Table Of ContentAccounting for Climate Change
Accounting for Climate Change
– fi
Uncertainty in Greenhouse Gas Inventories Veri cation,
Compliance, and Trading
Edited by
Daniel Lieberman
ICF International, Washington, DC, USA
Matthias Jonas
International Institute for Applied Systems Analysis, Laxenburg, Austria
Zbigniew Nahorski
Systems Research Institute, Polish Academy of Sciences, Warsaw, Poland
Sten Nilsson
International Institute for Applied Systems Analysis, Laxenburg, Austria
This book would not have been possible without the help of:
SystemsResearch Institute
PolishAcademyof Sciences
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Table of Contents
DANIEL LIEBERMAN, MATTHIAS JONAS, WILFRIED WINIWARTER, ZBIGNIEW
NAHORSKI and STEN NILSSON / Accounting for Climate Change: Introduction 1Y4
S. NILSSON, A. SHVIDENKO, M. JONAS, I. MCCALLUM, A. THOMSON and
H. BALZTER / Uncertainties of a Regional Terrestrial Biota Full Carbon Account:
A Systems Analysis 5Y21
W. WINIWARTER / National Greenhouse Gas Inventories: Understanding Uncertainties
versus Potential for Improving Reliability 23Y30
M. GILLENWATER, F. SUSSMAN and J. COHEN / Practical Policy Applications of
Uncertainty Analysis for National Greenhouse Gas Inventories 31Y54
M. GUSTI / Modeling Afforestation and the Underlying Uncertainties 55Y62
R. BUN, M. GUSTI, L. KUJII, O. TOKAR, Y. TSYBRIVSKYY and A. BUN / Spatial
GHG Inventory: Analysis of Uncertainty Sources. A Case Study for Ukraine 63Y74
M. JONAS and S. NILSSON / Prior to Economic Treatment of Emissions and Their
Uncertainties Under the Kyoto Protocol: Scientific Uncertainties That Must Be
Kept in Mind 75Y91
ZBIGNIEW NAHORSKI and WALDEMAR JE¸DA / Processing National CO Inventory
2
Emissions Data and their Total Uncertainty Estimates 93Y107
S. MONNI, S. SYRI, R. PIPATTI and I. SAVOLAINEN / Extension of EU Emissions
Trading Scheme to Other Sectors and Gases: Consequences for Uncertainty of
Total Tradable Amount 109Y118
ZBIGNIEW NAHORSKI, JOANNA HORABIK and MATTHIAS JONAS / Compliance
and Emissions Trading under the Kyoto Protocol: Rules for Uncertain Inventories 119Y138
OLIVIER ROUSSE and BENOÎT SE´VI / The Impact of Uncertainty on Banking Behavior:
Evidence from the US Sulfur Dioxide Emissions Allowance Trading Program 139Y151
PAWEEE` BARTOSZCZUK andJOANNAHORABIK/ TradablePermitSystems:Considering
Uncertainty in Emission Estimates 153Y159
WaterAirSoilPollut:Focus(2007)7:421–424
DOI10.1007/s11267-006-9120-8
Accounting for Climate Change: Introduction
Daniel Lieberman&Matthias Jonas&Wilfried Winiwarter&
Zbigniew Nahorski&Sten Nilsson
Publishedonline:3February2007
#SpringerScience+BusinessMediaB.V.2007
Abstract The assessment of greenhouse gases tradingsystemandattempttointernalizehighlevelsof
(GHGs)emittedtoandremovedfrom theatmosphere uncertainty by tailoring the emissions trading market
is high on both political and scientific agendas rules. Assessment of uncertainty can help improve
internationally. As increasing international concern inventoriesandmanagerisk.Throughrecognizingthe
and cooperation aim at policy-oriented solutions to importance of, identifying and quantifying uncertain-
theclimatechangeproblem,severalissueshavebegun ties, great strides can be made in the process of
to arise regarding verification and compliance under AccountingforClimateChange.
