JI Projects

The ways in which a JI project can be conducted are largely dependent on whether the potential host country fulfils specific criteria, namely:

a) Ratification of the Kyoto Protocol

b) Calculation of the number of Assigned Amount Units (AAUs) it receives

c) Establishment of a national scheme to estimate its greenhouse gas emissions and carbon stored in sinks

d) Establishment of a national emissions registry

e) Timely annual submission of its emissions inventory

f) Submission of additional information on its AAUs

To host a JI project, industrialised countries must meet at least criteria a, b and d. If a host country meets all of the above criteria, it may verify the emission reductions and carbon storage and then issue the respective JI-generated ERUs on its own. The requirements which apply to JI projects and the necessary project cycle are largely left to the host country to determine. This is known as JI Track 1, which is likely to become the norm. EU Member States in particular are required to meet these criteria because from 2008, they are a prerequisite in making the EU Emissions Trading Scheme work.

If a host country only fulfils criteria a, b and d, an international procedure applies in respect of ERUs. This is known as JI Track 2. Structuring and monitoring of Track 2 is the responsibility of the JI Supervisory Committee (JISC). States who meet the requirements for Track 1 have the option to register their projects under the JI Track 2 process.

Stages of project implementation under Track 2 more or less match the general project cycle.

Project developers submit their PDDs to a JISC-accredited Independent Entity (IE). The IE conducts its preliminary assessment and has the PDD published to give the general public, and especially those affected by the project, an opportunity to raise their objections or make comment. The IE collects and evaluates the public input; if the evaluation is positive, the IE publishes its decision together with a supporting justification.

Based on the IE report, the respective designated focal points (DFPs) check whether the applicable national requirements for JI projects have been met. If the result is positive, the projects are approved. According to JISC stipulations, however, a letter of approval from an investor country does not necessarily have to be submitted at this stage. A letter of approval from an investor country only has to be presented later when ERUs are to be issued.

The IE forwards the full set of documentation to the JISC. Projects are automatically deemed approved 45 days after the PDD is submitted unless a party involved in the project or at least three members of the JISC request a review by the JISC. If a review is requested, the JISC decides at its next meeting whether to perform the review or allow the project through. If the JISC determines as the outcome of a review that a project does not comply with JI rules, it may require changes to the project or turn down the project in its entirety.

Once a JI project is approved, the project developers must produce ongoing documentation of the project status over the course of the project cycle in line with the monitoring plan. An IE determines the quantity of emission reductions achieved at the end of a specific period, announces it to the public and forwards its report to the JISC. The JISC can again conduct a review of the project at this point; otherwise (or if a review finds in favour of the project) it instructs the DFPs of the host and investor countries to transfer the appropriate number of ERUs. A JI project can only generate ERUs from 2008 onwards, i.e. from the start of the first Kyoto Protocol commitment period.

The UNFCCC JI website ( http://ji.unfccc.int) provides all necessary documentation and other information such as the criteria for baseline setting and monitoring under JI Track 2, a list of accredited IEs and a list of the DFPs established so far.

States which meet the requirements for Track 1 may alternatively choose Track 2, for example to save the effort and expense of developing their own project approval procedure. States applying Track 1 may also use selected elements of Track 2: Many host countries in Track 1, for example, require that projects be evaluated by a JISC-accredited IE. Alongside reliability considerations, this may be a precautionary measure for the event that the requirements for Track 1 no longer apply once the project gets underway and it then has to be implemented under Track 2. Experience has shown that CDM designated operational entities (DOEs) are usually selected to be the independent entities for JI Track 1 (see link to CDM).

Simplified procedure for small-scale projects

The transaction costs involved in JI (for example IE fees) are largely unrelated to the size of project and are therefore less of a burden for large projects than for small ones. To promote small-scale JI projects, the JISC has adopted a simplified procedure:

• Simplified requirements for the PDD
• The possibility of bundling multiple project activities to form a single project
• Small-scale projects are exempt from payment of a fee to JISC on submission of the PDD

The simplified procedure applies for the following JI project types:

• Renewable energy projects with a capacity of up to 15 MW.
• Energy efficiency projects with energy savings (on either the supplier or the user side) of up to 60 gigawatt hours per year.
• Other projects which result in annual emission reductions of no more than 60,000 tonnes CO2e.

For bundled projects, these thresholds only apply for individual activities in the bundle. They may be exceeded by the bundle as a whole.

JI in Germany

JI was originally conceived as a way of mobilising the potential for emission reductions in transition states of Central and Eastern Europe. Unlike most other western industrialised countries, however, Germany allows JI projects to be conducted on its own territory. This is provided for in the German Project-Based Mechanisms Act (ProMechG); the country’s designated focal point (DFP) is the German Emissions Trading Authority (DEHSt).

Two additional points must be taken into account regarding domestic JI projects. The first is the problem of double counting. If a project is implemented at a facility that is covered by the EU Emissions Trading Scheme, two things will happen. First, emission reduction certificates are issued to the project developer. Second, the facility operator needs fewer EU allowances. That is, unless further action is taken, the emission reductions are counted twice. Under ProMechG, these emission reductions count as part of the baseline and are not credited with ERUs.

The second point is that projects are not allowed to receive double grant funding. Where a project receives public funding, the grant-funded portion of emission reductions likewise counts as part of the baseline. Feed-in tariffs for renewables-generated electricity and subsidies for combined heat and power plants are treated as being equivalent to public funding.

Details of the legal basis for JI.