1. The Architecture of the International Climate Change Regime

 

Beginning in 1970s, climate change, then commonly referred to as global warming, started to be recognized as a serious environmental problem that can affect the stability and sustainability of life on the planet. Following First World Conference on Climate Change, United Nations Environment Program (UNEP) and the World Meteorological Organization (WMO) have set-up Intergovernmental Panel on Climate Change (IPCC) – an international body that surveys and periodically summarizes scientific consensus on the issue of climate change for the global community. Currently little doubt remains that human activities leading to the production of carbon dioxide, methane, and nitrous oxide are directly linked to the increases in the concentration of greenhouse gases in the atmosphere that may result in changes of climate patters at the regional and global level.

 

At the Rio Earth Summit in 1992, and in follow-up to the release of IPCC First Assessment Report, 161 countries signed the United Nations Framework Convention on Climate Change (UNFCCC), which epitomized the result of several years of preceding international negations. The ultimate objective of the Convention is to stabilize greenhouse gas concentration in order to prevent anthropogenic impacts on the global climate system. The purpose of the Convention was to serve as a foundation for the creation of a global regulatory framework to for the consolidation of the international efforts to reduce greenhouse gas emissions.

 

The UN Framework Convention on Climate Change

 

The Convention establishes general framework of the climate change regime, stipulating its objectives, general guiding principles and parties responsibilities (e.g. such as reporting), as well as administrative structure for the formulation and amendment of international climate policies. One of its main features is establishment of “common but differentiated responsibilities” of all Parties in achieving its objectives. The Parties are thus divided into Annex I, or industrialized countries, which include OECD countries and economies in transition, and Annex II countries, or developed countries, which are limited to OECD countries only.

 

According to Convention’s provisions its Parties which are developed countries or countries in transition and which are included in Annex I to the Convention have concrete obligations concerning implementation of policies aimed at the reduction and limitation of GHG emissions as compared to 1990 levels, as well as protection and enhancement of GHG sinks. Countries included in Annex II to the Convention, must not only pursue national policies and implement necessary activities regarding mitigation of climate change impacts but also facilitate technology transfer to the developing countries and provide assistance in their adaptation and capacity building for climate change.

 

The Kyoto Protocol and its Flexible Mechanisms

 

The Kyoto Protocol, adopted by the Third Conference of the Parties (COP-3) in Kyoto, Japan, in 1997 is a legal amendment to the UNFCCC, which strengthens the commitments expressed in the convention and introduces concrete means for their realization. According to Article 3 of the Protocol, the Parties to the Convention have agreed by consensus that developed countries will have a legally binding commitment to reduce their collective emissions of six greenhouse gases by at least 5% compared to 1990 levels by the period 2008-2012.

The Protocol addresses a number of key issues relating to the implementation of the Convention[1]:

• Commitments, by setting legally binding emissions targets for industrialized countries
• Implementation, including domestic steps and three new international mechanisms
• Minimizing impacts on developing countries, by introducing an Adaptation Fund
• Accounting, reporting and review, by introducing in-depth review of national reporting
• Compliance, by setting up a Compliance Committee to assess and resolve problem cases.

 

In order to assist Annex I parties in fulfilling their commitments regarding GHG emissions reduction, the Kyoto Protocol envisages the introduction of a number of international market mechanisms for trading GHG reductions, which are known as “flexible mechanisms” – emissions trading (ET), joint implementation (JI), clean development mechanism (CDM).

-          Joint Implementation (Article 6 of the Kyoto Protocol) envisages implementation of joint projects aimed at the reduction of GHG emissions or their removals by sinks by Annex I countries in any sector of the economy.

-          Clean Development Mechanism (Article 12 of the Kyoto Protocol) envisages implementation by Annex I countries projects aimed at the reduction of GHG emissions or their removals by sinks in non-Annex I (developing) countries.

-          Emission Trading (Article 17 of the Kyoto Protocol) envisages the possibility for any Annex I country to transfer part of its assigned amount to another Annex I country.

 

Fourteen countries ‘undergoing the process of transition to a market economy’ are included in the Annex I of the UNFCCC and are thus eligible for international emissions trading and joint implementation (JI) under Kyoto Protocol.[2] Their inclusion in Annex I roughly reflected their degree of industrialization and consequently the level of their GHG emissions. In 1990, the Eastern European countries included in Annex I were responsible for about 30 percent of all GHG emissions in Annex I countries and about 22% of all global GHG emissions, with Russia, Ukraine, and Poland being respectively the second, fifth, and seventh largest contributors to climate change among Annex I countries.

