Annex to the Interministerial Information to the President of the Republic, signed by the Ministers of External Relations, Luiz Felipe Lampreia, and of Science and Technology, José Israel Vargas, on July 8, 1996

1. The United Nations Framework Convention on Climate Change, signed and ratified by Brazil, was open to signature at the Rio Conference. This instrument aims at combating the causes of the greenhouse effect, which is responsible for climate change and the consequent warming of the planet.

2. The developed countries included in Annex I of the Convention committed themselves under this instrument to reduce their emissions of carbon dioxide and other greenhouse gases by the year 2000, so that they do not exceed their 1990 emission levels.

3. In the context of the end of world recession, it is possible to predict, in global terms, the rise in energy consumption and in emissions, as a result. This situation hinders the implementation of the targets set for the reduction of developed countries emissions.

4. Consequently, and as an alternative response to the strict fulfillment of their commitments, the developed countries have sought to impose a reinterpretation of the concept of "joint implementation" in the context of the Convention.

5. The concept of joint implementation is vaguely reflected in article 4.2 of the Convention. It is a complementary mean of implementing commitments, that enables countries Parties to the Convention to carry out joint projects in order to achieve their targets as to the reduction of emissions or the enhancement of greenhouse gas sinks.

6. The reinterpretation of the concept of joint implementation that has been advocated by developed countries within the Convention attempts to establish a "regime of credits" by means of which they would compensate, by financing projects in other countries, the non-fulfillment of the targets freely assumed by them and that should be accomplished in their own territories with regard to the reduction of greenhouse gas emissions.

7. The First Conference of the Parties to the Convention, held in Berlin in 1995, authorized countries to initiate a "pilot phase" of joint implementation projects. Since the resolution adopted in Berlin, joint implementation projects that were originally conceived to be carried out between developed countries, started to include developing countries also. The pilot phase states that the participation of countries in this project will be voluntary. Activities of projects developed jointly shall be approved by Governments, and in the pilot phase they will not render "credits" to financing countries. The Conference of the Parties shall review the pilot phase by the year 2000 (which implies, in thesis, the possibility of concession of credits to developed countries in the future).

8. Brazil has sustained, pursuant to what has been consignated in the relevant decision of the First Conference of the Parties, that joint implementation should be an additional and complementary mean for the fulfillment of the obligations under the Convention, and not an expedient by which developed countries may register credits as a compensation for the non-fulfillment of their commitments. In this sense, Brazil has expressed concern with the tendency of giving excessive emphasis to the notion of joint implementation with detriment to discussions on the effective fulfillment of the obligations clearly expressed in the Convention.

9. Besides that, Brazil believes cooperation between developed and developing countries should take place under article 4.5 of the Convention, which states the transfer of technologies to developing countries and the enhancement of their technological capacities with a view to enabling them to adequate their development process to cleaner matrix with regard to the emission of greenhouse gases. The Decision of the First Conference of the Parties on the pilot phase refers to article 4.5 stating that joint implementation is one way to execute it.

10. Joint implementation still does not have definite format and modalities. According to current understanding, however, projects implemented jointly may include on the part of developing countries measures aiming (1) to reduce greenhouse gas emissions and (2) to protect and develop sinks and reservoirs of greenhouse gases. The first modality refers to the adoption by developing countries of initiatives resulting in the modification of their energy matrix, with a growing use of renewable energies and technologies that reduce the increase in emissions, especially regarding the burning of fossil fuel. The second one refers to the preservation of rain forests, reforestation, and the combat to deforestation.

11. As it is recognized in the Convention, developed countries are responsible, historically and currently, for present concentrations of greenhouse gases in the atmosphere. The current concentration of greenhouse gases in the atmosphere results mainly from the cumulative effect of emissions generated by industrial activities in developed countries in the last 150 years. For this reason, the Convention highlights the principle of common but differentiated responsibilities between countries, and the obligation of industrialized countries in taking the lead as to the adoption of measures under the Convention on Climate Change.

