UNFCCC Technical Workshop on Joint Implementation Session 9 Role and Future of JI Track 2 in the Carbon Market Jakob Forman Chief Programme Coordinator Danish Environmental Protection Agency Climate Change Division

Danish Strategy on JI Government will help get the carbon market up and running through early investments Use of flexible mechanisms is primarily a task for the private sector under the EU ETS The purchase programme DanishCarbon.dk has activities in both potential Track 1 and 2 countries in Central and Eastern Europe Funds for capacity building in host countries Facilitating information and experiences on the carbon market to the private sector

Danish Purchasing Programme for JI DanishCarbon.dk: 57 mill. € from 2003-06 and 27 mill. € from 2007-09 18 contracts with approx. 9.4 mill. tonnes of CO2. 5 projects are implemented and generating emission reductions. So far contracts in Estonia, Lithuania, Poland, Czech Republic, Romania, Bulgaria and Russia

Handling Track 2 No countries are so far eligible for Track 1 Will do running evaluation of projects and countries during this spring Close dialogue with host countries As Denmark has been an early mover some early projects need to be converted to Track 2 Track 2 has been used in some of the latest projects Risks related to Track 1 or 2 have been assessed as any private buyer would do Being a governmental buyer we have also had the objective to start activities and thereby build capacity in many countries to enlarge the market

Handling Track 2 The price of ERUs is negotiated taking all risks into consideration The question on Track 1 or 2 is naturally part of the contract negotiation Costs of potential Track 2 registration will most often be reflected in the price Track 2 is more costly in the short run, but more intensive follow up on project performance (monitoring/reporting/host country procedures etc.) might be necessary and a potential risk for Track 1 projects

Capacity Building and Technical Assistance Denmark supports a number of JI-countries in their effort to get eligible (risk mitigation): Russia: Regional pilot inventories, criteria for approval of JI projects, legal advice Romania: National climate strategy and action plan, national climate change registry Bulgaria: Implementation of EU ETS, national climate change registry, draft legislation for Track 1 compliance Ukraine: Support for Track 1 compliance

Role and Future of JI Track 2 The development of Track 2 has taken a successful start with interesting perspectives has been transparent and logic in its set up offers a relevant framework for countries only lately entering the JI market offers UN legitimacy and we experience confidence in the system Thanks to the JISC and Secretariat - but the good work needs to be continued to get it fully operational

CDM and GIS CDM Green Investment Scheme Denmark has a similar purchase programme for CDM Spreading risk on the purchase (countries, technologies, mechanisms) Advantage of being fully operational No country risk on eligibility Green Investment Scheme Denmark has at this moment no intention to purchase from GIS The Danish Climate Strategy has been to get the market up and running for the private sector

Concluding remarks The establishment of the JI Track 2 has helped build trust in the market for JI projects Each project in DanishCarbon.dk will be assessed to finally chose Track 1 or Track 2 status Risk mitigation e.g. by helping build capacity in host countries Denmark focus on the project mechanisms to make the market attractive to the private sector Track 2 framework can potentially be an incentive for advanced non-Annex I Parties

Thank you for your attention! For further information Please contact: Jakob Forman jaf@mst.dk www.DanishCarbon.dk