 

Thirteen of the economies in transition (EITs) assumed numerical reduction targets among 38 countries listed in Annex B to Kyoto Protocol.[3] They are

• - 8% for Bulgaria, Czech Republic, Slovakia, Estonia, Latvia, Lithuania, Romania, Slovenia,

• - 6% for Hungary and Poland,

• - 5% for Croatia,

•   0% stabilization for Russia and Ukraine.

Belarus, while part of Annex I to the UNFCCC, has not assumed emission reduction obligations under Annex B.

 

In addition to emissions targets for Annex I Parties, the Kyoto Protocol also contains a set of general commitments that apply to all Parties, such as:

·         Taking steps to improve the quality of emissions data

·         Mounting national mitigation and adaptation programmes

·         Promoting environmentally friendly technology transfer

·         Cooperating in scientific research and international climate observation networks

·         Supporting education, training, public awareness and capacity-building initiatives. [4]

 

Marrakech Accords

 

The Seventh Conference of the Parties (COP-7) held in Marrakech, Morocco, in 2001 concluded four years of international negotiations regarding the details of the implementation of the Kyoto Protocol flexible mechanisms. The conclusion of the Conference, known as the Marrakech Accords established the guidelines for the implementation of commitments under the Kyoto Protocol. This includes definition of the basic terms, determination of the role of the Conference of the Parties, rules for the establishment of committees for supervising the implementation of the Kyoto Protocol Articles 6 and 12, specification of the requirements for participation in JI and CDM projects, as well as in international emissions trading, and determination of the verification procedure to be performed by the Supervision Committee. Annexes to the guidelines contain norms and procedures for accrediting independent entities, methodology for reporting, criteria for baseline determination, and periods of monitoring and accounting.

 

• Operating rules of the flexible mechanisms of the Kyoto protocol: Joint Implementation (JI), the Clean Development Mechanism (CDM) and International Emissions Trading (IET), including rules defining a party's eligibility to participate in the mechanisms. 
• Modalities for the accounting of assigned amounts under Article 7.4 of the Kyoto Protocol
• Procedures and mechanisms relating to compliance.
• Guidelines for the accreditation of Operating Entities (for CDM) and Independent Entities (for JI).  

 

The Marrakech Accords describe four types of units, all equal to one metric tonne of carbon dioxide equivalent, that make up the “currency” of the Kyoto Protocol and establish procedures that provide for full fungibility of units generated under all three mechanisms. 

 

• ERU     - emission reduction unit - a unit for accounting emission reductions generated through Joint Implementation mechanism.
• CER     - certified emission reduction - a unit for accounting emission reductions generated through Clean Development Mechanism.     
• AAU     - assigned amount unit – issued into a an Annex I registry upon calculation and registration of its assigned amount; tradable under Article 17 of the Kyoto Protocol.
• MU      - removal unit - a unit for accounting sinks credits generated in Annex I countries. 

 

2. EITs or Post-Soviet States - What’s in a Name?

 

A great degree of variation exists between the countries formerly dominated by the Soviet Union. These differences are manifested in their political and economic circumstances, such as degree of their political transition, scale of their economies, level of industrialization, and attractiveness for outside investment. The scope of these differences, their roots and implications for domestic climate policy and for international climate-related activities will be the focus of this paper.

 

The international environmental law does not offer much consistency in what it implies under the economies in transition. Different international treaties contain different interpretations of the term, depending on the details of the negotiation process that preceded them. General understanding is that these are the countries of the former Socialist bloc ruled by the communist governments. There were 9 Socialist countries in Europe  - Hungary, Czechoslovakia, Poland, the Federal Republic of Yugoslavia, the Democratic Republic of Germany, Albania, Romania, Bulgaria and the Soviet Union. The fall of the Iron Curtain and dramatic political transformation of the region resulted in the emergence of 24 economies in transition on the political map of Eurasia.

 

How these 24 countries are grouped varies greatly depending on the purpose and perception of those who group them.  Geographically these are all the countries of the Central Europe (Hungary, Czech Republic, Slovakia, and Poland), Eastern Europe (Ukraine, Belarus and the Baltic States of Lithuania, Latvia, and Estonia), South Eastern Europe (Bulgaria, Romania, and Moldova and the Balkan states of Albania, Bosnia-Hertzegovina, Croatia, Macedonia, Serbia and Montenegro, and Slovenia), Russia, the Caucasus (Georgia, Azerbaijan, Armenia) and Central Asia (Kazakhstan, Uzbekistan, Turkmenistan, and Kyrgyzstan).

