### 6.2 How can sectoral approaches fit into the post-2012 framework?

There is a set of questions about fitting sectoral approaches into the negotiation strategy and the post-2012 framework per se. The starting point is how sectoral approaches can be applied to the targets-and-timetables approach used under the Kyoto Protocol. Sectoral approaches could work together with the targets-and-timetables approach or with a pledge-and-review model. Otherwise, an action-based strategy, which covers sectoral approaches, can be regarded as a way of integrating targets and timetables, as they are agreed, with consistent and comparable policies and measures (Fujiwara and Egenhofer, 2008). Section 3 above introduced bottom-up, developing country commitments with an option of SNLTs (Ward et al., 2008; Schmidt et al., 2006). Transition from sectoral crediting to sectoral trading could act as a stepping-stone on the evolution path towards a flexible mechanism, moving from the current CDM towards a cap-and-trade scheme with binding absolute reductions. They could exist side by side with other tools on different stages of the evolution path. Since the UNFCCC is a framework agreement with a longer time horizon as well as a wider coverage of participating countries, its scope allows a broader range of issues, including mitigation tools, under a single umbrella. Hence, sectoral approaches could have a better chance of developing into part of the post-2012 framework under the UNFCCC than under the Kyoto Protocol. Section 4.1 illustrated the state of play in UN discussions, chiefly under the AWG-LCA track.

As section 5 outlined, there will be a hybrid range of agreements and mechanisms to make sectoral approaches operational. $ ^{52} $ The simplest option is to have only intergovernmental agreements such as a reporting protocol, as an extension of the UNFCCC requirements. Other measurement and reporting protocols could be recorded in a UN registry but remain optional for parties to adopt. The other option is to have both intergovernmental agreements and agreements negotiated between the government and industry in each entity. The former provides the government with guidelines for formulating the latter. Lessons have been learned from the EU’s experience in implementing the EU ETS, especially in formulating national allocation plans along the EU monitoring and reporting guidelines in the first two phases (2005–07 and 2008–12). Moreover, intergovernmental agreements would not only provide for guidelines for domestic legislation and regulations but also set up international mechanisms to reduce the unevenness of distributional impacts or increase access for those with less resources to implement policies and measures, e.g. mechanisms for facilitating access to finance or technology. The EU ETS will create mechanisms for the distribution of allowances to be auctioned by member states: one is to increase the share of allowances of 19 member states (see appendix 2) and another is to count the early efforts of 9 member states in their share of allowances (see appendix 3). This combination would make the implementation of domestic measures more enforceable. Nevertheless, regardless of the variation, any new system would not exempt parties from existing commitments to the UNFCCC, including national communications.

### 7. Concluding remarks

Research shows that sectoral approaches could contribute to the development of a method that could optimally set a cap on GHG emissions and allocate emission allowances, especially (but not exclusively) through benchmarking. Sectoral benchmarking could be built upon improvements in boundary setting and data collection, along with best practices. The importance of this method is common to all three models – industry-led transnational initiatives, bottom-up developing country commitments and sectoral crediting. Yet, views over the costs associated with and capacities for sectoral benchmarking differ from country to country, especially between developed countries.