Joint Implementation
Along with the Clean Development Mechanism (CDM), climate protection projects with Joint Implementation are among the flexible Kyoto measures. They are based on article 6 of the Kyoto Protocol and offer industrialized countries the option of reducing emissions in another industrialized country. When such a climate project is carried out, a transfer of emission allowances (Emission Reduction Units, ERUs) from an Annex B State (host country) to another Annex B State (investor country) takes place. In the best case, a win-win situation is achieved, in which both countries benefit from implementation of the project: on the one hand, the investor country receives the right to additional emissions, whereby an investment in reduction measures in the host country is often less costly than an investment in one's own country, due to increasing marginal costs; on the other hand, the host country benefits both from the sale of the generated emission rights and from the technology transfer from the investor country. Enterprises are also entitled to participate in JI projects and to use the received ERUs – up to a specified share – for fulfillment of their reduction target within the European Emissions Trading Scheme. In Liechtenstein, this share amounts to 8% of the amount of emission allowances assigned to installation operators subject to the Emissions Trading Scheme.
No JI Projects within territory of Liechtenstein have been implemented in the ongoing period.
Eligibility requirements for JI projects
Similarly to CDM projects, investor and host countries must also meet certain criteria in the case of JI projects. Paragraph 21 of the JI Guidelines sets out the following eligibility requirements for a participating State:
- It is a Party to the Kyoto Protocol.
- Its assigned amount pursuant to article 3, paragraphs 7 and 8 has been calculated and recorded in accordance with decision 13/CMP.1.
- It has in place a national system for the estimation of anthropogenic emissions by sources and anthropogenic removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, in accordance with article 5 of the Kyoto Protocol.
- It has in place a national registry in accordance with article 7, paragraph 4 of the Kyoto Protocol.
- It has submitted annually the most recent required inventory of greenhouse gases, in accordance with article 5, paragraph 2 and article 7, paragraph 1 of the Kyoto Protocol.
- It submits the supplementary information on assigned amount in accordance with article 7, paragraph 1 of the Kyoto Protocol.
Depending on fulfillment of the eligibility requirements by the host country, two different procedures are available. If the host country fulfills all criteria (1-6), a simplified procedure applies (JI Track 1). The exchange of AAUs then takes place solely between the registries of the two participating countries, without involvement of the JI Supervisory Committees (JISC). If, however, the host country only fulfills the minimum requirements (criteria 1, 2 and 4), a more complex procedure applies (JI Track 2), which essentially corresponds to the CDM procedure. Instead of the CDM Executive Board, the JISC is then involved in the approval process.
Some potential host countries of JI projects have so-called "hot air" allowances. These are fictitious emissions arising from economic stagnation after 1990, entitling the host country to sell Emission Reduction Units (ERUs), even though no specific reduction measures are carried out in return. So that such hot air allowances nevertheless have a positive impact, discussions are currently underway to bind the revenue from such auctions to reduction measures in the host country. Through the application of so-called Green Investment Schemes (GIS), the seller country assures the buyer that the revenue from the sale of hot air allowances will be used to finance environmental projects and programs in the seller country, as specified in a bilateral agreement between the two contracting States.
Figure 3: Schematic end of a JI project on track 2
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