 

 

Politically the economies in transition fall into groups that reflect the degree of their integration with European institutions and their geopolitical affiliation with the regional powers. There is the “new” Europe, i.e. countries accepted to the EU in the first expansion round (all of the Central Eastern Europe, Slovenia, and the Baltic States), the candidate countries (Bulgaria and Romania) whose accession to the EU is anticipated in 2007-08, non-candidate countries (Croatia, Albania, Macedonia, Bosnia and Herzegovina, Serbia and Montenegro) and the Newly Independent States (NIS) also referred to as the Commonwealth of Independent States (CIS), which include Ukraine, Russia, Belarus, Moldova, the Caucasus and Central Asia.

 

As we can see the division created by the Convention and the Protocol – into those that are included into Annex I to the UNFCCC as ‘countries undergoing transition to market economy’  and those that are not – cuts across some vital political and economic affiliations. These fundamental differences were clearly manifested in the refusal of economies in transition to negotiate as a single bloc. Lured by the elusive ghost of the ‘hot air,’ Russia and Ukraine – the only former Soviet Union republics represented in Annex I –  negotiated as part of the Umbrella group. The Central European counties could not and did not want to be associated with the two because they were already well ahead in EU accession negotiations at the time. They eventually formed their own negotiating block, CG11, at COP 6 in the Hague.

 

To complicate the matter even more, from the point of view of the transition counties not included into Annex I,[5] the division created by the Convention and the Protocol sent wrong political signals. At COP 6-bis in Bonn in July 2001, Armenia, Uzbekistan and Turkmenistan, on behalf of the Central Asia, Caucasus and Moldova (CACAM) objected the use of the term "developing countries" when referring to them. Stressing that they consider themselves to be "countries with economies in transition," CACAM countries requested the conference of Parties to substitute the words "developing countries" with "developing countries and other Parties not included in Annex I" in the texts of the COP decisions.

 

This view was further reaffirmed when Kazakhstan formally requested the Parties to add its name to the list of Parties included in Annex I to the Convention and expressed intention to be bound by Articles 4.2 (a) and (b) of the Convention. Following a decision of the Parties at COP 7 in Marrakech in 2001, Kazakhstan will become an Annex I Party for the purposes of the Protocol after its entry into force, although it will remain a non-Annex I Party under the Convention. It is expected that further negotiations will follow with a view to define a quantified emission limitation or reduction commitment for Kazakhstan under Annex B of the Protocol.

 

The international attention so far has focused either on Annex I EITs, as they are currently eligible for JI and emissions trading, or on ‘traditional’ developing countries of Latin America, Africa and Asia. Thus, regrettable, issue of CDM development and capacity building, as well as other aspects of Kyoto Protocol implementation in CACAM countries has been overlooked, since the CACAM group lies outside of the major capacity-building networks. Worse still the four European non-EU candidate countries of Albania, Macedonia, Bosnia and Herzegovina, Serbia and Montenegro that are not included in Annex I of the Kyoto Protocol have neither a capacity-building networks nor the geographic weight of CACAM countries.

 

 

3. Political Context

 

The political context in the former socialist block is set out mostly by the degree of their institutional and political transition. Considerable differences exist in the region with regards to the progress of the reforms, strength of democracy, and level of institution development. The best reflection of these differences is the progress made by transition countries towards integrating into regional institutions, such as the EU, OECD, and the NATO, with the EU membership being probably the strongest indicator of regional integration. The Central European countries, Baltic states and Slovenia will accede to EU in 2004. Bulgaria and Romania are candidate countries for the second round of EU expansion. Out of the 13 countries in transition on the Annex B list, only Russia, Ukraine and Croatia are currently not formal candidates for the EU membership.

 

For the countries of Central Europe and the Baltic states, who always viewed their annexation to the Soviet bloc after World War II as artificial, membership in the NATO and the EU has been a stated foreign policy goal. In 1991, Hungary, Poland, Czech Republic and Slovakia (Czechoslovakia at the time) founded the Visegrad Group with the aim to provide mutual support for EU integration. All four countries have became members of the OECD (1996, 1995, and 2001 respectively). In 1999, Hungary, Poland, and the Czech Republic became the first former-Warsaw Pact countries to join NATO. Slovakia and the Baltic states were invited to join NATO in 2002 and are expected to sign relevant accession treaties in March 2003. They are thus considered to be countries that successfully transitioned to democracy and market-based economy.

