitments; land use, land-use change and

forestry (LULUCF); the flexibility mechanisms; other issues; and potential consequences.

Special attention in Panama discussions received issues about the nature of the second commitment

period; the fact that some Annex I parties have stated that they will not take up QELROs in a second

commitment period under the Kyoto Protocol; and the continuation of market-based mechanisms after

2012, especially the CDM.

A revised proposal was produced by the chair to facilitate negotiations in Durban

(FCCC/KP/AWG/2011/CRP.2/Rev.1).

http://unfccc.int/documentation/documents/advanced_search/items/3594.php?rec=j&priref=600006550&s

uchen=n

Amendments/numbers: During the spin-off group on amendments to the Kyoto Protocol (pursuant to its

Article 3.9) parties agreed to focus discussions on: transformation of pledges into QELROs, including the

impact of LULUCF rules; streamlining options on the carryover of surplus AAUs; and working through

the chapter text.

Parties were not able to agree on establishing an informal group to identify further items to be elevated to

the contact group on Annex I parties’ further commitments and the possibility of discussing Option B

(consequential amendments).

During the final spin-off group meeting, parties introduced a number of submissions and expressed

divergent positions on the issue of share of proceeds. The African Group, proposed that the carry-over of

surplus AAUs from the first to the second commitment period to be limited to 1% of each party’s

assigned amount for the first commitment period; and parties be able to sell the carried-over amount, with

50% of the revenue to be transferred to the Adaptation Fund.

There will be a table produced by the Secretariat capturing the state of technical work on the

transformation of pledges into QELROs. The table will be used as a basis for discussion to assist the spin-

off group on further technical discussions.

All the above issues are more of a political nature, rather than technical and possibly will be looked at in

Durban.

On Flexibility mechanisms: Discussions in the informal group on the flexibility mechanisms were based

on Chapter III (emissions trading and the project-based mechanisms) of the Chair’s revised proposal

(FCCC/KP/AWG/2010/18/Add.1).

In the spin-off group working on emissions trading and the project-based mechanisms, parties tried to

clarify positions on general issues and agreed to remove text on discount factors under the CDM. On the

continuation of the mechanisms, parties agreed that no more progress could be made on the text without

agreeing on the SCP and a ―political level‖ decision. Streamlined options from the text are contained in

the new Co-Facilitators’ note, which will be forwarded to Durban.

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Work still remaining on the issues of continuation, share of proceeds, and eligibility of nuclear facilities

under the CDM and Joint Implementation (JI), and mechanisms.

On LULUCF: Discussions were based on Chapter II of the revised proposal by the Chair

(FCCC/KP/AWG/2010/18/Add.1).

In the spin-off group, parties addressed natural disturbances, a cap on forest management and harvested

wood products. Parties exchanged views on force majeure and natural disturbances, including the

commonalities and differences of both concepts. Delegates eventually agreed to a revised text on force

majeure now known as “disturbances,” with a few issues outstanding. In the Chair’s revised text

(FCCC/KP/AWG/2011/CRP.1), delegates agreed to streamline text on: reference levels; and rewetting

and drainage. Some parties supported a proposal on a cap for forest management when using reference

levels, which remained bracketed. Parties also addressed the proposal on ―flexible land use.‖ In the

AWG-KP closing plenary, many parties welcomed progress on LULUCF.

On the basket of methodological issues: the spin-off group on the basket of methodological issues

(FCCC/KP/AWG/2011/CRP.1, Chapter IV) met only once in Panama. Parties reviewed options for

language on greenhouse gases, common metrics, application of the 2006 IPCC Guidelines for National

Greenhouse Gas Inventories, and cross-cutting issues. Two options contained in the revised proposal by

the Chair were discussed, with noting that agreement on one option is contingent on whether to include

nitrogen trifluoride in the coverage of the quantified emission limitation and reduction commitments for

the SCP. The relationship between issues under Chapter IV and Chapter I (Amendments to the Kyoto

Protocol) were discussed. The text kept all the options.

Discussions on all AWG-KP issues will continue at the resumed forth part of AWG-KP 16 in Durban.