Guest Article #44

Joint what? Why Joint Implementation matters

Joint Implementation is one of the two Kyoto Protocol's project-based mechanisms. So far, it has been overshadowed by its twin brother the Clean Development Mechanism, and it does not seem to be a top priority on the negotiating agenda. It probably should.

Two tracks for the price of one

Joint Implementation (JI) is the Kyoto protocol's mechanism through which emission reductions achieved by projects in Annex I countries can generate Emission Reduction Units (ERUs) by converting part of their Assigned Amount Units (AAUs). There are actually two tracks for JI. Track 1 is for those countries that have demonstrated they are able to assess the impact of a given project on their greenhouse gas inventory. In such a case, they can set their own rules for converting AAUs into ERUs. All host countries, whether they are eligible to Track 1 or not, can also decide to go through Track 2, in which case the emission reductions generated by a project will be approved by the Joint Implementation Supervisory Committee (JISC).

State of play

Even though the Marrakesh Accords, agreed in late 2001, provided the framework for JI projects, there was no such thing as a “prompt start” for JI. It was not until the entry into force of the Kyoto Protocol, in late 2005, that host countries knew for sure they would receive their AAUs, and that the institutions of JI – namely, the JISC - were set up effectively.

Less than five years down the road, where do we stand? 300 projects are being developed (around 120 under Track 1 and 180 under Track 2), accounting for a potential emission reduction of 400 Mt by 2012. The two reasons that can explain why these figures may not seem impressive are the following: first, the timeframe for developing most of those projects was extremely short due to the aforementioned “late start” of JI; and second, emission reductions can only be generated during the 2008-2012 five-year crediting period – until we have more visibility on the post-2012 framework. Those emissions reductions will take place in many sectors of the economy: energy (renewable energy, energy efficiency, fugitive emissions of methane), waste; manufacturing and chemical industry. JI has thus proven its ability to find cost-efficient ways of reducing emissions in Annex I countries.

A promising mechanism, but more attention needed

Let's get one thing straight: JI really deserves more attention from negotiators, for three strategic and three technical reasons.

From a strategic point of view, first and foremost, JI promotes emission reductions in Annex I countries, which arguably have a historical responsibility and should reduce emissions before non Annex I countries do. Second, if all countries are to take some kind of commitment on their GHG emissions in the future, the “market share” of JI will grow. Looking now at a mechanism that could become the leading project-based mechanism in the future could be worthwhile. Third, JI is a secure mechanism, since it operates under the AAU cap. It thus allows some flexibility, and is thereby an ideal testing ground for improving existing mechanisms such as the CDM. As an example, the JISC has recently adopted guidelines on the use of materiality in the verification process. JI could also be used to experiment with potential new mechanisms such as sectoral crediting.

From a technical point of view, first, the lack of information on costs can in some cases lead to poor policy design, and to high costs. JI enables Annex I countries to identify cost-efficient ways to reduce their emissions, and regulate later on. Second, it is in the countries' long-term interest to host JI projects: JI attracts investment in low-carbon technologies. Once the crediting period of the project is over, the projects keep reducing emissions, leading to a net benefit for the host country. Third, JI ensures there are real emission reductions behind the trading of Kyoto assets, and that it is not just about “trading hot air”. This is particularly true for Track 2, under which projects have to be given the green light by the JISC, and need to abide by the Committee's quality standards.

JI in a post-2012 framework

The future of JI, on the supply and demand side, ultimately depends on the post-2012 negotiations. My personal recommendation to negotiators would be the following: if JI does not hurt, keep it; if it reduces costs and thereby allows for more ambitious targets, promote it; in all cases, make sure we keep up minimum quality requirements for emission reductions.