The “liability” rule for Article 17 emissions trading will address the question of whether countries who participate in trading can redeem assigned amount units originating from Parties that exceed their targets at the end of the commitment period. The rule remains among the most contentious unresolved issues standing in the way of final agreement on this key Kyoto mechanism.
We believe that a hybrid liability rule based upon a commitment period reserve would ensure environmental integrity and liquidity of the trading system, and would provide a point of convergence for negotiators.