The impact of EU emissions trading and the linking directive on the potential for Joint Implementation (JI) projects in six EU accession countries

Wolfgang Sterk, Stefan Lechtenböhmer, and Maike Bunse, Wuppertal Institute for Climate, Environment, Energy

Keywords

EU emissions trading, Linking Directive, acquis communautaire, double counting, Joint Implementation, JI, JI potential, Accession Countries, energy efficiency and JI, GHG emission reduction

Abstract

There is an extensive potential for GHG emission reductions in the new EU member states and the EU accession countries by improving energy efficiency, investing in renewable energy supply and other measures, part of which could be tapped by JI. However, the EU Emissions Trading System (EU ETS) and especially the recently adopted "Linking Directive" is probably going to have a significant impact on this JI potential. Especially two provisions are important:

The baseline of a project has to be based on the acquis communautaire, the environmental regulations of which are substantially higher than the Accession Countries' existing ones.
Projects, which directly or indirectly reduce emissions from installations falling within the scope of the EU ETS, can only generate certificates if an equal number of EU allowances are cancelled. JI is thus put into direct competition with the EU ETS.

In this paper we analyse the impact of these provisions first in theory and then country by country for six Central and East European countries that recently acceded the EU or are candidates for accession. As a result, we give an overview of the potential and the limitations of JI as an instrument for achieving emission reductions in the selected Accession Countries and provide important overview information to policy makers.