Relvant lessons for GIS learnt JI Track 1 and Track 2 in various Central & Eastern European countries Zsolt Lengyel SenterNovem Carboncredits.nl Moscow,

Relvant lessons for GIS learnt JI Track 1 and Track 2 in various Central & Eastern

European countries

Zsolt LengyelSenterNovem

Carboncredits.nl

Moscow, 28 April 2008

28 April 2008, Moscow

Russian Carbon Market Forum 2

Outline of the presentation

1. Carboncredits.nl – SenterNovem introduction2. JI Track 1 & 2, GIS – the context of eligibility 3. JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS?4. A pragmatic approach from the Dutch perspective5. Key lessons and challenges from Track 1 for GIS6. Crowding out effects spotted...7. Competition and co-operation between GIS/JI 8. Some tentative recommendations...



1. Carboncredits.nl – SenterNovem introduction

1. An Agency of The Netherlands’ Ministry of Economic Affaires

2. Focus on Energy, Sustainability and Innovation with 1300 employees at four offices; an annual budget of 3-5 billion EUR

3. Carboncredits.nl was established within Senter Internationaal in 2000 to carry out the Joint Implementation purchasing through public procurement ( the ERUPT programme)

4. The Worldbank Prototype Carbon Fund and Carboncredits.nl were the first operational entities in the carbon market

5. Has signed and manages over 20 contracts with emission reductions around 17 million tonnes of CO2e



2. JI Track 1 & 2, GIS – the context of eligibility Requirement JI track 1

and GIS (IET) JI T 2.• Party to Kyoto Protocol x x• Assigned amount issued x x• National system (Art. 5.1) x• National registry in place x x• Most recent inventory submitted x • AA information submitted x

A Party involved in an Article 6 project shall inform the secretariat of:(a) Its designated focal point for approving projects pursuant to Article 6,

paragraph 1(a);(b) Its national guidelines and procedures for approving Article 6 projects,

including the consideration of stakeholders' comments, as well as monitoring and verification.



3. JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS?

Supplier Host country

Purchasing entity

Transaction costs

possibly lower

possibly higher

possibly lower

Control not relevant much more not relevant

Complexity possibly less

possibly less

possibly less

Project scope

not relevant possibly more project types

not relevant

Risks & uncertainties

reduced reduced reduced



4. A pragmatic approach from the Dutch perspectiveWe had a sstrategic focus for investigating and

facilitating the Track 1 route in countries where:

• the ERU, AAU ( associated with pre-2008 early

action) volumes were high,

• where the projects that were at high JISC Track 2

risk

• where there was preparedness and move towards

eligibility for Track 1 JI



5. A pragmatic approach from the Dutch perspective (cont.)

• Track 2 has been the default option for

Carboncredits.nl, however some ERPAs and LoAs

explicitly included the optional Track 1 route (the

early crediting also required the AAU transfer

options)

• Technical assistance cooperation with Romania

(2006-2008), the first CEE country in the world,

to realise the benefits and face the challenges of

Track 1 on its route towards GIS



6. Key lessons and challenges from Track 1 for GIS

• Reducing transaction costs and risks whilst maintaining

credibility and ensuring project quality to meet the

environmental/greening criteria of the buyers

• Streamlining the approval procedures whilst

establishing a preference for GIS over Track 1/Track 2

• Enabling projects to go through GIS/Track 1 that

otherwise will have difficulties (administrative, financial)

getting approval via Track 2 ( JISC versus domestic

criteria)



7. Key lessons and challenges from Track 1 for GIS (cont.)

Specific eligibility considerations: sectoral preferences

(district heating, industrial technology housing; small

scale projects; early mover projects; programmatic

approach; project bundling)

Accreditation of domestic and international entities for

determination (e.g. AIEs have automatic accreditation for

Track 1 whilst domestic entity requirements needs to be

established; GIS fully domestic)

Standardised baselines (e.g. exemplary projects and their

baselines/cefs are selected, official grid factors

established)



8. Crowding out effects spotted...

• Buyers’side: funds set-aside for Kyoto Protocol mechanisms target GIS less for JI/CDM

• Host’s side regulatory attention towards GIS, whilst JI systems are not fully operational

• Project level alternative routes creating even more confusion

• Co-existence of GIS/JI is a fact the question is how to improve the situation in both areas?



9. Competition and co-operation between GIS/JI

• Project differentation for GIS/JI have a clear picture what project type (technical) is suitable for which scheme (sectors, baseline and monitoring methodologies)

• Regulatory preferences and clarity attention to both systems at the same time (may allow project suppliers to chose)

• Governance do not distort; make it easy (or difficult)

• Do not spread your resources too thinly!



10. Some tentative recommendations...

• One step at a time? get your Joint Implementation system ready before establishing a GIS

• Identify the key GIS implementation challenges a credible fund for disbursing and managing the GIS revenues is essential

• Learning by doing the biggest lesson of JI is that one should start acting....and constantly adjust/correct its system

• Watch out for lessons/mistakes of Hungary/Latvia//Romania/Ukraine and those most active in the JI/GIS field



Contact details for SenterNovem (Carboncredits.nl):

Visiting address: Postal address:Catharijnesingel 59 Postbus 8242 3511 GG Utrecht 3503 RE UtrechtNetherlands Netherlands

Tel: +31 30 214 7829Fax: +31 30 231 6491E-mail: [email protected]: www.carboncredits.nlwww.senternovem.org / www.senternovem.nl

Relvant lessons for GIS learnt JI Track 1 and Track 2 in various Central & Eastern European countries Zsolt Lengyel SenterNovem Carboncredits.nl Moscow,

Documents

challenges of track

optional track

high jisc track

ji slide

dutch perspective

gis ietji t

transitory route

pragmatic approach