Preparatory Signal Detection for the EU Member States under EU Burden Sharing - Advanced Monitoring Including Uncertainty

Jonas, M. ORCID: https://orcid.org/0000-0003-1269-4145, Nilsson, S., Bun, R., Dachuk, V., Gusti, M., Horabik, J., Jeda, W., & Nahorski, Z. (2004). Preparatory Signal Detection for the EU Member States under EU Burden Sharing - Advanced Monitoring Including Uncertainty. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-04-029

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Abstract

This study follows up the authors' collaborative IIASA Interim Report IR-04-024 (Jonas et al., 2004) which addresses the preparatory detection of uncertain greenhouse gas (GHG) emission changes (also termed emission signals) under the Kyoto Protocol. The question was "how well do we need to know net emissions if we want to detect a specified emission signal after a given time?" The authors use the Protocol's Annex I countries as net emitters and excluded the emission/removals due to land-use change and forestry (LUCF). They motivated the application of preparatory signal detection in the context of the Kyoto Protocol as a necessary measure that should have been taken prior to/in negotiating the Protocol. The authors argued that uncertainties are already monitored and are increasingly made available but that monitored emissions and uncertainties are still dealt with in isolation. A connection between emissions and uncertainty estimates for the purpose of an advanced country evaluation has not yet been established. The authors develop four preparatory signal detection techniques and applied these to the Annex I countries under the Kyoto Protocol. The frame of reference for preparatory signal detection is that Annex I countries comply with their committed emission targets in 2008-2012.

In our study we apply one of these techniques, the combined undershooting and verification time (Und&VT) concept to advance the monitoring of the GHG emissions reported by the Member States of the European Union (EU). In contrast to the earlier study, we focus on the Member States' committed emission targets under the EU burden sharing in compliance with the Kyoto Protocol. We apply the Und&VT concept in the standard mode, i.e., with reference to the Member States committed emission targets in 2008-2012, and in a new mode, i.e., with reference to linear path emission targets between the base year and the commitment year (here for 2001).

To advance the reporting of the EU we take uncertainty and its consequences into consideration, i.e., (i) the risk that a Member State's true emissions in the commitment year/period are above its true emission limitation or reduction commitment; and (ii) the detectability of its target. Undershooting the committed EU target or EU-compatible, but detectable, target can decrease this risk. We contrast the Member States' linear path undershooting targets for the year 2001 with their actual emission situation in that year, for which we use the distance-to-target indicator (DTI) introduced by the European Environment Agency.

In 2001 only four countries exhibit a negative DTI and thus appear as potential sellers: Germany, Luxembourg, Sweden and the United Kingdom. However, expecting that the EU Member States exhibit relative uncertainties in the range of 5-10% and above rather than below, excluding emissions/removals due to LUCF, the member states require considerable undershooting of their EU-compatible, but detectable, targets if one wants to keep the associated risk low. These conditions can only be met by the three Member States Germany, Luxembourg and the United Kingdom - or Luxembourg, Germany and the United Kingdom if ranked in terms of creditability. Within the 5-10% relative uncertainty class, Sweden can only act as potential high-risk seller. In contrast, with relative uncertainty increasing from 5 to 10%, the emission signal of the EU as a whole switches from "detectable" to "non-detectable", indicating that the negotiations for the Kyoto Protocol were imprudent because they did not take uncertainty and its consequences into account.

We anticipate that the evaluation of emission signals in terms of risk and detectability will become standard practice and that these two qualifiers will be accounted for in pricing GHG emission permits.

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