The Kyoto mechanism known as Joint Implementation (JI) allows governments and companies in industrialised countries to purchase Emissions Reduction Units (ERUs) from projects elsewhere in the developed world that reduce or avoid greenhouse gas emissions. Among the projects that qualify for JI are: - Technology changes resulting in industrial process emissions (N2O, SF6, HFC23)
- Methane (CH4) emissions reductions in coal mines
- Landfill gas emission captures
- Renewable energy sources (wind, biomass, biogas, hydropower, solar, or geothermal)
- Power station fuel switches and new cogeneration (CHP) units
- Industrial and municipal energy efficiency measures
- District heating system fuel switches and efficiency measures.
| What are the criteria? The Kyoto Protocol sets certain criteria for JI projects, and the market has determined others. A good JI project should meet the following conditions: - Emission reductions beyond those required by law, and beyond the business as usual scenario (this condition is known as "additionality")
- Planning and most approvals complete and construction ready to begin (completed projects are not eligible)
- More than 50,000 tonnes of CO2 emissions reductions per year in the period 2008 to 2012
- Creditworthy project developer
- Supportive host government willing to approve the transfer of ERUs to an international buyer.
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What about small projects? Because of the transaction costs involved, buyers of ERUs have a strong preference for larger projects. Small projects with similar characteristics can sometimes be grouped, or bundled, as part of one transaction. However, there is growing demand from individuals and companies that choose voluntarily to offset their own greenhouse gas emissions. Whether offsetting airplane travel, international conferences, or large sporting events, these buyers are not interested in official Kyoto compliance. Such investors typically seek smaller quantities of credits, and the transaction can be conducted with fewer steps and approvals. Therefore, small projects that have exceptional environmental and/or social benefit may still be able to sell emission reductions.
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