ACME
Applying CLEANER PRODUCTION to MULTILATERAL ENVIRONMENTAL AGREEMENTS
JI
Joint Implementation
SESSION 6
United Nations Environment Program
Division of Technology Industry and Economy
Swedish International Development Agency
OUTLINE
Objectives of this session
1/ Overview of the Joint Implementation (JI)
> What are the objectives and purpose of JI ?
2/ Two tracks for JI projects
> What are the two separate approaches for JI projects ?
3/ Organisation of JI projects and eligibility requirements
> What are the different steps of a JI project ?
4/ Statistics
> Where are we now with the JI ?
5/ Conclusion
> What is the potential of JI projects ?
ACME – Session 6 - Joint Implementation - 2 / 25
OVERVIEW
About the Kyoto Protocol
Signed in 1997; in force since 16 February 2005.
Ratified by more than 130 countries
> Major non participants: USA and Australia.
Commits Annex 1 countries to reducing greenhouse gas emissions.
> GHG emissions may be reduced by ~ 5% below 1990 levels in 2008-2012;
> Individual, quantified emission targets for each industrialized country;
> 6 greenhouse gas covered: CO2, CH4, N2O, HFC, PFC, SF6.
3 flexibility mechanisms for financing emission reduction abroad.
> Clean Development Mechanism (CDM)
> Joint Implementation (JI)
> International Emissions Trading (ET)
ACME – Session 6 - Joint Implementation - 3 / 25
OVERVIEW
Introduction to the carbon market
2 main commodities traded in the carbon market
> Emission allowance
> Project-based emissions reductions
4 different markets
> Kyoto Protocol
> EU Emissions Trading Scheme
> Canada Greenhouse Gas Offset System
> Japan (voluntary trading system)
Developing
Countries
CDM
Annex 1 countries
EU – 25
Canada
Japan
Other OECD
Certified Emission Reduction
(CERs)
ACME – Session 6 - Joint Implementation - 4 / 25
JI
Emission Reduction Units
(ERUs)
Central and
Eastern Europe
OVERVIEW
Joint Implementation (JI)
Key concepts of Joint Implementation:
> Climate change mitigation projects implemented between two
Annex B countries.
> Creation, acquisition and transfer of Emission Reduction Units
(ERU).
> JI projects eligible from year 2000, but ERU can only be issued
for a crediting period starting after 2008.
> ERU bankable to a max of 2.5% of Assigned Amount (AAU).
> JI projects can be carried out according to either of two
methodologies: Track 1 and Track 2.
ACME – Session 6 - Joint Implementation - 5 / 25
TWO TRACKS
Eligibility requirements
Track 1 (full eligibility)
Track 2 (partial eligibility)
a. Party to the Kyoto Protocol.
a. Party to the Kyoto Protocol.
b. Assigned amount calculated.
b. Assigned amount calculated.
c. National system in place for
estimating emissions/removals.
d. National registry in place for
tracking assigned amount.
e. Submission of most recent required
emissions inventory.
f. Accurate accounting of assigned
amount and submission of information.
ACME – Session 6 - Joint Implementation - 6 / 25
d. National registry in place for
tracking assigned amount.
TWO TRACKS
Track 1
Key role for host Party
> Have designated focal point for approving projects;
> Have determined national guidelines for:
- Approving projects
- Monitoring
- Verification
> Shall make directly or through secretariat information on
projects publicly available;
> Meet participation requirements.
