A project developer s view on Joint Implementation workshop

A project developer’s view on Joint Implementation workshop UNFCCC March 10 th 2006 Adriaan Korthuis a. korthuis@climatefocus. com 1

The project developer’s wish list • Clear and common rules and procedures • Simplicity • Clarity as soon as possible 2

What are we talking about? JI potential • Early mover projects in Central and Eastern Europe – Bulgaria and Romania are dominant – Renewable energy, energy efficiency, landfill gas, CMM • New projects in Russia and Ukraine – Only a few new projects in Central Europe due to EU emissions trading and double counting; – RU/UA: Energy efficiency, landfill, CMM, renewables – Central Europe: landfill, small energy efficiency, renewable energy under JI reserve in national allocation plans These are distinctive groups with distinctive needs 3

Early movers • Considerable amount of projects (99 according to Risø) • Majority of projects is in EU countries or countries that will be member states at the time of delivery of the emission reductions. Expected to comply to participation criteria track 1. Buyers are exclusively governments. • Most projects have undergone (pre-)validation and have host country approval. • Advice: rely on track 1 for these projects. Spend time and energy on the future and not on digesting the past. 4

New projects: clear and common rules • New projects will mainly be in Russia and Ukraine, where procedures have still to come in place • Harmonise track 1 and track 2 • Provide clear template • Avoid redefining the rules frequently 5

Simplicity is needed while maintaining environmental integrity • Tension between International Emissions Trading (excess AAUs) and Joint Implementation • Joint Implementation has the advantage of addressing real and measurable emission reductions • If JI becomes too complicated however, the market (governments!) will move to International Emissions Trading To be realised by • Additionality defined again as ‘emissions below the baseline’ • Benchmark and sectoral baselines 6

Additionality in baselines 1. Methane, industrial gasses, N 2 O – If no legal requirements to destroy the gas, – If no revenues other than carbon income the project is additional 2. Grid connected renewables/energy efficiency – Renewable energy projects should be additional by definition – Develop grid baselines based on forecasts until 2012 – Key factors: e. g. energy efficiency and fuel switch developments projects performing below the baseline are additional 7

Baseline determination • Grid connected power production: – recognise carbon emission factors of the grid that have been validated in earlier projects – host countries provide national carbon emission factor • combined margin • dispatch analysis • scenario analysis • Host countries decide on emission factors: – High emission factor = more projects and more investments – Low emission factor = less projects and keeping AAUs in national registry. 8

Guarantees for environmental integrity • Capped environment: Parties carry risk of overestimation and overallocation of emission reductions • Conservatism must be a leading principle when establishing baselines • Stakeholder comments during determination 10

Recommendations to JISC • Focus on new projects • Harmonise tracks 1 and 2 – recommend Parties to use the baselines for JI Track 1 as well • Invite countries to submit sectoral baseline proposals • Apply additionality as ‘emissions below the baseline’ • Prompt start: allow for use of CDM methodologies to enable ‘prompt start’ 11

Adriaan Korthuis Climate Focus www. climatefocus. com e-mail: a. korthuis@climatefocus. com 12