August 2015 - A study conducted by the Stockholm Environment Institute has identified serious flaws in Joint Implementation, especially as regards JI Track 1 projects in Russia and Ukraine. Thomas Forth, Chair of the Foundation Future of the Carbon Market, shares his views:
1. Room for improvement despite the positive experience gained with JI
The JI Track 2 process, which involves monitoring by the UNFCCC, has given rise to reliable emission reductions. Unfortunately, many countries have avoided its use and the process must be improved. But having said that, it is important to note that EU member states have had positive experience with JI Track 1. For example, as of 2012, projects conducted in France and Germany in the industrial and household energy-supply sectors had achieved emission reductions to the tune of approximately 14 million tonnes CO2.
It is thus all the more disappointing that countries outside the EU have systematically allowed the JI process to be abused and have thus failed to ensure the environmental integrity of the projects involved. JI Track 1 should therefore no longer be continued at international level. Thus, in global climate change negotiations, the EU would like to see Track 1 abolished and replaced by a robust and reliable verification procedure that applies to all JI activities.
2. Germany has already acted by introducing the Register Ordinance
The SEI study has still to be analysed in detail. But one thing that must be looked into is which particular projects received ERUs by unjust means. At the moment, there are no legal means of intervention. ERUs that were exchanged for EUAs cannot be set aside. Also, at the end of 2012, the EU and Germany had expressed concern regarding many First Track JI projects in Russia and Ukraine. The Register Ordinance closed the door to the exchange of ERUs at the end of 2012 with legally binding effect as of April 2013 (the deadline for ERUs issued in 2012).
Of the projects cited in the study, none were approved in Germany. This is because right from the outset, Germany’s Project-based Mechanisms Act (ProMechG) contained a stringent verification process for JI projects which borrowed heavily from JI Track 2. This allowed the German authorities to carefully monitor activities in a similar way to that used for UNFCCC projects. From the beginning, the German Environment Ministry (BMUB) had shown reluctance towards JI Track 1 and thus structured the ProMechG equally for both tracks – something which with hindsight appears to have been more than justified. In addition, the experienced gained in both France and Germany shows that precise and transparent requirements posed no threat to good JI projects.
3. Push both for reforms and consideration of emerging challenges in the climate negotiations
Germany is committed to the reform of the Kyoto Protocol’s flexible mechanisms. The CDM in particular has contributed significantly to reducing global greenhouse gas emissions. The initial teething troubles have been overcome. The CDM enables businesses to participate in climate change mitigation and allows checks to see if projects are truly additional. We want the market mechanisms to take in all the industry sectors not covered by the EU ETS.
With regard to the Paris Agreement, a decision must be made as to whether developing countries should contribute to global climate change mitigation efforts. This is why they should use a portion of their certificates to meet their agreed emission reductions. Of course, different standards apply for Brazil and China than for economically weaker countries whose per capita emissions still lie at around 1 tonne/CO2-equivalent. The INDC process will play a key role in the new market mechanisms. In future, what will count is how the market mechanisms interact with national climate change policies.