Programmes Targeting Project-based Mechanisms

Abstract

Joint Implementation (JI) and the Clean Development Mechanism (CDM) have been looked upon with a great deal of interest and speculation since the adoption of the Kyoto Protocol. Prior to the adoption of the Marrakech Accords potential CDM and JI projects were in development, but the risks associated with those projects were very high — in part because rules governing the projects were not yet defined. It has also been difficult to assess the level of risk associated with investing in a project since it has been unclear how these two Kyoto Protocol mechanisms would interact with domestic emissions trading schemes. The Protocol provides for projects starting in the year 2000 to be eligible for both mechanisms, and the Marrakech Accords provided for the prompt start of the CDM. The CDM is up and running and there are governing bodies that can improve the rules as the system evolves. The rules for JI projects, however, are incomplete and the governing bodies will not be established until after the Protocol enters into force.