1. Eligibility issues and joint implementation
UNFCCC technical workshop
on joint implementation
Bonn
9-10 March 2006
Andrew Howard
UNFCCC secretariat

2. Overview Eligibility requirements safeguard the integrity of
Kyoto’s compliance accounting
Crediting for JI projects
The underlying carbon market
Four linked questions to be examined here
How is crediting under JI implemented?
How does JI eligibility impact on JI crediting?
What do Annex B Parties require for JI eligibility?
What is the process and timing for determining eligibility?

3. Crediting JI projects
Registries convert (“issue”) host Annex B Party’s existing units into emission reduction units (ERUs) based on a JI project
Registries transfer ERUs to investing Party/entity
ERUs may be used by Annex B Parties for compliance
ERUs differ from CDM credits, which are newly created units
AAU
RMU
ERU
for emission reducing projects
for LULUCF projects

4. Kyoto institutions and eligibility
National systems
Annex I Party systems
Emissions
inventories
Reporting
process
National registries
Kyoto Protocol units
Assigned amount
Eligibility requirements
Review and compliance processes
Emissions
Secretariat compilation and accounting
systems
Article 3.1 compliance
assessment
> =
<

5. JI eligibility requirements
Track 1 (full eligibility)
a. Party to the Kyoto Protocol
b. Assigned amount calculated
c. National system in place for estimating emissions/removals
d. National registry in place for tracking assigned amount
e. Submission of most recent required emissions inventory
f. Accurate accounting of assigned amount and submission of information
a. Party to the Kyoto Protocol
b. Assigned amount calculated
d. National registry in place for tracking assigned amount
Track 2 eligibility
National systems and reliable inventories are fundamental for determining compliance of Parties with their Kyoto targets
calculation of assigned amount under Articles 3.7/8
maintaining mechanisms eligibility
end of commitment period compliance test
Initial inventory with full time-series is important for calculation of assigned amount under both track 1 and 2
Difference between track 1 and 2 hinges on ongoing provision of annual inventory that meets requirements

6. Issuance, transfer and acquisition
No eligibility
Cannot issue or transfer ERUs
Track 2
Can issue and transfer ERUs
 only after JISC verification of the project and reductions
Can issue, transfer and acquire ERUs
 Party may verify projects and reductions by its own procedures
Track 1 (full eligibility)
No eligibility needed to develop and run JI projects
 eligibility only relates to ERU issuance, transfer and acquisition

7. Implementing eligibility checks
CDM registry
International transaction log
Base checks
European Union transaction log
Supple- mentary checks
National registry
Other supplementary transaction logs
International transaction log connects all national registries
ITL checks that
JI host Party originally issued the units being converted
JI host Party meets either track 1 or track 2 eligibility requirements
Acquiring Party meets full eligibility requirements for trading / track 1 JI
ITL allows transfer of track 2 ERUs without considering commitment period reserve

8. Eligibility process Initial review process Compliance Committee
Annex B Party Initial Report
Review report (may include questions of implementation)
Compliance Committee
(Enforcement Branch)
Decides that requirements are not met
Decides that it is not proceeding with any questions of implementation
Compliance Committee determination is decisive
Initial report and review is “to facilitate calculation of assigned amount and demonstrate capacity to account for emissions and assigned amount”
GHG inventory (focus on base year)
National system
National registry
Calculation of initial assigned amount under Articles 3.7/8
Calculation of commitment period reserve
Selection of sinks activities under Article 3.3/4
Facilitative Branch
Considers questions on reporting and accounting prior to CP
Provides advice, and facilitate financial and technical assistance
Enforcement Branch
Can apply adjustments to inventories
Make corrections to Party’s accounting
Suspend and reinstate eligibility to participate in mechanisms

9. Eligibility timing
Automatic eligibility after 16 months of initial report (unless Compliance Committee determines a requirement is not met)
Compliance Committee may decide earlier that it is not proceeding with any questions of implementation relating to eligibility
Initial reports expected in the 2nd half of 2006
Party must continue to meet requirements to maintain eligibility
- Annual inventory and assigned amount reporting
- Inventories pass the quality test in the annual review
Compliance Committee can subsequently suspend eligibility
Any eligibility reinstatement considered under expedited procedures
Annual reporting and review
Annual greenhouse gas inventory
Annual assigned amount information
Changes in the national registry
Changes in national system
Calculation of commitment period reserve

10. Closing thoughts
Minimum eligibility needs assigned amount calculation (needs national system and base year emission inventory) and a national registry
JISC verification offers JI projects international credibility
- For Annex B Parties meeting only track 2 requirements
- But also for Annex B Parties meeting full track 1 requirements
Eligibility requirements expected to be met in late 2007 or early 2008
Annual reporting and review
Annual greenhouse gas inventory
Annual assigned amount information
Changes in the national registry
Changes in national system
Calculation of commitment period reserve