Project Mechanism
Joint Implementation (JI) and Clean Development Mechanism (CDM) are international climate projects where the initiators receive emission certificates for their commitment. The certificates can be either used in European Emissions trading or sold. The mechanisms thus allow emission abatement to be carried out where costs are lowest. Meeting the Kyoto targets becomes less of an economic burden. The underlying idea is that it does not matter where emissions are reduced, as long as they are reduced globally.
- Kyoto Protocol
- Project-based Mechanisms of the Kyoto Protocol
- Offsetting Certificates from project-based Kyoto Mechanisms
Kyoto Protocol
The Kyoto Protocol, which came into force on 16/02/2005, is the first binding treaty under international law designed to mitigate climate change. The signatory industrial states in total pledge to reduce their emissions by 5 percent of the 1990 level until 2012. The European Union pledged to reduce its emission levels by 8 percent. This can be achieved by national as well as EU-wide measures. Currently, the most important EU-wide climate protection measure is the European Emissions Trading Scheme for companies.
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The Marrakesh Accords:
The Kyoto Protocol also provides for the use of project based flexible mechanisms such as the Joint Implementation (JI) and Clean Development Mechanism (CDM). In order to partially achieve their emissions reduction target, industrial states may carry out projects abroad and set off the emissions reduction against their own target.
JI as well as CDM climate projects can be developed for all six greenhouse gases listed in Kyoto Protocol.
Project-based Mechanisms of the Kyoto Protocol
From 13/11/2004 the so-called Linking Directive has been in force. Its full name is Directive of the European Parliament and of the Council amending the Directive establishing a scheme for greenhouse gas emissions allowance trading within the Community, in respect of the Kyoto Protocol's project mechanisms. It enables installation operators participating in EU emissions trading to meet a proportion of their climate protection obligations by taking part in CDM projects in the first trading period (2005-2007) and JI as well as CDM projects during the second trading period (2008-2012). This ruling excludes nuclear power stations and carbon sink projects. Specific rules apply to large dam projects.
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Legal Documents (partly German)
On 30/09/2005, the Act on the introduction of project-based mechanisms in accordance with the Kyoto Protocol to the United Nations Framework Convention on Climate Change of 11 December 1997, known as the Project Mechanism Act or ProMechG, came into force, turning the requirements of the EU Linking Directive into national law. ProMechG regulates the recognition of CDM and JI projects in Germany, enabling installation operators to meet their obligations in submitting emissions allowances also by submitting emission credits from CDM (from 2006) and JI projects. The Federal Environment Agency has been appointed as Competent National Authority.
Offsetting Certificates from project-based Kyoto Mechanisms
In principle, it is possible for operators of installations subject to emissions trading to fulfil their obligation to submit their annual share of CO2 emissions allowances by submitting certificates from project-based Kyoto mechanisms, i.e. Emission Reduction Units (ERUs) and Certified Emission Reduction certificates (CERs). No ceiling has been set for the use of these certificates by the EU Emissions Trading Directive. It is up to member states to set a limit.
Further Information
Information on the Use of CERs in European Emissions Trading from 2013
The German Federal Government set the limit at 22 percent of the total amount of allowances allocated to an installation for the entire 2008-2012 trading period. At the beginning of a trading period, operators can fulfil their obligations exclusively by submitting CERs and ERUs, as long as they do not exceed the upper limit of 22 percent over the whole allocation period. It is also possible to submit a larger quantity of CERs or ERUs at the end of a trading period, however, the 22 percent ceilings is still valid. CERs, ERUs and emission allowances have equal certificate value. Thus, operators who have more than 22 percent of CERs or ERUs can sell their surplus to other operators and replace them by emission allowances.