No international guidelines regarding approving
projects, baseline definition, monitoring, verification…
ACME – Session 6 - Joint Implementation - 7 / 25
TWO TRACKS
Track 2 step-by-step (1)
PROJECT
DEVELOPER
Step 4-5:
Preparation
of PDD
INDEPENDENT
ENTITY (IE)
JI SUPERVISORY
COMMITTEE (SC)
Project Design Phase
Step 1:
JI project
idea,
definition
Step 2:
Preparation of
Project Idea
Note (PIN)
NATIONAL or
INTERNATIONAL
ADMINISTRATION
HOST COUNTRY
Pre-screening
of eligibility
Positive
Undertake EIA
Registration of
the project with
host country
Pre-screening of
eligibility of the
proposed project
Negative
Step 3: Opinion
on the PIN
Possible
review PDD by
admin
Registration of
the project by
admin
Step 6-7:
Determination of
the PDD and other
docs by an IE
Submission of
IE report to SC
Step 8: Possible
review by SC
Step 9: Project
confirmation by SC
TWO TRACKS
Track 2 step-by-step (2)
PROJECT
DEVELOPER
HOST COUNTRY
NATIONAL or
INTERNATIONAL
ADMINISTRATION
INDEPENDENT
ENTITY (IE)
JI SUPERVISORY
COMMITTEE (SC)
Project Operation Phase
Step 1-2:
Monitoring of project performance
and submission of
monitoring
results/report to IE
Step 3:
Verification by IE
IE submits
verification
report to SC
Verified ERUs
recorded in host
government’s
national registry
Issu
e
ERU
s
Step 5:
SC confirms
emission reduction
verification by IE
ERU transfer
recorded in the
national registry
ACME – Session 6 - Joint Implementation - 9 / 25
Step 4:
Possible review
by SC
TRACK 2
Project Design Document (PDD)
Standardized format for PDD
A. General description of the project
> who, what, where and effects
B. Setting of the baseline
> How to describe what will happen without the project activity
> As approved baseline methodology OR as new baseline methodology
C. Duration of the project / Crediting period
> Crediting period
D. Setting of the monitoring plan
> How to measure actual emission reductions (approved OR new)
> Data type, source, completeness, quality, verification
E. Estimation of GHG emission reductions
F. Environmental impacts
G. Stakeholders’ comments
Annex 1: Contact information on participants in the project
Annex 2: Information regarding Public Funding
Annex 2: Baseline information
Annex 3: Monitoring plan
ACME – Session 6 - Joint Implementation - 10 / 25
TRANSFER OF ERU
ERU Transfer
ITL (International transaction log) connects all national registries. It
allows transfer of track 2 ERUs without considering commitment period reserve.
Supplementary
checks
European Union
transaction log
Other supplementary
transaction logs
International transaction log
Base
checks
CDM
registry
National
registry
National
registry
National
registry
National
registry
ITL checks that:
> JI host Party originally issued the units being converted;
> JI host Party meets either track 1 or track 2 eligibility requirements;
> Acquiring Party meets full eligibility requirements for trading / track 1 JI.
ACME – Session 6 - Joint Implementation - 11 / 25
ORGANISATION
Eligible projects and developers for JI
Eligible
projects
Eligible
developers
> Installations based on renewable energy source
> Fuel switch to lower carbon intensive fuels
> Energy efficiency at supply side
> Energy efficiency at demand side
> Combined heat and power (CHP) projects
> Agricultural sector projects (excl. land-use change)
> Transport sector
> Reduction in methane emissions
> Reforestation/afforestation projects
> Government bodies/agencies
> Municipalities
> Foundations
> Financial institutions
> Private sector companies
> NGOs
> Organisations acting as intermediary for any of the above
ACME – Session 6 - Joint Implementation – 12 / 25
ORGANISATION
Baselines
“A project is eligible for CDM if greenhouse gas emissions are reduced
below those that would have occurred in the absence of the JI project.”
GHG emissions
(tCO2eq)
1. Validation of project design,
baseline and monitoring plan
2. Verification / Certification
of emission reductions
Emissions baseline
EMISSION
REDUCTIONS
Emissions after the project
Years
Project implementation
ACME – Session 6 – Joint Implementation - 13 / 25
ORGANISATION
Small-scale projects in JI
Simplified methodologies for small-scale CDM projects are also valid for JI.
Definition of small-scale projects (SSP):
Type I
Renewable
Type II
Energy efficiency
Type III
Others
SSC threshold
Max output up to
15 MW
Reduction of energy Direct emission less
consumption up
than 15,000 t-CO2/yr
to15 GWh/yr
Max Emission
Reduction
18-13.5 kt-CO2/yr
12-9 kt-CO2/yr
109 kt-CO2/yr
Why do we need SSP with simplified modalities and procedures?
> Greatest barriers for low income communities are the high transaction costs;
> Investment and technological barriers;
> Not enough institutional & managerial capacity and/or financial resources;
> Fight against smaller countries exclusion.
ACME – Session 6 - Joint Implementation - 14 / 25
STATISTICS
Overview of JI activities
Statistics on Mars 2006 from Carbon Point
Carbon market in 2005:
> In 2005, global carbon market transactions worth €9,4 billion.
> In 2005, JI projects transactions are estimated of €95 million (1%).
Statistics of JI (as per June 2006):
> 515 projects registered, for 268 MtCO2e emission reduction until 2012.