bothproposedandlegislatedschemesmeanttoreduce
the human-induced global climate impact. The Keywords Uncertaintyanalysis.Greenhousegas
approachestoaddressinguncertaintyintroducedinthis inventories.Kyotoprotocol.Emissionstrading.
article attempt to improve national inventories or to Verificationandcompliance
provide a basis for the standardization of inventory
estimates to enable comparison of emissions and
emission changes across countries. Authors of the The assessment of greenhouse gases (GHGs) emitted
accompanying articles use detailed uncertainty analy- to and removed from the atmosphere is high on both
ses to enforce the current structure of the emission political and scientific agendas internationally. Under
the United Nations Framework Convention on Cli-
mate Change (UNFCCC), parties to the Convention
D.Lieberman(*) have published national GHG inventories, or national
ICFInternational, communications to the UNFCCC, since the early
Washington,DC,USA 1990s. Methods for the proper accounting of human-
e-mail:[email protected]
induced GHG sources and sinks at national scales
:
have been stipulated by institutions such as the
M.Jonas S.Nilsson
ForestryProgram,InternationalInstituteforApplied Intergovernmental Panel on Climate Change (IPCC)
SystemsAnalysis, and many countries have been producing national
Laxenburg,Austria
assessments for well over a decade. As increasing
international concern and cooperation aim at policy-
W.Winiwarter
SystemsResearch,AustrianResearchCenters-ARC, oriented solutions to the climate change problem,
A-1220Vienna,Austria however,severalissueshavebeguntoariseregarding
verification and compliance under both proposed and
Z.Nahorski
legislated schemes intended to reduce the human-
SystemsResearchInstitute,PolishAcademyofSciences,
Warsaw,Poland induced global climate impact.
[1]
422 WaterAirSoilPollut:Focus(2007)7:421–424
Pilot and voluntary GHG emissions trading incorporated into national GHG inventories and the
schemes exist in the United States, United Kingdom, reasonsforusingthem.
Australia and Europe, anddd—since January 2005—the While uncertainty estimates are not intended to
European Union has become the world’s largest dispute the validity of national GHG inventory
legislated GHG emissions trading market. Common figures, the variability that they communicate under-
to burgeoning market-oriented GHG reduction scores the lack of accuracy characterizing many
schemes both worldwide and global, as well as to source and sink categories’ methodologies and thus
national GHG inventory analyses, is the concept of makes for a difficult foundation on which to base
single-point estimates of emissions and emission policy. This does not, however, imply that environ-
changes. This accounting method raises a host of mental agencies, corporate environmental depart-
crucialquestionseither directlyorindirectlylinkedto ments, and other stakeholders should simply do
the issue of uncertainty, especially in the context of without uncertainty estimates; on the contrary, a
accounting for emission changes, the central focus of number of arguments illustrate the importance of
the Kyoto Protocol to the UNFCCC. these analyses.
TheissuesofconcernattheInternational Workshop According to the IPCC Good Practice Guidance
on Uncertainty in Greenhouse Gas Inventories, held and Uncertainty Management in National Green-
24–25September2004, inWarsaw, Poland,are rooted house Gas Inventories, uncertainty analysis is
inthelevelofconfidencewithwhichnationalemission intendedtohelp“improvetheaccuracyofinventories
assessments can be performed, as well as the manage- in the future and guide decisions on methodological
mentofuncertaintyanditsroleindevelopinginformed choice.”1 Uncertainty analyses function as excellent
policy. Jointly organized by the Systems Research indicators of opportunities for improvement in data
Institute of the Polish Academy of Sciences (http:// measurement, data collection, and calculation meth-
www.ibspan.waw.pl/) and the Austrian-based Interna- odology; only by identifying elements of high
tional Institute for Applied Systems Analysis (http:// uncertainty can methodological changes be intro-
www.iiasa.ac.at/), the Workshop covered state-of-the- duced to address them. Currently, most countries that
artresearchanddevelopmentsinaccounting,verifying, perform uncertainty analyses do so for the express
and trading of GHG emissions and provided a purpose of improving their future estimates; this
multidisciplinary forum for international experts to rationale is generally the same at the corporate level.
