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Trading Carbon : November 2011
efficiency and renewable energy in Russia and Ukraine. Without an international agreement for JI in place, the EU should take immediate action to sec ure a future for emissions trading with Russia and Ukraine through bilateral agreements. Certainty and reform is required. To prevent JI from becoming the first victim of the stalemate in the negotiations for a future agreement, the following is key: l a decision in Durban that provides certainty to the market that JI (Track I and II) can continue to issue ERUs in the immediate period after December 31, 2012; and l an endorsement in Durban of the recommendations made by the JISC to reform JI for a second Kyoto commitment period from 2013 or in a new climate agreement. To do so, the parties in Durban have to adopt/ confirm elements of the JISC "Recommendations on options for building on the approach embodied in Joint Implementation" (see box). In his famous 2005 commencement address at Stanford University, Apple's CEO Steve Jobs ended his speech with: "Stay Hungry. Stay Foolish." Let's hope Parties in Durban will have the courage. l The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Commerzbank or Carbon Trade & Finance Ingo Ramming is a managing director of Commerzbank and an executive director of Carbon Trade & Finance, a join venture between Gazprombank and Commerzbank Email: Ingo.Ramming@commerzbank.com 23 JOINT IMPLEMENTATION emissions reduction baselines in the EU. The mechanism has also initiated in Central and Eastern Europe, as well as Russia and several former Soviet Union states, a foc us on energy efficiency and modernisation. Carbon cap-and-trade is neither practical nor efficient in several areas -- for example, the EU ETS only covers approximately 45 per cent of Europe's GHG emissions. JI and project-based mechanisms, therefore, provide significant benefits in two ways: a) as a complementary instr ument to reduce emissions in sectors not covered by cap-and-trade; and b) as a policy instr ument for countries that have no cap- and-trade scheme in place -- for example, Ukraine and Russia -- to raise awareness, help to set benchmarks and baselines, and as a first step into carbon markets. Project-based mechanisms are also a powerful tool to stimulate investments in areas that are vital to the EU's energy supply. JI opens the door to investments in energy Without clarity from Durban, JI will be the first victim of the stalemate in international talks November 2011 I support the options proposed by the Joint Implementation Supervisory Committee (JISC), primarily the recommendation to create a unifed track for project approval and so merge Track I and Track II. A combination of both tracks makes sense when accompanied by other reforms. They include: l issuance of credits into a JI registry should be administered by the governing body and so taking this responsibility away from the host countries; l setting up a new JISC with more focus on standard setting and less direct involvement in JI projects; and l membership of JISC should consist one-third of representatives from Annex I (developed) parties (already now), one-third Accredited International Entities (project auditors) and one-third project participants. JISC recommendations
December - January 2011