# Projects/
transactions
Total volume until
2012 (MtCO2e)
Projects (total)
515
268
Projects (PDD)
189
140
Transactions
82
63,7
ACME – Session 6 – Joint Implementation - 15 / 25
STATISTICS
JI pipeline
ACME – Session 6 – Joint Implementation - 16 / 25
0
ACME – Session 6 – Joint Implementation - 17 / 25
UK
Slovenia
Lithuania
Latvia
New Zealand
Belarus
Estonia
Slovakia
Hungary
Czech Rep
Romania
70
Bulgaria
80
Germany
Ukraine
Poland
Russian Fed
Number of projects
STATISTICS
JI host countries (1)
100
90
Projects in country
PDDs in country
60
50
40
30
20
10
STATISTICS
JI host countries (2)
70
60
Volume in country
MtCO2e
50
PDDs in country
40
30
20
ACME – Session 6 – Joint Implementation - 18 / 25
Latvia
Belarus
Lithuania
Slovakia
New Zealand
Estonia
UK
Czech Rep
Hungary
Bulgaria
Germany
Romania
Poland
Russian Fed
0
Ukraine
10
STATISTICS
Number of JI projects
Source: Point Carbon's Carbon Project Manager
ACME – Session 6 – Joint Implementation - 19 / 25
Other
Waste
Renewable
energy
LULUCF
Landfill gas
Number of JI PDDs
Industrial
processes
180
160
140
120
100
80
60
40
20
0
Energy
efficiency
improvement
Fugitive
emissions
Number of projects
JI projects by type
STATISTICS
JI vs CDM project types PDD
CDM projects
ACME – Session 6 – Joint Implementation - 20 / 25
Source: Carbon Point.
JI projects
STATISTICS
40
35
30
25
20
15
10
5
0
Volume
Major ERU-buyers
Canada
Japan
Sweden
Luxembourg
Unknown
Finland
Norway
Austria
World Bank
Denmark
Number of
deals
MtCO2e
40
35
30
25
20
15
10
5
0
Netherlands
# contracts
Investor countries
> Netherlands ERUPT-program / www.senter.nl
> NEFCO (The Nordic Environment Finance Corporation) / www.nefco.org
> Worldbank’s Prototype Carbon Fund / www.prototypecarbonfund.org
> EBRD (The European Bank for Reconstruction and Development) /
www.ebrd.com
ACME – Session 6 – Joint Implementation - 21 / 25
CONCLUSION
Importance of Joint Implementation
Many Annex I countries have established or are planning to establish
acquisition programmes for ERUs and CERs;
EU Emission Trading Scheme and the EU linking directive gave a
new impulses to the market, demand has increased from private sector;
Estimates exist for overall demand for project based credits, but
difficult to split into JI and CDM demand;
Estimated supply 2.1 billion tonnes CER and ERU (88% CDM, 12%
JI) until 2012 - Source: Point Carbon;
European companies and carbon funds most active buyers of CERs.
Governments most active buyers of ERUs.
ACME – Session 6 – Joint Implementation - 22 / 25
CONCLUSION
Potential of JI projects
Early mover projects in Central and Eastern Europe.
> Considerable amount of projects (more than 100 according to UNEP-Risø)
> Majority of projects is in EU countries or countries that will be member states
at the time of delivery of the emission reductions (Bulgaria and Romania are
dominant);
> Buyers are exclusively governments and multilateral;
> Investor countries: Dutch domination;
> Type of projects: renewable energy, energy efficiency, landfill gas, CMM.
New projects are emerging in Russia, Ukraine, and Poland.
> Only a few new projects in Central Europe due to EU emissions trading and
double counting;
> Russia/Ukraine: Energy efficiency, landfill, CMM, renewables
> Central Europe: landfill, small energy efficiency, renewable energy under JI
reserve in national allocation plans.
ACME – Session 6 – Joint Implementation - 23 / 25
CONCLUSION
CP and JI: the link
Cleaner Production methodologies
are applicable to all eligible
projects mentioned for JI.
Cleaner
Production
Activities
Stronger link with renewable
energy, fuel switch, CHP and
supply-side energy efficiency
projects.
CP financing through JI process
(e.g. co-operation between
Bulgarian and Dutch
Governments).
ACME – Session 6 – Joint Implementation - 24 / 25
Joint
Implementation
CONCLUSION
End of session 6
Thank you for your attention…
Any questions?
ACME – Session 6 – Joint Implementation - 25 / 25