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close this bookThe Global Greenhouse Regime. Who Pays? (UNU, 1993, 382 p.)
close this folderPart IV Conclusion
close this folder14 Constructing a global greenhouse regime
View the document(introduction...)
View the documentConditionality and additionality
View the documentTechnology transfer
View the documentMulti-pronged approach
View the documentImplementation procedures
View the documentRegional building blocks
View the documentNorth-'South' conflicts
View the documentConclusion
View the documentNotes and references

Implementation procedures

All institutions based on international cooperation face free riding by signatories who obtain the benefits of an international agreement while avoiding the costs by non-compliance. The likelihood that signatories to a Climate Change Convention might try to avoid meeting their commitments poses the question of monitoring, verification and enforcement of compliance.

Monitoring and verification

Analysts concur that a multi-gas agreement will be much harder to monitor and likely impossible to verify. Taxes, traceable permits, and abatement services all require monitoring to ensure that the terms and conditions of the scheme to fulfil commitments under a Climate Change Convention are being met. Monitoring, however, must be scientifically credible. Monitoring of nonCO2 greenhouse gases such as methane from paddy fields or from diverse, mobile point sources such as cattle is not feasible due to the uncertainty as to emission rates. While rice production is relatively well known, methane emissions vary greatly with soil type, nutrients, light, and temperature. Estimates for rice paddy in Spain and Italy vary by more than 100 per cent.

Also, sinks for and terrestrial reservoirs of greenhouse gases must also be monitored, both to ensure that sinks endowed as property rights are maintained, and to verify any claims made as to additional carbon fixation. Yet rates of re- and de-forestation are highly contentious, and satellite-based remote sensing cannot yet provide adequate monitoring and verification of biotic carbon sinks. The deforestation rate in Brazil, for example, is highly controversial (estimates range by a factor of five). Similar arguments apply to other greenhouse gases such as nitrous oxide.

For all these reasons, therefore, I conclude that it is only meaningful to cost monitoring and verification of carbon dioxide released from fossil fuels at the outset of the implementation of the Convention.

In Chapter 5, however, I assumed that property rights are created in proportion to national carbon sinks that are the basis of determining permissible emissions in future years. It is possible to monitor and verify the status of the forest stocks and thus carbon reservoirs in those forests although it is not feasible to track the carbon flows to and from them. A monitoring system is feasible that would use remote sensing and in situ, ground-based validation to determine the fulfilment of commitments made to maintain or to expand these reservoirs. I assume, therefore, that biotic stocks of carbon will be included eventually under a protocol for monitoring and verification, although not the carbon emissions from these sources.

Verification is the international control of compliance with agreed measures and behaviour by means of tools and procedures agreed upon in an instrument of international law - for example, a protocol on compliance to a Climate Change Convention. Verification can be defined as having different densities depending upon the level of distrust between parties to the agreement and the technical difficulty of obtaining information with an adequate level of confidence on the other.

I assume that the verification procedures that are adopted in a verification protocol will be multilateral rather than bilateral in implementation (although they may rely heavily on national/unilateral monitoring and verification capabilities such as satellite systems). Assuming that all parties will be accorded equal treatment in the protocol, it is reasonable to suppose that all parties also will be subject to monitoring and verification by an implementing organization established under the Convention.

Nature of emission sources
Anthropogenic sources of CO2 vary greatly with respect to characteristics that affect greatly their suitability for monitoring and verification. Some are stationary, emit copiously and continuously, and are suitable for direct, quantified monitoring. Power stations and large factories exemplify this type of emitter. Other sources are stationary and numerous but only emit intermittently very small quantities of gas. Fireplaces and open fires are typical. There are also very many mobile point sources that are sporadic emitters such as vehicles and livestock. Finally, there are very diffuse sources such as non-commercial fuels based on animal wastes.

