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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
• 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
[email protected]
www.DanishCarbon.dk