1. 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

2. 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

3. Danish Purchasing Programme for JI
DanishCarbon.dk:
57 mill. € from and 27 mill. € from
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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. Thank you for your attention!
For further information
Please contact:
Jakob Forman