Joint Implementation

by Puria Radmard

Joint Implementation (JI) is the second of the Kyoto protocol’s reduction incentives. Like the CDM, it is a way of issuing tradable carbon allowances for Article I countries (countries with mandatory reduction targets) to trade, but unlike the CDM, it encourages Annex I countries to host projects in one another.

97% of JI credits have been issued to Track 1 projects – meaning they were approved and their reductions verified by the project host – as opposed to Track 2 projects where the international body does this job [1]. 

The host country then cancels credits it got from it’s own reductions (AAUs), and sells them to the country funding the project (as ERUs).

JI projects that allow this credit conversion, like CDM projects, must be additional. But it is no surprise that countries with surplus AAUs (called “hot-air”) also overestimate their reductions and oversell ERUs; like Ukraine and Russia, who together have issued 90% of all ERUs [2].

Also unsurprisingly, the EU has found inconsistencies in the Track 1 projects, and proposed merging of the tracks after 2012 (the end of Kyoto’s first commitment period) [3]. This was (sort of) later agreed on at COP18 in 2012. A couple months later the EU passed a law that (amongst other things) greatly restricted the use of JI credits in the ETS in general, but especially if they were issued in Track 1 [4].

So has JI been successful? The Track 1 issue stars in every evaluation of the scheme. Auditors for these projects had little incentive to do their jobs properly, which made it implausible for 75% of ERUs issued to be additional, and at least 80% of all projects had a low or questionable environmental integrity rating [5].

Overall, the Stockholm Environment Institute (SEI) says JI actually caused more carbon emissions – about 600 million tonnes. These are mainly from countries with ‘hot air’ (mainly Russia and Ukraine) who don’t need to use their own credits converting them to ERUs and selling them to other countries and companies [6]. This effectively ‘unlocks’ otherwise prohibited emissions.

So it’s clear that the CDM has done better than the JI. But how does the Kyoto protocol’s emissions trading scheme hold up as a whole? We’ll talk about that in the next article.

Categories Economic Concepts

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