swedish international development agency s ession 6 united nations environment program division of...

Swedish International Development Agency

SESSION 6

United Nations Environment ProgramDivision of Technology Industry and Economy

JIJoint Implementation

ACME Applying CLEANER PRODUCTION to MULTILATERAL ENVIRONMENTAL AGREEMENTS

OUTLINEObjectives 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

OVERVIEWAbout 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)


OVERVIEWIntroduction 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)

JICDM

Annex 1 countriesEU – 25CanadaJapan

Other OECD

Emission Reduction Units (ERUs)

Certified Emission Reduction(CERs)

Central and Eastern Europe

Developing Countries


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.

OVERVIEWJoint Implementation (JI)


Track 1 (full eligibility) Track 2 (partial eligibility)

a. Party to the Kyoto Protocol.

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.

a. Party to the Kyoto Protocol.

b. Assigned amount calculated.

d. National registry in place for tracking assigned amount.

TWO TRACKSEligibility requirements


TWO TRACKSTrack 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…

PROJECT DEVELOPER

HOST COUNTRYNATIONAL or

INTERNATIONAL ADMINISTRATION

INDEPENDENT ENTITY (IE)

JI SUPERVISORY COMMITTEE (SC)

Project Design PhaseStep 1:

JI project idea,

definition

Step 2: Preparation of Project Idea Note (PIN)

Pre-screening of eligibility

Pre-screening of eligibility of the

proposed project

Step 3: Opinion on the PIN

Possible review PDD 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 4-5: Preparation

of PDDUndertake EIA

Positive

Negative

Step 9: Project confirmation by SC

Registration of the project by admin

Registration of the project with host

country

TWO TRACKSTrack 2 step-by-step (1)

PROJECT DEVELOPER

HOST COUNTRYNATIONAL or

INTERNATIONAL ADMINISTRATION

INDEPENDENT ENTITY (IE)

JI SUPERVISORY COMMITTEE (SC)

Project Operation Phase

TWO TRACKSTrack 2 step-by-step (2)

Step 1-2: Monitoring of pro-ject performance

and submission of monitoring

results/report to IE

Step 3: Verification by IE

IE submits verification

report to SC

Step 4: Possible review

by SC

ERU transfer recorded in the national registry

Verified ERUs recorded in host

government’s national registry

Step 5: SC confirms

emission reduction verification by IE

Issue

ERUs


TRACK 2Project Design Document (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 reductionsF. Environmental impactsG. Stakeholders’ comments-Annex 1: Contact information on participants in the projectAnnex 2: Information regarding Public FundingAnnex 2: Baseline informationAnnex 3: Monitoring plan

Standardized format for PDD

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.

CDMregistry

International transaction logBase

checks

European Uniontransaction log

Supple-mentarychecks

Nationalregistry

Nationalregistry

Nationalregistry

Nationalregistry

Other supplementarytransaction logs

ITL (International transaction log) connects all national registries. It allows transfer of track 2 ERUs without considering commitment period reserve.

TRANSFER OF ERUERU Transfer


> 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

ORGANISATIONEligible projects and developers for JI

ACME – Session 6 - Joint Implementation – 12 / 25

Eligible developers

Eligible projects

ORGANISATIONBaselines

“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.”

Years

GHG emissions(tCO2eq)

Project implementation

Emissions baseline

Emissions after the project

1. Validation of project design, baseline and monitoring plan

2. Verification / Certification of emission reductions

EMISSIONREDUCTIONS

ACME – Session 6 – Joint Implementation - 13 / 25

ORGANISATIONSmall-scale projects in JI

Simplified methodologies for small-scale CDM projects are also valid for JI.

Definition of small-scale projects (SSP):

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.

Type I

Renewable

Type II

Energy efficiency

Type III

Others

SSC threshold Max output up to 15 MW

Reduction of energy consumption up to15 GWh/yr

Direct emission less than 15,000 t-CO2/yr

Max Emission Reduction

18-13.5 kt-CO2/yr 12-9 kt-CO2/yr 109 kt-CO2/yr


STATISTICSOverview of JI activities

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.

Statistics on Mars 2006 from Carbon Point

# Projects/ transactions

Total volume until 2012 (MtCO2e)

Projects (total) 515 268

Projects (PDD) 189 140

Transactions 82 63,7


STATISTICSJI pipeline


0

10

20

30

40

50

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80

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UK

Num

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of pro

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Projects in country

PDDs in country

STATISTICSJI host countries (1)


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Ger

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O2e

Volume in country

PDDs in country

STATISTICSJI host countries (2)


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Num

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pro

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Number of J I projects

Number of J I PDDs

Source: Point Carbon's Carbon Project Manager

STATISTICSJI projects by type


STATISTICSJI vs CDM project types PDD

JI projects

CDM projects So

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arbo

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MtC

O2eVolume

Number ofdeals

STATISTICSInvestor countries

Major ERU-buyers > 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


CONCLUSIONImportance 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.


CONCLUSIONPotential 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.


Cleaner Production methodologies are applicable to all eligible projects mentioned for JI.

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).

CleanerProductionActivities

JointImplementation

CONCLUSIONCP and JI: the link


CONCLUSIONEnd of session 6

Thank you for your attention…Any questions?


swedish international development agency s ession 6 united nations environment program division of...

Documents

ji projects eligible

organisation of ji projects

potential of ji projects

purpose of ji

countries acme session

greenhouse gas emissions

financing emission reduction

countries eu