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Study reveals serious flaws of JI mechanism

August 2015 - A new study by Stockholm Environment Insitute (SEI) shows that Joint Implementation has seriously undermined global climate action. In a random sample of 60 JI projects, 73% of the offsets came from projects for which additionality was not plausible – that is, the projects would likely have proceeded even without carbon revenues. The study also examined the six largest project types across JI, and found only one, N2O abatement from nitric acid production, had overall high environmental integrity – meaning the projects were likely to be truly additional and not overcredited. Altogether, the study found that about 80% of ERUs issued came from project types of low or questionable environmental integrity.

The design of JI is meant to safeguard against non-additional projects: Host countries must cancel one of their emission allowances for every ERU issued. But the study found more than 95% of ERUs were issued by countries with significant surpluses of allowances. If those countries issued non-additional ERUs, they would not have to make up the difference by further reducing emissions at home. Thus, ERUs worth about 600 Mt CO2e issued as of March 2015 may not represent actual emission reductions.

The paper makes recommendations for the ongoing review of the JI Guidelines, for carbon markets generally, and for a new climate agreement. In particular, it highlights the need to ensure that countries’ pledges under the new climate agreement are truly ambitious, and to establish international accounting rules and robust oversight of international transfers of carbon units, so the problems that have arisen with JI are not repeated under a new climate regime.

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Full paper and policy brief