Only the first category is suitable to direct monitoring and verification. There are, for example, well-developed techniques for determining gaseous emissions such as ultrasonic instruments in the off gas stack which measures the effluent density and velocity and thereby volume to within 3-5 per cent accuracy. The other sources all exhibit characteristics that would make information collection enormously onerous due to their number or the lack of observational methods.

Determining emissions
Good statistics are available for energy production and consumption balances for most countries. However, to convert these energy data to emissions on an international basis, energy balances must be made more complete and accurate, carbon content and conversion into emissions must be made more precise, and statistics must be collected according to consistent and compatible ground rules. The parties to the Convention must agree on the types of data, required disaggregation and detail, and common reporting rules for national reports. Fortunately, the Intergovernmental Panel on Climate Change has already produced a set of guidelines of this nature, which are being refined and updated. In particular, rules are needed to determine whether emissions are based on energy production or consumption. The latter is particularly problematic because of the difficulty of ascertaining conversion losses.

The implementing organization must be able to verify the accuracy of data such as ash content of coal or oxidation rates of conversion in power plants, etc. It cannot hope to collect the requisite data independently but only to analyse the data supplied by parties to the convention by cross-checking the reported fuel cycles and conversion to emissions with 'spot' cheeks including on-site visits to 'cheek the books' of very large, stationary emitters. In most nations, however, the latter checks would only cover 1-5 per cent of a given country's emissions. It is crucial to an effective greenhouse regime that verification be conducted routinely by subjecting national reports to independent, critical scrutiny and assessment, treated as an expert technical rather than political process.

A verification system that combines data analysis with spot checks would likely enable the implementing organization to detect an emission infringement of the Convention by a party that deviates 10 per cent or more from the party's commitments. Similarly, a verification system that uses remote satellite and air-based sensing with local inspections should be able to detect departures from declarations to maintain or to expand biotic carbon pools such as forest reserves, to within a five per cent deviation from commitment. (The verification protocol would have to define the ground resolution at which it requires monitoring, the calibration and interpretational rules to be followed, and the density of selective observation needed for confidence to exist that parties are complying with their commitments.)

Verification cost
The cost of the verification system will consist of the direct costs of the implementing organization engaged in checking the annual national reports of compliance and field inspections, plus the indirect costs of obtaining independent sources of information needed to cross-check national claims about emissions or the status of carbon stocks or sinks.

It is reasonable to assume that the implementing organization will not have to meet the capital or direct operating costs of remote sensing satellites. Rather, these costs will be covered in the budgets of the space agencies in Europe, Japan, and the United States which already pay for the huge cost of earth-observing satellites.

By way of comparison, the International Atomic Energy Agency's (IAEA) safeguards department currently consists of 450 persons including 190 field inspectors. The implementing organization for verifying a Climate Change Convention would probably require about twice as many staff given the much larger number of facilities to be visited and much broader international scope of the verification system compared with that applied in the nuclear field.

In 1987 the IAEA safeguards applied to about 230 tonnes of plutonium, 30,000 tonnes of enriched uranium, and 50,000 tonnes of depleted uranium, thorium or uranium. In 1983, the IAEA safeguards agreements applied to a total of 881 installations such as power reactors and other fuel cycle facilities. A carbon monitoring system will apply to billions of tonnes of fuels, and millions of hectares of forest at hundreds of thousands of sites a much bigger task.

The safeguards surveillance and materials balance inspectorate system for the sensitive nuclear materials run by the IAEA costs about US$30 million per year. The cost of a system that verifies compliance with a Climate Change Convention might therefore approach $100 million per year. It is doubtful that more than three times the IAEA's budget would be provided to the implementing organization at a time when the IAEA already finds it difficult to obtain funds for such a politically sensitive field of concern to great powers.

The source of the funds for the implementing organization and its activities would either be charges that follow the UN scale of payments or a special formula similar to that developed by the IAEA in 1971 (and later revised) that levies states on a per capita income basis (with a ceiling) and a cap on contributions by poor states.

