A Question of Value: On the Legality of Using Kyoto Protocol Units under the Paris Agreement

The first commitment period of the Kyoto Protocol generated about 4.3 billion Assigned Amount Units (AAUs) and about 180 million Certified Emission Reductions (CERs) for carry-over by Annex i states and potential use as ‘overachievements’ or offsets to discount emissions under NDCs. The second commitment period may generate additional carry-over units, and there is an estimated ‘dormant’ amount of about 4.6 billion CERs that could be issued from ongoing CDM projects. To rely on these units risks upsetting the process of trust-building necessary to increase ambition under the Paris Agreement. This article questions the legality of carry-overs but finds that a textual interpretation of the current legal framework under both treaties leaves the matter unresolved. With a more refined legal interpretation, based on the principles of environmental integrity and sound accounting under the Paris Agreement, the article re-evaluates AAUs and CERs under the Agreement, by relying on insights from a social theory of value and the critical studies literature on the political economy of carbon markets. The conclusion is that AAUs cannot be used under the NDCs accounting framework, as their formal value of 1 Mt CO2 eq. under the Kyoto Protocol is considerably diminished under the Agreement. As for CERs, their value depends on different social realities related to their issuance. States or the CMA should adopt transparent criteria to select the CERs that are worth transitioning pursuant to the Article 6.4 mechanism. The same conceptual framework of value-attribution can also inform the design and operation of the Article 6 mechanisms and their units in order to attain higher environmental integrity and sound accounting for NDCs.