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La mise en œuvre conjointe : un outil méconnu mais

prometteur

Université de Montréal, 28 avril 2006Colloque organisé par le CEDRIE

Helena Olivas – Directrice, changements climatiques

Philip Raphals –Directeur général

www. centrehelios.org Outline

• Joint Implementation• what it is• how it works

• JI and “hot air”• Canada’s position on JI• Should Canada participate in JI?

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One of the three flexibility mechanisms under art.

6 of Kyoto Protocol

> CDM

> Emission Trading (ET)

> JI

Like CDM, based on projects that reduce GHG

Unlike CDM

> occurs between two Annex I countries, both of which

have reduction obligations

> credits are transferred but not created

• hence more like ET

Joint Implementation

www. centrehelios.orgHow does it work?

JI results in conversion of Assigned Amount Units

(AAUs) to Emission Reduction Units (ERUs)

> ERUs are transferred to foreign and local project

partners

> partners can sell them to any company or government

AAU

RMU

ERU

ERU

for emission reducing projects

for LULUCF projects

www. centrehelios.orgWhat is an AAU? An AAU is a Party’s entitlement to emit a tonne of

CO2e Each year, each Party is issued AAUs equal to its

1990 emissions multiplied by the percentage agreed to (Canada = 94%)

By the end of the compliance period, each Party must have retired AAUs (or equivalent) equal to its actual emissions> CERs (CDM), ERUs (JI) and RRUs (sinks) are

equivalent to AAUs

www. centrehelios.orgRetirement

>=<

Emissions 2008 to 2012

Compliance assessment

Units in retirement account

Units in retirement accounts not transferable

Canada

Party account

Legal entity A

Legal entity B

Retirement a/c

RMU

CER

ERUAAU

www. centrehelios.orgConverting AAUs to ERUs In a JI project:

> host country AAUs are converted to ERUs, • 1 AAU for each tonne of reduction

> ERUs are transferred to local and foreign (Annex I) partner Since host country has lost an AAU, it must

> reduce its emissions by one more tonne (or acquire equivalent credit)

Reduction from JI project integrated into national inventory> no harm to host country

Hence, JI is a zero-sum game> credits are transferred> not created

www. centrehelios.orgERU issuance

ERU

Germany

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

Russia

Party account

Legal entity A

Legal entity B

Retirement a/c

Cancellation a/c

JI project(conversion

of AAUsto ERUs)

Verification by host Party (track 1) or

independent procedure (track 2)

AAUERU

www. centrehelios.orgAdditionality and JI Since no credits are created, failure to

achieve additionality > does not harm the environment

• global emissions the same with or without additionality

> but it does harm the host country (financially)• the host country must still make additional reductions (or

purchase additional credits) to replace the AAUs converted to ERUs

fundamental difference from CDM> CERs are new credits> if project is not additional, global emissions will

increase

www. centrehelios.orgOnce an ERU is created …

ERUs divided per agreement between project partners> can sell them to host country, foreign partner’s

country, or any other entity with an account• companies and other subnational entities have their

own accounts within national account

> Ultimately, they are purchased by a Party and counted towards its reduction obligation (or voluntarily retired)

www. centrehelios.orgTwo tracks

JI has two tracks

> if host country meets Kyoto reporting

and reviewing requirements Track 1 > if not Track 2

• third party verification • approval from Joint Implementation

Supervisory Committee (JISC)

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Host country bears responsibility> Designated focal point approves projects

> National guidelines for:• Approving projects

• Monitoring

• Verification

> make information on projects publicly available

International guidelines regarding information to be made public> to be reviewed by JISC and recommended to

COP/MOP

JI Track 1

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More rigorous than track 1

> Project requirements established by JISC

> needs third-party verification through an

Accredited Independent Entity (AIE)

> more transaction costs

> greater confidence

JI Track 2 – International oversight

www. centrehelios.orgDemystifying “hot air”

“Hot air”: excess AAUs resulting from economic collapse of Countries with Economies in Transition (ex-USSR)> Current emissions far below 1990 levels

(without reduction effort) excess AAUs> Excess AAUs officially recognized

• otherwise, Russia would not have ratified

> But many countries unwilling to buy these AAUs

• Hot air AAUs worthless if no one will buy them

www. centrehelios.orgJI and “hot air” JI projects in Economies in Transition

> if projects not additional, • no harm to host country, since it has excess

AAUs• buying non-additional JI from EIT = buying

hot air

> if projects are additional, ERUs perfectly valid

In EIT countries, JI is more like CDM• not zero-sum• additionality essential

www. centrehelios.orgJI and “hot air”

JI unfairly tainted by “hot air” issue> Parties can decline to purchase “hot air”> It is possible to participate in JI without

buying “hot air”• either refuse to buy ERUs from EIT projects,

or• (better) insist on demonstrated additionality

– Track 2 (3rd party verification) for EIT projects– Green investment schemes (GIS): JI revenues

invested in environmental protection

www. centrehelios.orgCanada’s position on JI Chrétien/Martin administrations initially interested

in JI> opposed to purchasing “hot air” > supported GIS

When Offset System proposed, Canada announced it would not participate in JI> Canada as host country

• under JI, credits from Canadian reduction projects could be sold in other Annex I countries

• with $15 price cap, better prices abroad• staying out of JI no competitors for domestic credits

Harper administration: no interest in any flexibility mechanisms

www. centrehelios.orgShould Canada buy credits? Even if it can’t fully meet Kyoto commitments …

> Maximize domestic reductions> If insufficient, either

• purchase art. 6 credits, or• be in non-compliance

Buying credits has same effect on global climate as domestic reductions> CDM: because of additionality> ET and JI: because zero-sum

• contribute to economic efficiency

Refusing to purchase credits while failing to make significant domestic reductions > disrespect to international community> failure to meet legal commitments> unfair to Parties that do comply> consequences?

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Participation in JI would create opportunities for Canadian companies> access to European (and other) carbon markets> invite foreign investment in emissions reduction

technologies (Canada as host country) If Canada does not participate in JI, Canada

« owns » all domestic reductions> without offset system or JI, no incentive for companies

to voluntarily reduce emissions> domestic reductions in partnership with foreign

partners good for Canadian economy good for global climate

Should Canada participate in JI?

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Merci !