UNFCCC Secretariat Lillehammer, Norway 30 August 2004

1. Estimation, Reporting and Accounting of Harvested Wood Products- Overview of the Technical Paper (FCCC/TP/2003/7 and Corr.1) UNFCCC Secretariat Lillehammer, Norway 30 August 2004

2. Mandate • SBSTA-15 requested the secretariat to prepare a technical paper on HWP accounting, taking into account socio-economic and environmental impacts, including impacts on developing countries. • Paper was prepared with the assistance of a limited number of experts from developed and developing countries, as well as countries with economies in transition. • SBSTA considered and took note of the technical paper at its nineteenth session.

3. Scope and definition • HWP – two separate elements: changes in C stocks and GHG emissions from forest harvesting and wood products. In TP, “wood products” is used. • Wood products are wood-based materials harvested from forests. Used for the production of commodities such as furniture, plywood and paper and paper-like products, or for energy. In principle, non-timber resources such bamboo or rattan could also be considered as wood products.

4. Classification of Wood Products(Source: FAO, 2000)

5. Life cycle of carbon in wood products • Wood products themselves are not sinks of carbon but rather reservoirs to which carbon resulting from photosynthesis is transferred. • A distinction should be made between emissions from harvesting and changes in carbon stocks resulting from wood products (emissions from this source occurring at different stages) • Amount of carbon from wood products released into atmosphere depends on average lifetime and on consumption of wood products. Lifetimes and end-uses of wood products are not constant over time.

6. Approaches for Accounting of Changes in Carbon Stocks and GHG Emissions from Forest Harvesting and Wood Products • IPCC Expert Meeting in Dakar (1998) identified four approaches to accounting for GHG emissions resulting from wood products: • IPCC default method • Stock change approach • Production approach • Atmospheric-flow approach • A major difference between the approaches relates where and when changes in carbon stocks or emissions occur.

7. Effects of the different Approaches • TP analysed and summarized the reporting implications for each approach in terms of where and when emissions or changes in stocks from wood products should be reported (either by producing or consuming country). • TP also described the possible effects of accounting of wood products on the market for wood products, including price, supply and demand.

8. Impacts and Implications • The estimation, reporting and accounting of carbon in wood products within the UNFCCC and the Kyoto Protocol could potentially affect • forest and wood products management practices • development of policies and measures • quantity and quality of national stock of wood products. • Socio-economic and environmental implications from the accounting of wood products depend on the approach followed to allocate emissions. • Implications different for developed and developing countries and for net exporters and importers of these products.

9. Socio-economic Impacts and Implications • Potential social and economic impacts are discussed for trade, consumption and production of wood products, and the consequences of these on other society-related variables such as employment and population dynamics. • Comparisons of impacts are made between Annex I (and non-Annex I) net importers/net exporters and between Annex I and non-Annex I, in the production/trade of roundwood and wood products. • Nature of the impact (eg. Increase or decrease in production, imports or exports) will depend on approach selected.

10. Other Socio-economic Impacts and Implications • Impacts of the different approaches on bioenergy and impacts on recycling are also discussed in the TP. • Depending on approach selected, either incentives or disincentives are created for use of wood for energy production and recycling.

11. Environmental Impacts and Implications • Accounting for wood products may have direct effects on practices such as harvesting, production and trade. • Environmental impacts (on biodiversity and deforestation rates) should be analysed in the context of changes in these practices. • Impacts of these practices on the environment are also related to national circumstances and institutions. • TP discussed incentives/disincentives for harvesting and sustainable forest management practices for both Annex I and non-Annex I countries.

12. Impacts on Emission Limitation Targets • Application of different approaches within context of the Kyoto Protocol may lead to large differences in accounting of emissions and removals. Hence, emission limitation targets. • Further complicated when trade takes place between Annex I and non-Annex I countries. • Annex III of TP provides an indicative and quantitative analysis of different approaches for selected countries.

13. Conclusions and Issues • Treatment of wood products either within the context of the UNFCCC or the Kyoto Protocol presents several complex issues: • Definitions and classification of wood products, consider as a whole or a specific set of products; • Concepts relating to accounting, treatment of emissions vs changes in C stocks; • Accounting of old stocks of wood products (pre-1990); • Timing and place of accounting (when and where); • Methodological issues in estimation, limited availability of data; • Analysis of implications of a possible accounting system that does not create perverse incentives or negative socio-economic and environmental impacts; • Trade of wood products within and between Annex I and non-Annex I Parties.

14. Conclusions and Issues Other issues • Are the available approaches sufficient to enter into discussions on the inclusion of wood products in the context of the UNFCCC and the Kyoto Protocol ? • Is there a need to consider new approaches ? • Different approaches have different implications for emission limitation commitments, markets and trade, use of wood and recycling and sustainable forest management. Is there a need to analyze further impacts and implications of each approach ? How to minimize or eliminate negative impacts ?

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