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Swedish International Development Agency

A pplying C LEANER PRODUCTION to M ULTILATERAL E NVIRONMENTAL AGREEMENTS. ACME. JI Joint Implementation. S ESSION 6. United Nations Environment Program Division of Technology Industry and Economy. Swedish International Development Agency.

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Swedish International Development Agency

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  1. ApplyingCLEANER PRODUCTION to MULTILATERAL ENVIRONMENTAL AGREEMENTS ACME JI Joint Implementation SESSION6 United Nations Environment ProgramDivision of Technology Industry and Economy Swedish International Development Agency

  2. ACME – Session 6 - Joint Implementation - 2 / 25 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 ?

  3. ACME – Session 6 - Joint Implementation - 3 / 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)

  4. ACME – Session 6 - Joint Implementation - 4 / 25 OVERVIEW Introduction to thecarbon 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) Annex 1 countriesEU – 25CanadaJapanOther OECD CDM JI Developing Countries Central and Eastern Europe Emission Reduction Units (ERUs) Certified Emission Reduction(CERs)

  5. ACME – Session 6 - Joint Implementation - 5 / 25 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.

  6. ACME – Session 6 - Joint Implementation - 6 / 25 TWO TRACKS Eligibility requirements 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.

  7. ACME – Session 6 - Joint Implementation - 7 / 25 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…

  8. TWO TRACKS Track 2 step-by-step (1) NATIONAL or INTERNATIONAL ADMINISTRATION PROJECT DEVELOPER INDEPENDENT ENTITY (IE) JI SUPERVISORY COMMITTEE (SC) HOST COUNTRY Project Design Phase Step 1: JI project idea, definition Pre-screening of eligibility of the proposed project Negative Step 2: Preparation of Project Idea Note (PIN) Pre-screening of eligibility Step 3: Opinion on the PIN Positive Step 6-7: Determination of the PDD and other docs by an IE Step 4-5: Preparation of PDD Possible review PDD by admin Undertake EIA Step 8: Possible review by SC Submission of IE report to SC Registration of the project with host country Registration of the project by admin Step 9: Project confirmation by SC

  9. ACME – Session 6 - Joint Implementation - 9 / 25 TWO TRACKS Track 2 step-by-step (2) NATIONAL or INTERNATIONAL ADMINISTRATION PROJECT DEVELOPER INDEPENDENT ENTITY (IE) JI SUPERVISORY COMMITTEE (SC) HOST COUNTRY Project Operation Phase 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 Verified ERUs recorded in host government’s national registry Step 5: SC confirms emission reduction verification by IE ERU transfer recorded in the national registry Issue ERUs

  10. ACME – Session 6 - Joint Implementation - 10 / 25 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

  11. European Uniontransaction log Other supplementarytransaction logs Supple-mentarychecks International transaction log Basechecks CDMregistry Nationalregistry Nationalregistry Nationalregistry Nationalregistry ACME – Session 6 - Joint Implementation - 11 / 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. 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.

  12. ACME – Session 6 - Joint Implementation – 12 / 25 ORGANISATION Eligible projects and developers for JI Eligible projects > 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 Eligible developers

  13. ACME – Session 6 – Joint Implementation - 13 / 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 EMISSIONREDUCTIONS Emissions after the project Years Project implementation

  14. ACME – Session 6 - Joint Implementation - 14 / 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): • 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.

  15. ACME – Session 6 – Joint Implementation - 15 / 25 STATISTICS Overview of JI activities Statistics on Mars 2006 fromCarbon 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.

  16. ACME – Session 6 – Joint Implementation - 16 / 25 STATISTICS JI pipeline

  17. ACME – Session 6 – Joint Implementation - 17 / 25 STATISTICS JI host countries(1)

  18. ACME – Session 6 – Joint Implementation - 18 / 25 STATISTICS JI host countries(2)

  19. ACME – Session 6 – Joint Implementation - 19 / 25 STATISTICS JI projects by type

  20. ACME – Session 6 – Joint Implementation - 20 / 25 STATISTICS JI vs CDM project types PDD JI projects Source: Carbon Point. CDM projects

  21. ACME – Session 6 – Joint Implementation - 21 / 25 STATISTICS Investor countries

  22. ACME – Session 6 – Joint Implementation - 22 / 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.

  23. ACME – Session 6 – Joint Implementation - 23 / 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.

  24. ACME – Session 6 – Joint Implementation - 24 / 25 CONCLUSION CP and JI: the link 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

  25. ACME – Session 6 – Joint Implementation - 25 / 25 CONCLUSION End of session 6 Thank you for your attention… Any questions?

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