address the methodological uncertainties underlying In either case, estimating uncertainty helps prioritize
these activities. The topics of interest covered national resources and take precautions against undesirable
GHG emission inventories, bottom-up versus top- consequences. Depending upon the intended purpose
down emission analyses, signal processing and detec- of an inventory, however, this may or may not be the
tion,verificationandcompliance,andemissiontrading extent of the utility of uncertainty analysis. Another
schemes. rationale for performing uncertainty analysis is as a
Centraltocurrentinternationalpolicyconcernsand policy tool, a means to adjust inventories and
the present discussion alike is the need for a well- compare emission changes in order to determine
defined role—if, in fact, any role is to be playeddd—of compliance. While some authors find the quality of
uncertaintyanalysesinnationalGHGinventoriesatthe quantitative uncertainty data associated with national
country level, as well as in those falling under the inventories insufficient to use for these purposes, a
purview of international regulatory schemes. Interna- number of studies offer justification for conducting
tionalschemessuchasEUemissionstradingorthatset uncertainty analyses to inform and enforce policy
forthbytheKyotoProtocol—iftheyaretofunctionas
bindingagreements—mustbeabletodemonstratethat
estimates regarding emission changes are not only 1J. Penman,D.Kruger,I.Galbally,T.Hiraishi,B.Nyenzi, S.
measurablebutalsothattheycomplywithanobjective Emmanuel,L.Buendia,R.Hoppaus,T.Martinsen,J.Meijer,K.
andstandardmeasurethatensuresconsistenttreatment Miwa and K. Tanabe (eds.) (2000). Good Practice Guidance
and Uncertainty Management in National Greenhouse Gas
oftheuncertaintywithwhichtheyareassociated.Itis
Inventories. Institute for Global Environmental Strategies,
thusofprimaryimportancetoevaluateofthemultiple
Hayama, Kanagawa, Japan, p. 6.5. Available at: http://www.
methods through which uncertainty analyses are ipcc-nggip.iges.or.jp/public/gp/english/.
[2]
WaterAirSoilPollut:Focus(2007)7:421–424 423
decisions. Some proposals suggest revising the Consequently,permits’marketvaluesincreaseastheir
system of accounting on which current reduction uncertainties decrease. This concept builds upon that
schemes are based, while others seek to incorporate of undershooting, according to which entities can
uncertainty measurements into signal analysis proce- onlyprovecompliancebyreducingemissionstosuch
dures thatmightofferpolicymakerstheadvantageof a level as to minimize the risk of non-compliance
bottom-up/top-down emission verification proce- (i.e., emissions must be reduced far enough below
dures. Whether uncertainty analysis can or should the target that it can be said, with some degree of
serve any of these varied purposes, however, con- confidence, that the target was actually met). Both
tinues to be the subject of scientific debate (and an of these approaches require an accepted reference
important element reflected in the contents of this reduction or detectability level that is valid for all
volume). The discussions that culminated in this countries; the institutionalization of either of them,
publicationnn—and this volumeitselfff—attempt tobring however, requires that reliable quantitative uncer-
to light further implications of and rationale for tainty assessment be incorporated into policy design,
quantifying uncertainty that in many cases have not which—as noted above—remains a matter of signif-
yet received significant attention from the interna- icant discussion.
