Currently active program (as of 1/2011).
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process
Type of Standard and Context
Joint Implementation (JI), like the CDM, is a project-based mechanism under the Kyoto Protocol. It is limited to transactions between industrialized countries and countries with economies in transition (EIT) that have commitments to limit or reduce their GHG emissions under the Protocol. The goal of the program is to increase market efficiency by allowing industrialized countries to meet a part of their obligation by investing in GHG abatement projects in another industrialized or EIT country if the cost of abatement is lower in the other country.
Like the CDM, the JI mechanism was negotiated in 1997 as a part of the Kyoto Protocol. Its goal is to combat climate change using a flexible GHG trading mechanism. JI grew out of a pilot program which began in 1995. Although the program became officially operational after the entry into force of the Kyoto Protocol in 2005, the registration of the first JI project not completed until March 2007.
For detailed information on the JI, see the JI Rulebook.
Standard Authority and Administrative Bodies
JI distinguishes between track 1 and track 2 projects. Track 2 projects must be approved by the Joint Implementation Supervisory Committee(JISC). Track 1 projects, on the other hand, are approved by their respective host countries. Track 2 projects are located in countries that either do not fully comply with the eligibility requirements for participating in the JI program, or meet the eligibility requirements, but have voluntarily chosen to use the Track 2 verification procedure under the JISC. Projects that follow the Track 1 verification procedure established by their respective host country governments are located in countries that meet all the eligibility requirements for participating in the JI program and are thus authorized to verify projects. ERUs are issued and transferred by the host country under both the Track 1 and Track 2 verification procedures.
The JI track 2 program is supervised by the Joint Implementation Supervisory Committee (JISC), a 10-member team with voting rights that represent the EIT countries, the industrialized countries, developing countries and the small island developing states. There are 10 additional members without voting rights who represent the same country groups as the voting members. They participate in all JISC meetings and share the work responsibilities of the JISC. The JISC is supported by an expert panel for the accreditation of independent auditors (JI Accreditation Panel) and is ultimately accountable to the governing body of the Kyoto Protocol, which includes representatives of all countries that have ratified the treaty.
Within each industrialized and EIT country, there is a Designated Focal Point (DFP) that serves as the nodal agency responsible for administering JI activities within its jurisdiction.
The JI scheme is international in its scope, but only industrialized and EIT countries that have ratified the Kyoto Protocol can host JI projects and issue the emission reduction units generated from the projects.
Recognition of Other Standards/ Linkage with Other Trading Systems
As in the case of the CDM, although the emission reductions of other schemes cannot be used under the JI program, other compliance programs, including the EU ETS, RGGI, and VCS either recognize and accept JI emission reductions under their programmes.
Tradable Unit and Pricing Information
The tradable unit under the JI program is an Emissions Reduction Unit (ERU). Each ERU is equal to one metric ton of carbon dioxide equivalent (mtCO2e). ERU prices are similar to CER prices. Actual prices depend according to contract conditions and type of project.
JI project participants include public or private entities based in industrialized and EIT countries that have ratified the Kyoto Protocol, or other legal entities that are approved by the project’s host country DFP to participate in the project. Approved entities may develop JI projects, sell the emission reduction generated, or buy ERUs to comply with their domestic and international obligations. To avoid the double counting of units, if industrialized or EIT country participants sell the JI emission reduction generated, they cannot count these reductions towards meeting their own targets. Buyers from other voluntary programs may also purchase JI emission reduction units.
Current Project Portfolio
As of January 2011 there were a total of 375 JI projects in the pipeline, 179 of them track 1 projects and 196 track 2 projects. 25 million ERUs have been issued. For updated numbers, see UNEP Risoe Centre.
The project types eligible or ineligible under JI are the same as those under the CDM. The only difference is that while only afforestation and reforestation LULUCF projects are eligible under the CDM, other LULUCF project types, including forest management, cropland management and grazing management, are eligible under JI.
