Market mechanism

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Motoharu Yamazaki UNFCCC Secretariat http//ji.unfccc.intmyamazaki_at_unfccc.int Joint Implementation - An overview and recent development - Moscow Carbon Market Forum 2008 Moscow, Russian Federation, 28-29 April 2008
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Joint Implementation Basic principles

• Market mechanism
• Lowest marginal cost of abatement
• Additionality to any emission reductions that
  would occur in the absence of the project
• Bottom-up approach, re-use and broad application
  principles for standards
• International supervisory and standard setting
  bodies
• Two tracks Track 1 Track 2
• Track 2 process overseen by the body known as the
  Joint Implementation Supervisory Committee (JISC)

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Joint Implementation JI Track 1/Track 2 (1)

• Participation requirements
• Designated focal point
• National guidelines and procedures

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Joint Implementation JI Track 1/Track 2 (2)
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Joint Implementation JI Supervisory Committee
Members/alternates
Members Alternate members
Annex I (EIT) Annex I (EIT)
Mr. Oleg Pluzhnikov Ms. Agnieszka Galan
Ms. Daniela Stoycheva Mr. Georgiy Geletukha
Mr. Vlad Trusca Mr. Matej Gasperic
Annex I (Non-EIT) Annex I (Non-EIT)
Mr. Olle Björk Mr. Franzjosef Schafhausen
Mr. Maurits Blanson Henkemans Mr. Hiroki Kudo
Mr. Georg Børsting Mr. Benoît Leguet
Non-Annex I Non-Annex I
Mr. Carlos Fuller Mr. Javier Andrés Hubenthal
Ms. Fatou Gaye Mr. Vincent Kasulu Seya Makonga
Mr. Muhammed Quamrul Chowdhury Mr. Maosheng Duan
Non-Annex I (AOSIS) Non-Annex I (AOSIS)
Mr. Derrick Oderson Ms. Ngedikes Olai Uludong-Polloi
Basic role Operationalization and supervision of
JI Track 2 procedure
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Joint Implementation Mandates of the JISC
Legal basis Marrakesh Accords (Decision
9/CMP.1 ) Montreal decision (Decision
10/CMP.1 ) Nairobi decisions (Decisions
2/CMP.2 3/CMP.2 ) Bali decision (Decision
_/CMP.3)

• Mandates CDM experience
• Rules of procedure
• Accreditation of independent entities
• Criteria for baseline setting and monitoring
• Provisions for small-scale projects
• JI project design document (PDD) form(s)
• Reviews
• Provisions for fees
• Management plan
• Reporting to the CMP

Similarities

• Differences
• No approval of methodologies
• No project registration
• No ERU issuance by the JISC
• No limitation of LULUCF projects to afforestation
  and reforestation
• No restriction on CPR regarding ERUs issued under
  JI Track 2

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Joint Implementation Status of work of the JISC
2006 operationalization of JI Track 2 procedure
Launch ofJI Track 2 procedureon26 October 2006
Since 2007 operation/supervision of JI Track 2
procedure
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Joint Implementation JI Track 2 project cycle
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Joint Implementation Baseline setting / monitoring

• Appendix B to JI guidelines (adopted by CMP)
• Guidance on baseline setting and monitoring
  (adopted by JISC)
• Baseline on project-specific basis and/or using
  multi-project emission factor
• Project participants allowed, but not obliged, to
  use approved CDM baseline and monitoring
  methodologies
• Additionality various approaches possible
• Provisions for small-scale projects (adopted by
  JISC)
• JI SSC definitions like for CDM SSC project
  activities (non-A/R) revised by CMP 2
• Main difference to CDM approach No limits on
  bundling

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Joint Implementation Stakeholders comments (status)

• 133 PDDs published for stakeholders comments
• (4 open for comments)
• Host Parties
• Bulgaria (10 PDDs)
• Estonia (4)
• Germany (2)
• Hungary (2)
• Latvia (1)
• Lithuania (7)
• Technologies
• Renewable energy (biomass, wind, hydro)
• Methane avoidance (gas distribution, landfills,
  coal mine)

• Poland (7)
• Romania (2)
• Russian Federation (75)
• Slovakia (1)
• Ukraine (21)
• Czech Rep. (1)

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Joint Implementation Participation requirements (status)
Designated Focal Point National guidelines and procedures

Japan ? ?
Liechtenstein ? ?
Lithuania ? ?
Luxembourg ?
Netherlands ? ?
New Zealand ? ?
Poland ?
Portugal ?
Romania ? ?
Russian Federation ? ?
Slovenia ?
Spain ? ?
Sweden ? ?
Switzerland ? ?
Ukraine ? ?
UK ? ?
Designated Focal Point National guidelines and procedures

Austria ? ?
Belarus ? ?
Belgium ? ?
Bulgaria ? ?
Canada ?
Croatia ?
Czech Republic ? ?
Denmark ? ?
Estonia ?
European Community ?
Finland ? ?
France ?
Germany ? ?
Hungary ? ?
Ireland ? ?
Italy ? ?
The CMP, by its decision 10/CMP.2, adopted an
amendment to Annex B to the Kyoto Protocol,
adding Belarus to it.
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Joint Implementation Accredited independent entities (1)

• Montreal decision
• Designated operational entities (DOEs) under the
  CDM may act provisionally as accredited
  independent entities (AIEs) under JI
• Determinations/actions valid only after
  accreditation
• Accreditation status
• 15 applications (13 DOEs) to date, of which
• 14 desk reviews conducted
• 13 on-site assessments conducted
• 3 indicative letters issued
• No witnessing assessment started yet

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Joint Implementation Accredited independent entities (2)

