Joint implementation and eligibility requirements UNFCCC JI Technical Workshop Bonn 13-14 February 2007 Andrew Howard Climate Change Secretariat www.unfccc.int ahoward@unfccc.int

Overview Crediting JI projects Implications of track 1 and 2 eligibility Implementation of Kyoto institutions Progress towards Parties’ eligibility Annual reporting and review Annual greenhouse gas inventory Annual assigned amount information Changes in the national registry Changes in national system Calculation of commitment period reserve

Crediting JI projects Host Annex B Party converts (“issues”) existing units into emission reduction units (ERUs) based on JI projects Registries transfer ERUs to investing project participants ERUs may be used by Annex B Parties for compliance ERUs differ from CDM credits, which are newly created units AAU RMU ERU for emission-reducing projects for projects in LULUCF activities

Safeguards through eligibility Kyoto’s institutions for compliance accounting Measuring and verifying emissions Tracking transactions in emission rights Carbon market institutions Ensuring integrity of emission rights Providing a firm basis for market contracts and prices Annual reporting and review Annual greenhouse gas inventory Annual assigned amount information Changes in the national registry Changes in national system Calculation of commitment period reserve

Kyoto institutions and eligibility National systems Annex B Party systems Emissions inventories Reporting process National registries Kyoto Protocol units Assigned amount 2008 - 2012 Eligibility requirements Review and compliance processes Emissions 2008 - 2012 Secretariat compilation and accounting systems Article 3.1 compliance assessment > = <

JI eligibility requirements Track 1 (full eligibility) a. Party to the Kyoto Protocol b. Assigned amount calculated c. National system in place for estimating emissions/removals d. National registry in place for tracking assigned amount e. Submission of most recent required emissions inventory f. Accurate accounting of assigned amount and submission of information a. Party to the Kyoto Protocol b. Assigned amount calculated d. National registry in place for tracking assigned amount Track 2 eligibility National systems and reliable inventories are fundamental for determining compliance of Parties with their Kyoto targets calculation of assigned amount under Articles 3.7/8 maintaining mechanisms eligibility end of commitment period compliance test Initial inventory with full time-series is important for calculation of assigned amount under both track 1 and 2 Difference between track 1 and 2 hinges on ongoing provision of annual inventory that meets requirements

JI issuance, transfer and acquisition No eligibility Cannot issue or transfer ERUs Track 2 Can issue and transfer ERUs  only after JISC verification of the project and reductions Can issue, transfer and acquire ERUs  Party may verify projects and reductions by its own procedures Track 1 (full eligibility) No eligibility needed to participate in JI projects  eligibility only relates to ERU issuance, transfer and acquisition

Eligibility process Initial review process Compliance Committee Annex B Party Initial Report Review report (may include questions of implementation) Compliance Committee (Enforcement Branch) Decides that requirements are not met Or decides that it is not proceeding with any questions of implementation Compliance Committee determination is decisive Initial report and review is “to facilitate calculation of assigned amount and demonstrate capacity to account for emissions and assigned amount” GHG inventory (focus on base year) National system National registry Calculation of initial assigned amount under Articles 3.7/8 Calculation of commitment period reserve Selection of sinks activities under Article 3.3/4 Facilitative Branch Considers questions on reporting and accounting prior to CP Provides advice, and facilitate financial and technical assistance Enforcement Branch Can apply adjustments to inventories Make corrections to Party’s accounting Suspend and reinstate eligibility to participate in mechanisms

Eligibility status Most Initial Reports submitted on time - 32 submissions received - Outstanding: Bulgaria, Canada, Romania, Russia Country visits by Review Teams are underway - Japan last week, Austria this week - All reviews to be completed by December 2007 Compliance Committee has up to 16 months of Initial Report - otherwise full eligibility is automatic for the Party - may declare earlier that it is not proceeding with any questions Party must continue to meet requirements to maintain eligibility Annual reporting and review Annual greenhouse gas inventory Annual assigned amount information Changes in the national registry Changes in national system Calculation of commitment period reserve

Emissions trading Subsequent ERU trading subject to trading eligibility - transferring and acquiring Parties - only full eligibility is possible (no track 1 equivalent) Entity-level EU trading fits under the Kyoto trading umbrella - phase 1 (2005-07) has separate EU allowances - phase 2 (2008-12) links EU allowances to Kyoto AAUs - linking directive allows trading of CERs/ERUs in both phases International ETS trades automatically accounted under Kyoto

International transaction log Essential market infrastructure Links registries of all Parties Real-time monitoring of transactions prior to completion Power to stop transactions where Kyoto rules are broken Regular reconciliation of ITL and registry records ITL implementation on track for April 2007 Early registry connections: CDM, Japan, NZ EU registries planning to link to ITL from May 2007

Closing words Kyoto institutions almost complete Review and compliance processes are at work Eligibility expected for late 2007 or early 2008 Annual reporting and review Annual greenhouse gas inventory Annual assigned amount information Changes in the national registry Changes in national system Calculation of commitment period reserve