Verification or confidence building?
The previous sections have argued that the greenhouse arena is characterized by complexity due to multiple gases (unless limited to carbon dioxide); an effectively infinite number of point and mobile pollution sources; mostly national information on energy use which is subject to distortion, withholding, and differing reliability, varying analytical methods, and underlying assumptions; reliance on extrapolation from existing energy statistics rather than new monitoring of greenhouse gas emissions; and a long lead time before an effective monitoring system and verification could be created.

In Chapter 5, I analysed three mechanisms to achieve agreed reductions and to fund the South's 'excess' incremental abatement costs: carbon taxes, traceable permits, and trade in abatement services. Each of these mechanisms poses different demands on a verification system. A carbon tax system, for example, requires that a baseline emission be set and updated each year to confirm that states are reducing emissions to agreed targets. A traceable permit system within an overall global emissions target demands that trading be monitored continuously in addition to establishing national emissions relative to an agreed baseline. Trade in abatement services requires that claimed reductions by one country actually have been achieved in another country. Monitoring compliance of such claims could be politically difficult for an international monitoring system.

In all three cases, achieving a high degree of certainty seems to require an extensive monitoring system and bureaucracy. Yet most states do not (yet) perceive the stakes in the greenhouse regime to demand monitoring and verification like that imposed on flows of special nuclear materials. Only a small international bureaucracy based on national reports and data cross-checking seems politically feasible at this time.

The history of international arms control and environmental agreements offers six important lessons for a greenhouse verification system. First, environmental costs and benefits do not accrue as fast as the costs and benefits of abandoning arms control agreements and the stakes are not perceived as central to the immediate security of the state nor (usually) to regime survival in that state. States may therefore be less demanding of a verification system for environmental agreements than in other domains. Moreover, when states coordinate because of self-interest, there is little reason to defect or cheat and little or no verification or enforcement is needed. If the costs of carbon abatement are as low as suggested in the studies reported in this book - at least for the first 20 per cent reduction and therefore the first decade or two of an agreement - then verification measures are needed mostly to build confidence in the regime rather than to raise the question of non-compliance and enforcement.

Second, it is inevitable and proper that enforcement responsibility will be lodged primarily at the same level as implementation responsibility, that is, within nation states. The bulk of the monitoring and verification should be conducted at this level, rather than internationally.

Third, most military control regimes were created in confrontational contexts under conditions of secrecy and with little or no participation. These characteristics led to many problems of implementation for arms control agreements. This experience implies that a greenhouse regime should strive for maximal transparency and openness, including a strong role for non-governmental organizations in monitoring compliance.

Fourth, some states have skillfully used verification issues in the past to block international agreements (most notoriously, the United States with regard to the Complete Test Ban Treaty). If the analysis in previous sections is correct, then this problem should not arise in the greenhouse gas arena.

Fifth, there are important precedents for monitoring and verifying international atmospheric agreements, at the regional level in Europe, and globally in ozone depletion convention. This experience should provide some good signposts for the greenhouse regime, especially for regional (in Europe) and subregional greenhouse gas agreements (in Northeast Asia) that could be developed to supplement a global greenhouse regime.

Sixth, the history of international monitoring and inspection of nuclear power provides some useful lessons. The IAEA's history suggests that an international secretariat should be created to audit national reports and ensure that they are bona fide, consistent and follow internationally recognized procedures. An independent technical committee could be appointed to define the reporting requirements of states to the parties to a Climate Change Convention. The same technical committee could also explore with states qualitative anomalies (such as refusal to allow an on-site inspection of emission rates or a claimed efficiency improvement) and quantitative discrepancies (such as inconsistencies between national reports and international statistics) that might arise from time to time.

