Zsolt Lengyel SenterNovem Carboncredits.nl Moscow , 28 April 200 8

1. Relvant lessons for GIS learnt JI Track 1 and Track 2 in various Central & Eastern European countries Zsolt Lengyel SenterNovem Carboncredits.nl Moscow, 28April 2008

2. Outline of the presentation • Carboncredits.nl – SenterNovem introduction • JI Track 1 & 2, GIS – the context of eligibility • JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS? • A pragmatic approach from the Dutch perspective • Key lessons and challenges from Track 1 for GIS • Crowding out effects spotted... • Competition and co-operation between GIS/JI • Some tentative recommendations... Russian Carbon Market Forum

3. Carboncredits.nl – SenterNovem introduction • An Agency of The Netherlands’ Ministry of Economic Affaires • Focus on Energy, Sustainability and Innovation with 1300 employees at four offices; an annual budget of 3-5 billion EUR • Carboncredits.nl was established within Senter Internationaal in 2000 to carry out the Joint Implementation purchasing through public procurement ( the ERUPT programme) • The Worldbank Prototype Carbon Fund and Carboncredits.nl were the first operational entities in the carbon market • Has signed and manages over 20 contracts with emission reductions around 17 million tonnes of CO2e Russian Carbon Market Forum

4. 2.JI Track 1 & 2, GIS – the context of eligibility Requirement JI track 1 and GIS (IET) JI T 2. • Party to Kyoto Protocol x x • Assigned amount issued x x • National system (Art. 5.1) x • National registry in place x x • Most recent inventory submitted x • AA information submitted x A Party involved in an Article 6 project shall inform the secretariat of: (a) Its designated focal point for approving projects pursuant to Article 6, paragraph 1(a); (b) Its national guidelines and procedures for approving Article 6 projects, including the consideration of stakeholders' comments, as well as monitoring and verification. Russian Carbon Market Forum

5. 3.JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS? Russian Carbon Market Forum

6. 4. A pragmatic approach from the Dutch perspective We had a sstrategic focus for investigating and facilitating the Track 1 route in countries where: • the ERU, AAU ( associated with pre-2008 early action) volumes were high, • where the projects that were at high JISC Track 2 risk • where there was preparedness and move towards eligibility for Track 1 JI Russian Carbon Market Forum

7. Track 2 has been the default option for Carboncredits.nl, however some ERPAs and LoAs explicitly included the optional Track 1 route (the early crediting also required the AAU transfer options) • Technical assistance cooperation with Romania (2006-2008), the first CEE country in the world, to realise the benefits and face the challenges of Track 1 on its route towards GIS 5.A pragmatic approach from the Dutch perspective (cont.) Russian Carbon Market Forum

8. 6. Key lessons and challenges from Track 1 for GIS • Reducing transaction costs and risks whilst maintaining credibility and ensuring project quality to meet the environmental/greening criteria of the buyers • Streamlining the approval procedures whilst establishing a preference for GIS over Track 1/Track 2 • Enabling projects to go through GIS/Track 1 that otherwise will have difficulties (administrative, financial) getting approval via Track 2 ( JISC versus domestic criteria) Russian Carbon Market Forum

9. 7. Key lessons and challenges from Track 1 for GIS (cont.) Specific eligibility considerations: sectoral preferences (district heating, industrial technology housing; small scale projects; early mover projects; programmatic approach; project bundling) Accreditation of domestic and international entities for determination (e.g. AIEs have automatic accreditation for Track 1 whilst domestic entity requirements needs to be established; GIS fully domestic) Standardised baselines (e.g. exemplary projects and their baselines/cefs are selected, official grid factors established) Russian Carbon Market Forum

10. 8. Crowding out effects spotted... • Buyers’side: funds set-aside for Kyoto Protocol mechanisms target GIS  less for JI/CDM • Host’s side regulatory attention towards GIS, whilst JI systems are not fully operational • Project level alternative routes creating even more confusion • Co-existence of GIS/JI is a fact the question is how to improve the situation in both areas? Russian Carbon Market Forum

11. 9. Competition and co-operation between GIS/JI • Project differentation for GIS/JI  have a clear picture what project type (technical) is suitable for which scheme (sectors, baseline and monitoring methodologies) • Regulatory preferences and clarity attention to both systems at the same time (may allow project suppliers to chose) • Governance  do not distort; make it easy (or difficult) • Do not spread your resources too thinly! Russian Carbon Market Forum

12. 10. Some tentative recommendations... • One step at a time?  get your Joint Implementation system ready before establishing a GIS • Identify the key GIS implementation challenges a credible fund for disbursing and managing the GIS revenues is essential • Learning by doing the biggest lesson of JI is that one should start acting....and constantly adjust/correct its system • Watch out for lessons/mistakes of Hungary/Latvia//Romania/Ukraine and those most active in the JI/GIS field Russian Carbon Market Forum

13. Contact details for SenterNovem (Carboncredits.nl): Visiting address: Postal address: Catharijnesingel 59 Postbus 8242 3511 GG Utrecht 3503 RE Utrecht Netherlands Netherlands Tel: +31 30 214 7829 Fax: +31 30 231 6491 E-mail: z.lengyel@senternovem.nl Homepage: www.carboncredits.nl www.senternovem.org / www.senternovem.nl Russian Carbon Market Forum