• Application as of 28 April 2008

Ref No. Entity name Sectoral scopes applied
0001 Det Norske Veritas Certification AS (DNV) 1-15 (all scopes)
0002 Japan Quality Assurance Organization (JQA) 1-15 (all scopes)
0003 Deloitte Tohmatsu Evaluation and Certification Organization Co., Ltd (TECO) 1-10, 12-13, 15
0004 Lloyds Register Quality Assurance Ltd. (LRQA) 1-13
0005 JACO CDM., Ltd. 1-15 (all scopes)
0006 Japan Consulting Institute (JCI) 1-5, 8-11, 13
0007 Bureau Veritas Certification Holding SAS 1-15 (all scopes)
0008 TÜV SÜD Industrie Service GmbH 1-15 (all scopes)
0009 Spanish Association for Standardisation and Certification (AENOR) 1-15 (all scopes)
0010 SGS United Kingdom Limited 1-15 (all scopes)
0011 TÜV NORD CERT GmbH 1-15 (all scopes)
0012 TÜV Rheinland Japan Ltd. 1-15 (all scopes)
0013 SQS, Swiss Association for Quality and Management Systems 1-15 (all scopes)
0014 KPMG Sustainability B.V. (KPMG) 1-4, 13
0015 Germanischer Lloyd Certification GmbH 1-3, 7, 10, 13
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Joint Implementation Determinations (status)
Determinations regarding PDDs First
determination deemed final on 26 March
2007(Switch from wet-to-dry process at Podilsky
Cement) Host Party Ukraine Emission
reductions 2008-2012 3,000,000 t CO2 equ
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Joint Implementation UNFCCC JI website
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Reporting and review Overview 2006-2008
Reporting (by Parties)
Review Reports (by ERTs)

• Initial report deadline 1 Jan 07
• 37 reports received by 1 Mar 08
• Most of them received in Dec 06
• Late submissions
• Iceland (11 Jan 07), the Russian Federation (20
  Feb 07), Canada (15 Mar 07), Romania (18 May 07),
  Bulgaria (25 Jul 07)
• Monaco 7 May 07 (ratification 27 Feb 06, entry
  into force 28 May 06)
• New KP Parties
• Croatia (rat. 30 May 07, e.i.f. 28 Aug 07),
  Australia (rat. 3 Dec 07, e.i.f. 2 Mar 08)
• Annual report deadline 15 Apr 08
• Periodic reporting (NC4) deadline 1 Jan 06
• Pending submissions by Luxemburg

• Initial review
• 37 review reports in 2007-2008 (decision
  26/CMP.1 and 22/CMP.1)
• 32 reports published, 4 under preparation, 1
  review pending Belarus
• 2 new initial reviews Australia, Croatia
• 37 4 Review Reports of the 2006 Inventory
  submission under the Convention (decisions
  7/CP.11)
• 38 Annual Review Reports to be prepared by 15 Apr
  08 (Croatia not included)
• Periodic review (NC4) and RDP review
• 37 In-depth Review Reports in 20072009
• 16 IDRs published, 10 reviews planned for May 2008

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Reporting and review Establishing eligibility

• Eligibility to be established (decision 11/CMP.1)
  
• No later than 16 months have elapsed since the
  submission of the initial report unless the
  Enforcement Branch of the Compliance Committee
  finds that the Party does not meet eligibility
  requirements
• Early eligibility not applied
• Status 25 Parties are eligible as of 28 April
  2008, another 4 parties will become eligible as
  of 29 April 2008
• Ukraine 29 April 2008 (expected)
• Russian Federation 20 June 2008 (expected)
• Eligibility status released from the CAD to the
  ITL and eligible Parties could perform
  transactions, e.g. on emission trading

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Reporting and review Maintaining eligibility

• Decisions 11/CMP.1 and 15/CMP.1
• Party continues to meet the eligibility
  requirements unless the Enforcement Branch of the
  Compliance Committee decides that the Party does
  not meet eligibility requirements
• Party may start annual reporting from the year
  following the submission of the initial report,
  on a voluntary basis
• 2008 inventory submission for Kyoto Parties is
  already the KP annual submission for Parties to
  maintain eligibility

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COP13/CMP3 Bali Roadmap

• A two year negotiating process for a broad and
  robust response to climate change (deadline
  2009).
• Components
• A new negotiation process under Convention
• Reducing emissions from deforestation
• Technology transfer
• Kyoto track time table for the AWG, adaptation
  fund and the review of the Protocol

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COP13/CMP3 Bali Action Plan

• Enhance the implementation of the Convention
  (along with Kyoto negotiations)
• An Ad Hoc Working Group on Long-Term Cooperative
  Action (AWG-LCA) to address
• Nationally appropriate mitigation commitments or
  actions by developed countries and mitigation
  actions by developing countries
• Actions to adapt to climate change and promote
  climate-resilient development
• Finance and technology cooperation to support
  action.

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Bangkok Climate Change Talks AWG-LCA 1

• Agreed on work programme 2008
• Organization of workshops to deepen understanding
  and clarify elements in Bali Action Plan
• Adaptation
• Financial flow
• Technology transfer
• Deforestation / forest degradation
• Sectoral approaches, sector specific actions
• Risk management and risk reduction strategies
• RD of innovative technology
• Shared vision of long-term cooperative action

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Bangkok Climate Change Talks AWG 5

• Emission trading, project-based mechanisms and
  LULUCF should continue to be available after 2012
• Consider
• Improvements to emission trading and
  project-based mechanisms
• Treatment of LULUCF in 2nd commitment period
• Approaches targeting sectoral emissions
• Broadening of coverage of GHGs, sectors and
  source category
• Approaches on emissions from aviation and marine
  bunker fuels
• Implications for carbon market