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La mise en œuvre conjointe :
un outil méconnu mais
prometteur
Université de Montréal, 28 avril 2006
Colloque organisé par le CEDRIE
Helena Olivas – Directrice, changements climatiques
Philip Raphals –Directeur général
Outline
•
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Joint Implementation
• what it is
• how it works
•
•
•
JI and “hot air”
Canada’s position on JI
Should Canada participate in JI?
Joint Implementation
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One of the three flexibility mechanisms under art.
6 of Kyoto Protocol
> CDM
> Emission Trading (ET)
> JI
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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
How does it work?
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JI results in conversion of Assigned Amount Units
(AAUs) to Emission Reduction Units (ERUs)
AAU
ERU
for emission reducing projects
RMU
ERU
for LULUCF projects
> ERUs are transferred to foreign and local project
partners
> partners can sell them to any company or government
What is an AAU?
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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
Retirement
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Canada
Party account
AAU CER
ERU
RMU
Legal entity A
Legal entity B
Retirement a/c
Units in
retirement
accounts not
transferable
Compliance assessment
Units in
retirement
account
>
=
<
Emissions
2008 to 2012
Converting AAUs to ERUs
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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
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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
ERU issuance
JI project
(conversion
of AAUs
to ERUs)
AAU
ERU
Verification by host
Party (track 1) or
independent
procedure (track 2)
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Russia
Germany
Party account
Party account
Legal entity A
ERU
Legal entity A
Legal entity B
Legal entity B
Retirement a/c
Retirement a/c
Cancellation a/c
Cancellation a/c
Additionality and JI
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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
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fundamental difference from CDM
> CERs are new credits
> if project is not additional, global emissions will
increase
Once an ERU is created …
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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)
Two tracks
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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)
JI Track 1
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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
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International guidelines regarding
information to be made public
> to be reviewed by JISC and recommended to
COP/MOP
JI Track 2 – International oversight
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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
Demystifying “hot air”
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“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
JI and “hot air”
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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
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In EIT countries, JI is more like CDM
• not zero-sum
• additionality essential
JI and “hot air”
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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
Canada’s position on JI
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Chrétien/Martin administrations initially
interested in JI
> opposed to purchasing “hot air”
> supported GIS
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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
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Harper administration: no interest in any
flexibility mechanisms
Should Canada buy credits?
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Even if it can’t fully meet Kyoto commitments …
> Maximize domestic reductions
> If insufficient, either
• purchase art. 6 credits, or
• be in non-compliance
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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
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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?
Should Canada participate in JI?
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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)
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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
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