Experience with JI projects in the Czech Republic Climate Change Unit Tomas Chmelik Climate Chnage Unit Ministry of the Environment of the Czech Republic Vršovická 65 Praha 10, Phone: Fax:

JI status in Czech Republic  JI phase started in January 2002  Interest from potential investor countries (The Netherlands, Austria, Japan, Germany, Denmark)  PCF WB cooperation – learning approach  Methodology prepared, some capacity building made  Assessment of projects according to methodology started – some problems detected  Following areas identified as a key ones:

Where and how to find good JI projects?  Czech experience – lack of supply (enough demand)  Transaction costs high (identifying the project, preparing the project as a JI)  Potential reduced in countries with high environmental and technological standards (problem of additionality)  EU ETS – big installations with big potential for reductions covered by EU ETS, some others indirectly linked (double counting problem), extension in future  Portfolio approach complicated, but could be a solution

Methodical approach  Clear and simple, with defined deadlines and types of documents required for assessment  Standardized and transparent  Coordination with others (investor – host)  Use maximum of domestic sources (capacity building) – cheaper and often better alternative  Routine approach but with a space to deal with specific (non-standard) projects

Definition of responsibilities  Who is owner of ERUs generated by project?  Responsibility of host government  Responsibility of investor government  Responsibility of project owner  Responsibility of intermediators, advisors, other buyers

Contractual issues, risk management  Contractual issues one of the most important and most expensive parts of the project  Complicated by different legal systems of investor and host (related to definition of responsibilities)  Dealing with risks in a proper way, balanced approach  Kyoto risk  Legal advisors expensive, especially for small projects  Standardized contracts a solution?

Funding issues  Co-financing essential – revenue from ERUs not sufficient for even essential part of funding, often available on delivery  Low prices at the moment (Kyoto risk)  Only a good project can be turned into a good JI!  Political background – what are the money used for  What if project subsidised by a state (support of renewables for example)?

Alternatives ?  Article 17 trading (IET) possible way forward  Utilization of AAU surplus in a way of recycling the revenue into concrete projects against real emission reductions (green investment)  Fund approach (coupling of various funding resources in one institution) – one of the options