1. 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, 100 10 Phone: +420 267 122 328 Fax: +420 267 126 328 E-mail: Tomas_Chmelik@env.cz

2. 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:

3. 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

4. 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

5. 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

6. 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?

7. 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)?

8. 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