tional scientific or political community. Through combining emissions studies and eco-
Single-pointemissionestimatesthatdonotaccount nomic evaluation, it ispossibleto compare uncertain-
for the presence of uncertainty are not likely to be tylevelsindifferentemissionstradingschemes.Ithas
respected by the scientific community as accurate been shown that the boundaries delimited by legisla-
assessments unless many input factors and methodol- tion can significantly influence the credibility of the
ogies undergo some degree of scrutiny beyond that results (i.e., achievements) of the legislation. For
whichhasbeenaffordedbygovernmentstodate.Itis example, significant uncertainty is introduced by a
generally understood that the current scientific meth- schemecoveringallGHGs,suchasthatintroducedby
ods used to measure data, as well as those used to the Kyoto Protocol, compared to the EU emission
calculate emissions, are only accurate within a range, trading scheme(whichcurrently covers onlyCO ).A
2
or to a certain degree. It is important to measure and more rigid emission accounting system than that
communicate what this degree (of confidence) is in currently employed by national inventory agencies
order to encourage confidence in the accepted might allow for country-specific flexibility while
methods and practices. In the realm of international ensuring a greater inter-country comparability of
cooperationandemissionreductionefforts,especially emission estimates and their uncertainties.
where market forces are involved, credibility is very The approaches to addressing uncertainty dis-
important. This criterion comes into play in deter- cussed in this volume attempt to improve national
miningwhethercountrycommitmentshavebeenmet, inventories or to provide a basis for the standardiza-
andiscrucialifcomparisonsaretobemadefromone tion of inventory estimates to enable comparison of
country to the next. Bottom-up versus top-down emissions and emission changes across countries.
verification, for example—comparing a traditionally Some seek to use detailed uncertainty analyses to
estimated inventory with an alternative inventory that enforce the current structure of the emissions trading
uses atmospheric or remote sensing measurements— system while others attempt to internalize high levels
offers a significant opportunity through which to of uncertainty by tailoring the emissions trading
improve credibility. market permits. These approaches all agree, however,
A more regulatory approach suggests using con- that uncertainty analysis is a key component of
sistent emission estimation algorithms among national GHG inventory analyses. The issues that
countries, seeking to minimize the uncertainty inher- are raised by authors featured in this compilation—
ent in the differences among national estimates by andtherolethatuncertaintyanalysesplayinmanyof
isolating common uncertainties. Another approach their arguments and/or proposals——highlight the im-
introduces the concept of effective emission permits. portance of such efforts.
The value of an effective emission permit is deter- While the IPCC clearly stresses the value of
minedbytheuncertaintyassociatedwiththemeasure- conducting uncertainty analyses and offers guidance
ments of the emissions that the permit represents. on executing them, the arguments in favor of
[3]
424 WaterAirSoilPollut:Focus(2007)7:421–424
performing these studies go well beyond any sugges-
RationaleforImprovingandConductingUncertainty
tionsmadebytheIPCC.Severalpotential reasonsfor
Analyses
nationalGHGinventoryteamstocontinuetoimprove
1. Onlybycarryingoutresearchonuncertaintiesarewebetter
and standardize the research and estimation method- equippedtohandleuncertaintiesinthefuture.
ologies that lead to quantifiable estimates of uncer- 2. Uncertaintyanalysesprovideastandardmeasurethatcan
tainty associated with GHG inventories are noted in facilitatetheprocessofcomparingnationalGHG
thetextboxbelow.Theseaimswereidentifiedduring inventoriesonetotheother.
Workshopdiscussions,andmanyarecoveredindetail 3. Uncertaintyanalyseshelptoidentifythemostprudent
opportunitiesforimprovementinthemethodsandestimatesof
by the expanded papers that appear in the following
GHGemissionsandemissionchangesinnationalassessments.
chapters. The papers adhere to the structure of the
4. Uncertaintiesplayaroleindeterminingwhetherornot
Workshop. Paper 1 reflects the keynote lecture of
commitmentsarecrediblymet.
the Workshop, while the remaining chapters center 5. Soliduncertaintyassessmentshavethepotentialto
on its main three themes: bottom-up and top-down contributetothestabilityofemissionstradingmarketsby
emission inventory approaches (Papers 2–5), signal reinforcingthevalueofcrediblereductions.
detection and analysis techniques (Papers 6–7), and 6. TheKyotoProtocolwillbemademorerobustinthefuture
bysettingtargets(exante)thatexplicitlyaccountforthe
the role of uncertainty in emissions trading schemes
(Papers 8–11). uncertaintiesassociatedwithemissionchanges.