A JI project can be located in any industrialized or EIT country that has ratified the Kyoto Protocol and has GHG emission limitations under the treaty.
There are only specific project size limitations for small-scale renewable energy projects with a maximum output capacity of 15 MW.
The project start date for eligibility is January 1, 2000.
The crediting period for a JI project must begin after January 1 2008 and end in 2012. However, the length of the crediting period can be extended beyond 2012 up to the operational life of the project if it is approved by the JI DFP in the country hosting the project.
Co-benefit Objectives and Requirements
Like the CDM, there are no explicit guidelines on the environmental or social co-benefits of JI projects. Unlike the CDM, JI projects are not required to assist countries with achieving their sustainable development goals, and projects do not have to be assessed based on any sustainable development criteria.
Like the CDM, every JI project must demonstrate that without JI, either the project would not have gone ahead, or it would have used an inferior technology resulting in higher GHG emissions. A JI project can demonstrate additionality in one of the following ways:
• Using an approved CDM baseline and monitoring methodology;
• Applying the most recent version of the ‘Tool for the demonstration and assessment of additionality’ or any other method approved by the CDM EB;
• Providing traceable and transparent information showing that the project’s baseline was identified on the basis of conservative assumptions, that the project scenario is not part of the identified baseline scenario and that the project will lead to reductions in anthropogenic emissions or enhancements of net removals; or by
• Providing traceable and transparent information on a previously ‘successfully determined’ comparable project implemented under comparable circumstances, and justifying why it is relevant to the proposed project under consideration.
The basic principles and the processes that apply in the quantification of emission reductions in CDM projects are the same for JI projects.
Validation and Registration
Under JI track 2, the validation stage is referred to as the determination. The determination of a JI project is carried out by an independent auditor (an Accredited Independent Entity, AIE) accredited by the JISC. In practice it is CDM auditors (DOEs) that are serving as auditors for determining JI projects. The acceptance of the auditor’s determination report by the JISC, referred to as final determination, is similar to the registration of the project under the CDM. This is only required for Track 2 projects as Track 1 projects are not assessed by the JISC.
Like the CDM, the project developers have to develop a project design document, which the AIE reviews to confirm that the project is eligible, additional and compliant with national laws and environmental requirements. The AIE also solicits public comments through the UNFCCC and then prepares a Final Determination Report, which is made public through the JISC. Like the CDM registration process, unless a party involved in the project or three members of the JISC request a review of the project, the AIE’s determination report is accepted and the project secures a final determination from the JISC. If a review is requested, the JISC must make a final decision no later than six months or at its second meeting after the review was requested.
Monitoring, Verification and Certification
The monitoring and verification processes for JI projects under its Track 2 procedure are similar to that of the CDM projects. It requires the preparation of a Monitoring Report by the project developer, verification with possible site visits and the preparation of a Verification Report by the accredited auditor. Both the documents are made public through the UNFCCC secretariat. If the JISC is not asked to review the auditor’s verification, then the assessment is made final and the project host country can issue ERUs equivalent to the amount of emission reductions approved by the JISC. The ERUs are converted from Assigned Amount Units (AAUs) or from Removal Units (RMUs, from LULUCF activities).
Registries and Fees
There is no JI registry. ERUs are issued to the national registries of the industrialized and EIT countries hosting the projects. ERUs may be transferred from one national registry to another if the ERUs are purchased by an entity authorized by an industrialized or EIT country DFP. The JI fee structure is as follows:
• A progressive fee based on the volume of emission reduction or removal is charged for processing verification reports. The fee is USD 0.10 per metric ton of CO2e for the first 15,000 units generated in a year, and USD 0.20 for each additional unit.
• The fee is charged as an advance at the time of applying for final determination by the JISC. The advance is adjusted against actual payments due at the time of verification. Small-scale projects with emission reductions of less than 15,000 tCO2e are exempted from paying in advance but are required to pay the fee at the time of verification.
• Up to USD 30,000 of the amount paid in advance is non-reimbursable if the project does not secure a final determination by the JISC.