 

In Southeastern Europe, the process of shedding the totalitarian past has proceeded slowly. In Romania and Bulgaria political reform was protracted and as a result, former Communist functionaries were able to hold on to their positions in the government, which in turn delayed much needed economic and structural changes. The accession of the neighboring Central European states to the EU revitalized the pace of reform, and both countries have successfully applied for the EU membership. With the completion of the first round of the EU expansion, the focus of EU policy is likely to shift heavier towards them, as they are expected to accede in the next round in 2007. Among all economies in transition, Slovenia enjoyed a special status. Being the most advanced and developed of all post-communist countries, it could afford a more inward focus and gradual approach to reform without jeopardizing its orientation towards European integration. The only Balkan non-candidate country on Annex I list is Croatia, whose accession to the EU is hardly possible before political and military stability is achieved in neighboring Bosnia and Serbia.

 

Unlike the majority of the countries of Central and Eastern Europe, both Ukraine and Russia, heavily battered by more than 70 years of Soviet rule, required much more profound transformation than the rest of post-communist countries, and thus have experienced deeper political and economic turmoil. Russia, whose goal has always been to re-assert itself as a global power, sought to unite around itself the remains of the Soviet Union, forming the Commonwealth of Independent States[6] in December 1991. Stained relations between some members of the group however prevented it from becoming an effective economic and political alliance. New Shanghai Cooperation Organization (SCO) uniting China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, has been most recently (May 2003) formed as a military counterweight to NATO.  Ukraine, after declaring independence in 1991, was playing a difficult balancing act between Europe and Russia, cherishing aspirations to integrate with the more developed West. It opted not to become the full-pledged member of the Commonwealth of Independent States (CIS) and has repeatedly sought membership in both the EU and the NATO, however without much success. The rhetoric of the government was not matched by adequate reforms, while alleged arms shipments to Iraq and the human rights violations did little to help Ukraine’s international image. Although Ukraine attempted to avoid “orientation to Asia”, regional economic alliances with its eastern neighbors were inevitable because of heavy dependence on imported oil and gas.[7]

 

In the Caucasus, the democratic progress has been even slower – with Azerbaijan and Georgia retaining their old Communist leaders as presidents till 2003  - and has been overshadowed by military conflicts and civil unrest. Georgia has suffered a civil war related to the independence aspirations of the breakaway regions of Abkhazia and South Ossetia, which lead to the introduction of stabilizing troops from Russia, and later on military training and assistance from the US. Georgia’s pro-US stance has angered Russia, which accuses Georgia of harboring Chechen militants, while Georgia accuses Moscow of backing separatist movements in the country.  In Azerbaijan and Armenia, the conflict over the predominantly Armenian-populated region in Azerbaijan, which sought to become independent after the disintegration of the Soviet Union, resulted in a full-scale war between the two countries. A ceasefire in place since 1994 has failed to deliver any lasting solution. About one-seventh of Azerbaijan's territory remains occupied, while 800,000 refugees and internally displaced persons are scattered around the country.[8] Although diplomatic efforts have brought relative stability in recent years, tensions over both regions persist.

 

All five Central Asian countries remain distinctly authoritarian - their current presidents, with the exception of Kyrgyzstan's, were the countries’ Communist leaders in the Soviet times. Turkmenistan and Uzbekistan can be described as full-fledged dictatorships, while other Central Asian states remind more of family fiefdoms. Turkmenistan’s isolationist leader has declared himself president-for-life and indulges in a Stalinist personality cult, suppressing civil society and littering the country with golden statues of himself and building palaces in his honor.[9] Uzbekistan's dictator struggled to control Uzbekistan's strong liberal and Islamist oppositions by imprisoning thousands. Kazakhstan, Kyrgyzstan and Tajikistan are not as repressive and in fact can call themselves democratic and have purportedly democratic elections. Tajikistan has suffered from a protracted civil war between the old elite and a coalition of Islamists and democrats, and till today struggles to maintain elementary law and order. Kyrgyzstan went through considerable democratization at the end of the Soviet period, and remained a liberal until the past few years.

 

A characteristic feature of the Caucasus and Central Asia is the tug of war between Russia and the US, which has existed since the later 1990s. In the Caucasus, the tension is mostly rooted in the American interests to develop rich energy resources of the Caspian, while Central Asia gained strategic importance during the war against terrorism. The presence of U.S. and allied troops in Uzbekistan, Kyrgyzstan and Tajikistan also heightened the activities of Russia and China. In the aftermath of American intervention in Afghanistan and Iraq, Kremlin has clearly demonstrated its intention to restore its geopolitical position in the region, while Chine eyes the region as a potential source of energy supplies. No country, even isolationist Turmenistan, refrains from great political game for regional hegemony and resources played out in Central Asia between the US, China, and Russia.