[4]
WaterAirSoilPollut:Focus(2007)7:425–441
DOI10.1007/s11267-006-9119-1
Uncertainties of a Regional Terrestrial Biota
Full Carbon Account: A Systems Analysis
S. Nilsson&A. Shvidenko&M. Jonas&
I. McCallum&A. Thomson&H. Balzter
Received:5October2006/Accepted:26December2006/Publishedonline:30January2007
#SpringerScience+BusinessMediaB.V.2007
Abstract We discuss the background and methods generate sufficient prerequisites for a verified FCA.
for estimating uncertainty in a holistic manner in a Weshowthattheuseofintegratedmethodology,atthe
regional terrestrial biota Full Carbon Account (FCA) current level of knowledge, and the system combina-
using our experience in generating such an account tionofavailableinformation,allowaverifiedFCAfor
for vast regions in northern Eurasia (at national and large regions of the northern hemisphere to be made
macroregional levels). For such an analysis, it is for current periods and for the recent past.
important to (1) provide a full account; (2) consider
the relevance of a verified account, bearing in mind Keywords terrestrialbiota.regionalfullgreenhouse
further transition to a certified account; (3) understand account.uncertainty.verification.certification.
that any FCA is a fuzzy system; and (4) understand NorthernEurasia
that a comprehensive assessment of uncertainties
requires multiple harmonizing and combining of
system constraints from results obtained by different 1 Introduction
methods. An important result of this analysis is the
From what we know about interactions between
conclusionthatonlyarelevantintegrationofinventory,
process-based models, and measurements in situ the biosphere and the atmosphere, we can assume
that only a full carbon account (FCA) (both in
itself and as the informational and methodological
: : :
S.Nilsson(*) A.Shvidenko M.Jonas I.McCallum nucleus of the full greenhouse gas account)
InternationalInstituteforAppliedSystemsAnalysis, corresponds to the essence and ultimate goals of
2361Laxenburg,Austria
the United Nation Framework Convention on
e-mail:[email protected]
Climate Change (UNFCC) (Nilsson et al., 2000a;
A.Thomson Schulze, Valentini, & Sanz, 2002). Because of
CenterForEcologyandHydrology, various political and economic constraints and
MonksWood,UK
considerations, the Kyoto Protocol and recent docu-
ments of the Intergovernmental Panel on Climate
H.Balzter
DepartmentofGeography,ClimateandLandSurface Change (IPCC) still operate with partial carbon
SystemsInteractionCentre(CLASSIC), accounting systems connected to the managed part
UniversityofLeicester,BennettBuilding,
of the biosphere. We assume from recent develop-
UniversityRoad,Leicester,LE17RH,UK
mentsthattransitiontofullaccountingwillbeputon
e-mail:[email protected]
URL:http://www.leicester.ac.uk/geography/staff/academiccc__balzter.html theclimatechangescienceagendainthenearfuture.
