What is Joint Implementation?

Joint Implementation (JI) is one of the project-based market mechanisms of the Kyoto Protocol. JI allows for emission reduction projects between any two countries included in Annex B of the Kyoto Protocol , where one party implements a greenhouse gas emission reduction project (host party) and the other purchases the emission reductions (investor party). JI projects generate Emission Reduction Units (ERUs) – a tradable commodity; each ERU corresponds to one tonne of reduced emissions in CO2 equivalent. There are two modes of JI, known as JI Track 1 and JI Track 2. Under JI Track 1 the host country is fully responsible for project emission reductions. JI Track 2 requires international supervision performed by the JI Supervisory Committee (JISC) under the United Nations.

What are the benefits of JI?

Joint Implementation allows a country with an emission reduction commitment under the Kyoto Protocol to earn ERUs from JI projects. This offers a flexible and cost-efficient means of fulfilling part of their Kyoto commitments, while the host country benefits from foreign investment and technology transfer. For project owners, JI can provide additional financing for an activity that reduces greenhouse gas emissions through the sale of ERUs.

What is the JI Cycle?

In order to receive ERUs and ensure benefits from their sale, each JI project needs to go through a sequence of steps known as the JI Project Cycle, which comprise the following:

• Letter of Endorsement (LoE) from a Host Country Government. This initial step requires the project host company to submit an application to its national authorities. This application normally includes a Project Idea Note (PIN) that describes the proposed project.
• Development of JI Project Design Document (PDD). The PDD is a document that describes the project in detail. It must be prepared in accordance with the rules and formatting defined by the JISC and/or the host country.
• Determination of the PDD by an Accredited Independent Entity (AIE). The PDD Determination is the performance of an audit by an AIE to establish whether a JI project meets the requirements established by the JISC and/or the host country. The audit involves a desk review of the PDD and supporting documents and a site visit to the project location.
• National Approval by the Host Country Government. The procedures for the issuance of the Letter of Approval (LoA) vary by country. Generally, an application needs to include the PDD and the Determination report from an AIE, among other documents.
• Final Determination by JI Supervisory Committee (JISC). This step is only applicable if the project host selects the international JI Track 2 procedure. Otherwise, the National Approval is sufficient under JI Track 1. Final Determination is received within 45 days after the submission of the PDD and Determination Report from the AIE, unless the JISC calls for a Review of the project.
• Sale of ERUs. The sale of ERUs can take place at any time starting from project initiation (forward sale) to the moment when ERUs are already issued (spot sale).
• Investor Country Approval. The project needs to be approved by the country hosting the ERU buyer (investor). The requirements vary among countries, but generally a PDD is needed.
• Monitoring of the Project GHG Emission Reductions. After the project is successfully implemented, continuous monitoring of emission reductions must take place. This must be done in accordance with the monitoring plan adopted in the PDD.
• Verification of Emission Reductions. The Monitoring report must be verified by an AIE, which checks if all procedures were followed and the reduction of GHG emissions included in the report actually took place.
• Final Verification of Emission Reductions. The verified monitoring report must be submitted to the JISC to receive Final Verification. This step is not required under JI Track 1.
• Issuance and Transfer of ERUs. On the basis of the verified monitoring report, a host country issues an equivalent number of ERUs into an account of the project in a National Registry. After the ERUs have been issued, they can be transferred to a buyer.

What types of projects can qualify for JI?

Projects that reduce emissions of greenhouse gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) can be implemented with the help of JI. These activities can include a variety of technologies, such as generation of energy from renewable sources (hydro, wind, biomass use), energy efficiency improvements in the heat and power sectors, reduction of emissions from the chemical industry, methane capture from landfills and coal mines, improvements in energy use in manufacturing industry (e.g. iron and steel) and many others. Some activities are excluded from JI, for example, power generation from nuclear stations.