Disputes and enforcement

Article 14 of the Convention states that disputes between parties should be settled by negotiation or by any peaceful means that they care to select, including arbitration by the International Court of Justice, and/or in accordance with procedures yet to be adopted by the parties to the treaty. Thus, the Convention provides little guidance as to what methods of dispute resolution should be incorporated into a protocol. It casts no light at all on the appropriate means of enforcing compliance with treaty commitments.

At a meeting in The Hague in 1989, twenty-four national leaders called for a 'new institutional authority' to set and implement environmental standards. Currently, however, only national institutions can implement standards authoritatively. Moreover, there is no compulsory dispute settlement jurisdiction relating to multilateral environmental regimes. Invariably, agreement by disputants is required before it is submitted to third party adjudication. The major stumbling block had been the socialist bloc rejection, and more recently, US rejection of compulsory third party arbitration.

In relation to disputes involving the failure of developing countries to comply with emission reduction targets, it would likely be highly counterproductive to try to enforce agreed targets by economic sanctions. These would worsen the very technological and economic difficulties that cripple many developing countries' ability to comply. It would also impose substantial costs on states that meet their commitments and thereby reduce the benefits to new signatories considering joining the Convention. Moreover, using the trade system to enforce climate change policies would likely prove to be unmanageable because every product and service that is traded internationally results in greenhouse gas emissions.

Consequently, alternatives to supranational regulation have emerged. States recognize each other's licensing rather than ceding licensing powers to an international authority. Such reciprocal recognition schemes operate in many areas including phytosanitary certificates for exports, shipping oil pollution prevention certificates, marine waste disposal permits, hazardous materials trade, and trade in endangered species. States also harmonize standards and standard-setting laws and procedures, often by adopting models from overseas. (For example, the environmental impact assessment, green labelling and pollution taxes).

Many states have also committed themselves, outside treaties, to providing early warning and notification, for example, with respect to banned chemicals, exchange of standards, or adjustments to trade-controlled items (such as endangered species). Regimes also create transnational networks of lower level 'operational' national officials who short-circuit hierarchical communications across boundaries, or who communicate directly with international organizations that may then reintroduce environmental information at much higher political levels in the same nation state. Such structures can defuse and even prevent disputes arising in the first place.

Non-adversarial techniques have also developed to resolve international disputes from escalating to interstate conflicts. Local legal challenges have been mounted across borders thereby achieving settlement without involving the states themselves. (In Europe and North America, this technique requires that legal systems grant status to foreign parties in local judicial or administrative procedures). The filing of complaints and the launching of infringement hearings are two other techniques that have been used (in the Montreal Protocol and in the European Economic Community, respectively).

Reporting requirements are also an important means of imposing national 'discipline' on treaty parties, especially when combined with international expert auditing and public debate in committees or annual conferences. Such procedures are already well developed in the occupational health and safety agreements administered by the International Labour Organisation. Similar procedures are used by the International Monetary Fund, and multilateral funding agencies also conduct national and sectoral audits as preconditions for or requirements of development loan agreements. Environmental auditing, however, has a weak tradition although the Montreal Protocol requires substantial reporting to permit monitoring of compliance and administration of various aspects of the agreement.

As noted earlier, it seems inevitable that the national reporting requirements of a Climate Change Convention will be the heart of a monitoring and verification system, and the key to effective enforcement through self-regulation. National reporting will the core confidence-building measure that will build widespread commitment to the regime. It can be supplemented by international auditing of the kind referred to above, but such reports (as occurs with the International Energy Agency reports) buttress only the normative power of domestic proponents of fulfilling treaty commitments and have no direct legal connotations.

These measures may be supplemented by other measures that increase the incentives of signatories to comply. Large emitters, for example, can offer to match the abatement of new signatories. They can also threaten to punish offenders by reducing their own abatement by as much or more than that of the defector, thereby reducing the benefits of free riding by increasing the costs of climate change. States can also lock in their own commitments so as to reduce the uncertainty facing potential signatories as to whether they will reap the benefits of reduced climate change.