[5]
426 WaterAirSoilPollut:Focus(2007)7:425–441
Perhaps the most appropriate way of providing a Protocol and subsequent international documents, An-
transition from a partial to a full carbon account is nex1countrieshaveagreenhousegasemissionreduction
differentiation between “assessment” (i.e., the actual target of 5.2% and the European Union of 8% below
exchangeofgreenhousegasesbetweenthebiosphere 1990 levels by the first commitment period of 2008–
and the atmosphere) and “accounting” (i.e., what 2012.Thismeansthattheuncertaintiesforthefullcarbon
partsofthisexchangeareeligibleforinclusioninthe accountshouldbeminimizedtoatleastalevelthatisable
Kyoto and post-Kyoto accounting mechanisms). toprovidereliableidentificationofthisreduction.Some
Thefullcarbonaccounthastwopartsthatdifferin scientificdiscussions(e.g.,withintheframeworkofthe
terms of their nature and methodology: (1) assessing GlobalCarbonProject)indicateapresumptivelevelof
emissionscausedbytheanthroposphere(forexample, ±20–25% for required limits of uncertainties for
by industry and energy); and (2) quantifying inter- summarized continental carbon fluxes (expressed, for
actions of terrestrial vegetation with other compo- example,asnetbiomeproduction)causedbyterrestrial
nents of the biosphere, in particular, the atmosphere. vegetation;thiswouldobviouslybetoohighifthefull
The share of emissions that each of these two carbon account were to become a subject of the post-
components has in the summarized fluxes of the Kyoto negotiation process. Our tentative results for
FCAatthenationallevelmaybeofthesamemagni- temperateandborealregionsshowthatFCAuncertain-
tude (e.g., for Russia, see Nilsson et al., 2003a). The ties for large regions could be decreased to a level of
experiences of some countries (European Union ∼10–15% (confidence level 0.9); this level at least
member states and the United States) show that the seemsachievableiftheFCAmeetsanumberofsystem
estimated uncertainties of carbon dioxide (CO ) emis- requirementsandinformationimprovements.Thetech-
2
sions from fuel combustion are low, as a rule in nicaljargon,however,requirestwoclarifications.First,
the ±2–4% range (confidence level 0.95) (EEA, relative errors depend on the estimated mean, and a
2005). In spite of the higher uncertainties for other definitelevelofuncertaintiesimpliesatacitprerequisite
gases(e.g.,inroughlythe±17–48%rangeformethane thatnetbiomeproduction(asaneventualestimateofthe
(CH ) emissions [Monni, Syri, & Savolainen 2004; terrestrialbiotafullcarbonaccount)isnotzeroorclose
4
Rypdal&Winiwarter,2001]),theoveralluncertainties to zero. Second, strictly speaking, the completeness of
(e.g., expressed on the basis of CO equivalence) of theFCAcannotbeestimatedinanyformalway,andthe
2
industrial sectors are substantially less than the knowledge and proficiency levels currently available
uncertainties of fluxes resulting from terrestrial vege- reducethechancesoffindingasolutiontothisproblem.
tation and agriculture (Nilsson et al., 2000a; EEA, Nevertheless, the philosophy behind the FCA does
2005). In other words, the uncertainties of the full makeitpossibletodevelopanapproximatesolution.
carbon account will ultimately depend mainly on the The full carbon account has two major goals that
uncertaintiesgeneratedbythe biosphere,and the latter are equally important and interdependent: (1) quan-
is the subject of this analysis. tification of all carbon pools and fluxes included in
While the Kyoto Protocol and IPCC documents the account; and (2) reliable estimation of uncertain-
(IPCC, 1997; 1998; 2000; and 2004b) mention the ties. The intentions of the UNFCCC and the logic of
importanceofassessinguncertainty,theydonotputthis recent post-Kyoto developments imply the need to
at the center of the problem (e.g., Nilsson, Jonas, & move toward a verified full carbon account. A
Obersteiner 2000b; Nilsson, Jonas, Obersteiner, & verified account means, following the IPCC, 2000,
Victor 2001). Forinstance, theIPCCGuidelinesstress p. A3.20), that: (1) uncertainties at all stages and for
that“uncertaintyinformationisnotintendedtodispute all modules of the accounting scheme are estimated
the validity of the inventory estimates, but to help in a comprehensive and transparent way; and (2) the
prioritizeeffortstoimprovetheaccuracyofinventories methodology of the FCA should present guidelines
in the future and guide decisions on methodological as to how uncertainties can be managed, in particu-
choice”(IPCC,2000:p.6.5).Thereliabilitylevelofthe lar, if the results of the accounting do not satisfy
full carbon account that should be required at the required (preliminary, defined) uncertainty levels.
regional and global levels is still being discussed. For Verification is basically a scientific notion and is (or
the partial account, which is defined by the Kyoto should be) an inherent part of any accounting
[6]