12. Developing countries, on their turn, committed themselves under the Convention, among other things, to formulate and implement national programs containing measures to mitigate climate change. This Commitment, also shared by developed countries, is presented in general terms, and is not related to any target for the reduction of greenhouse gas emissions. Brazil has asserted on that account that the elaboration of the national program will be carried out after the conclusion of the national greenhouse gas inventory (another obligation of all parties), when it will be possible to have a clear picture of Brazilian emissions. The Brazilian national inventory is being prepared by the Ministry of Science and Technology, relying on external resources approved by GEF (Global Environment Facility).

13. The Convention, however, is authoritative when it states in article 4.7 that the extent to which developing countries will implement their commitments will depend on the effective implementation by developed countries of their commitments with regard to transfer of financial resources and technology and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of developing countries. Besides that, the Convention recognizes that per capita emissions in developing countries are still relatively low and that the portion of global emissions originating in such countries should still grow in order to meet their economic and social needs.

14. Since the beginning of the pilot phase, insistent pressure has been exerted upon developing countries so that they endorse the reinterpretation of the concept of joint implementation within the Convention. The political complexity of this question tends to sharpen in view of the interest this subject arouses among sectors which could be potential beneficiaries of resources from mechanisms of joint implementation in developing countries.

15. Also in Brazil, some public enterprises as well as the private sector (especially in the forestry area) start to experience a systematic harassment by external interests that suggest the possibility of providing resources for the execution of joint implementation projects.

16. This question repeats itself also in the Western hemisphere, where the United States have been forcing the general acceptance of the concept of joint implementation within the activities under the implementation of the Miami Action Plan.

17. The previous considerations emphasize the necessity of defining the parameters of actions to be taken by the Brazilian Government concerning the subject in global scope and within the Convention.

18. Such a definition shall take into account, among other things, the following aspects:

a) the concept of joint implementation was originally conceived as a cooperation modality among developed countries. However, there is no information of projects already carried out only among such countries;

b) given the incipient nature of the pilot phase, there is little information available on the impact and scope of projects implemented jointly in developing countries;

c) joint implementation may include an element of iniquity in addressing climate change as it transfers to developing countries the responsibility to adopt measures which, in practice, would authorize the increase in developed countries emissions;

d) joint implementation may imply the immobilization for a long period of the environmental assets in developing countries, especially of their forestry areas;

e) the statement that the adoption of measures to reduce emissions and enhance greenhouse gas sinks would be more efficient and cost effective in developing countries is not necessarily true and lacks scientific basis;

f) even if the above-mentioned statement were true, cooperation for the adoption of adequate measures by developing countries would not need to be carried out necessarily under the joint implementation modality;

g) developed countries will certainly continue pressing in order for the activities implemented jointly to benefit them with a "regime of credits" that partially exempts them of their obligations within the Convention;

h) there is the obvious risk that joint implementation replace in the Convention the commitment by developed countries to assist developing countries with financial resources and proper technologies;

i) the great majority of non-governmental organizations related to the environmental area is contrary to joint implementation;

j) in Brazil, the sectors potentially more interested in exploring the possibility of receiving external resources from joint implementation projects would be the industrial reforestation and the sugar cane agro-industry sectors. It is not possible to predict, though, the importance and the volume of resources that could be made available by means of joint implementation projects;

k) at a first stage, Brazil would be interested in the execution of projects aiming at energy conservation, particularly in the oil sector. But there is no indication that developed countries intended to allot all the required resources to meet the necessities of the Brazilian case;

l) as the energy matrix in Brazil is already essentially clean (renewable and non-pollutant energy sources), external interest in joint implementation projects would tend to concentrate on projects regarding the protection of sinks (rain forests).

19. In view of the considerations above, the following guidelines are suggested:

i) keeping under the Convention context our opposition to activities implemented jointly between developed and developing countries that may generate credits by means of which developed countries may compensate the non-fulfillment of their targets under the Convention as to the reduction of the current level of greenhouse gas emissions in their territories;

ii) keeping a consentaneous attitude in relation to initiatives deriving from the Miami Action Plan.