Explanatory Memorandum to COM(2014)291 - Signing of the agreement with Iceland on the joint fulfilment of commitments in the second commitment period of the Kyoto Protocol

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1. CONTEXT OF THE PROPOSAL

These proposals concern Council decisions, to be adopted pursuant to Article 218  i and (6) TFEU, to sign and conclude the agreement between the Union, the Member States and Iceland concerning Iceland's participation in the joint fulfilment of commitments of the Union, the Member States and Iceland in the second commitment period of the Kyoto Protocol to the United Nations Framework Convention on Climate Change.

In December 2012, at the Doha Climate Change Conference, the 192 Parties to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) adopted an amendment to the Kyoto Protocol (the Doha Amendment) i. The Doha Amendment establishes a second commitment period under the Kyoto Protocol, starting on 1 January 2013 and ending on 31 December 2020, with legally-binding emission reduction commitments for the Parties listed in its Annex B. Among these Parties are the Union, the Member States and Iceland.

Article 4 of the Kyoto Protocol allows Parties to fulfil their commitments jointly. The Union and the fifteen Parties that were Member States when the Kyoto Protocol was signed in 1997 chose to do so for the first commitment period (2008-12), and agreed on/set out the terms of their joint fulfilment for the first commitment period when they ratified the Protocol in 2002.[2] The Doha Amendment i, and the statement made by the Union, the Member States and Iceland upon its adoption,[4] express the intention of these Parties to fulfil their reduction targets under the second commitment period jointly. The Commission proposed a Council Decision on the conclusion of the Doha Amendment to the Kyoto Protocol to the UNFCCC and the joint fulfilment of commitments thereunder in November 2013.[5] This proposal is currently under discussion.

The intention to jointly fulfil the commitments in the second commitment period of the Kyoto Protocol with the European Union, its Member States and Iceland dates back to 2009. In a letter to the Presidency of the Council of the European Union dated 3 June 2009, Iceland requested formal talks on announcing a joint fulfilment of their commitments with the European Union and its Member States in a second commitment period of the Kyoto Protocol. The Council, at its meeting on 15 December 2009, welcomed this request and invited the Commission to present a recommendation for the opening of the necessary negotiations with Iceland that is in line with the principles and criteria set out in the EUs Climate and Energy Package'.[6]

The Commission presented its recommendation for a Council Decision authorising the opening of negotiations with Iceland to the Council in June 2013. In December 2013, the Council gave the Commission a mandate to open, on behalf of the Union, negotiations with Iceland on an agreement that establishes the terms of joint fulfilment concerning Iceland's participation in the joint fulfilment of commitments by the Union, the Member States and Iceland. The representatives of the Member States in the Council also gave a mandate to the Commission to negotiate this agreement, on behalf of the Member States, with regard to areas falling in the competence of Member States. These negotiations have been conducted, in line with the negotiating directives, on the basis of Article 218 of the Treaty on the Functioning of the European Union and resulted in the agreement attached to this proposed Decision.

2. The Agreement with Iceland

The agreement with Iceland attached to this proposed Decision sets out the terms governing Iceland's participation in the joint fulfilment of commitments by the Union, its Member States and Iceland. It does not establish any obligations for the Union or its Member States.

Iceland's participation in the joint fulfilment

Iceland's participates in the joint fulfilment on the same basis as that of the Member States. Iceland's emission level, identical to its assigned amount, will relate to Iceland's emissions from gases and sectors covered under the Kyoto Protocol's second commitment period but that are not covered under the EU's greenhouse gas emissions trading system (Directive 2003/87/EC[7]).

[insert text on Iceland's assigned amount, once determined]

The agreement with Iceland will, in its Annex II, contain the same terms of joint fulfilment that are also laid down in an annex Annexed to the Council Decision on the conclusion of the Doha Amendment to the Kyoto Protocol to the UNFCCC and the joint fulfilment of commitments thereunder.

Application of relevant EU legislation to Iceland

As Parties to the Kyoto Protocol, the Union and the Member States are subject to a number of monitoring, reporting and verification requirements under the Kyoto Protocol. For Parties that have agreed to fulfil their commitments jointly, some of this information needs to be submitted jointly. As a consequence, the Commission will require information from Iceland to enable the Union to fulfil its reporting commitments. Moreover, Iceland will need to participate in the registry system of the Union and its Member States that are relevant for the fulfilment of obligations under the Kyoto Protocol. This requires Iceland to apply Union legislation that is not applicable to third countries (including the Parties to the European Economic Area) , especially in relation to the monitoring, reporting and verification of emissions as well as with regard to the operation of a registry and the accounting for transactions related to the implementation of commitments of the Union, its Member States and Iceland in the second commitment period of the Kyoto Protocol in line with the terms of joint fulfilment and the internationally agreed rules.

The agreement contains, in its Annex I, a list of Union legislation that shall be binding upon Iceland. It also provides for a procedure to amend this list, to ensure that Iceland's participation in the joint fulfilment and follows the same rules and responsibilities as that of Member States, in line with internationally agreed requirements.

Joint Fulfilment Committee

The agreement with Iceland provides for the establishment of a Joint Fulfilment Committee, which ensures the effective implementation and operation of the agreement. This committee consists of representatives of the Union, the Member States and Iceland and takes decisions by consensus. It may take decisions on the application of relevant Union legislation to Iceland and carries out exchanges of views and information related to the implementation of the terms of the joint fulfilment. Its meetings will be arranged, whenever possible, adjacent to those of the Climate Change Committee, established in accordance with Article 26 of Regulation 525/2013[8].

Duration and termination of the agreement with Iceland

The agreement with Iceland is concluded for a limited time period, until all matters related to the implementation of the second commitment period will have been completed. This is in line with Article 4 of the Kyoto Protocol which requires any Parties' agreement to jointly fulfil their commitments to remain in operation for the duration of the respective commitment period.

In case of a breach by Iceland, or objection by Iceland to amend the list of legal acts with application in Iceland according to this agreement, Iceland will be individually responsible to account for all of its greenhouse gas emissions covered by the Kyoto Protocol, including those under the scope of the EU's greenhouse gas emissions trading system.

This agreement has no budgetary implications for the Union.