Joint Implementation in the Baltic Region - A Finnish perspective

Panel: Panel 6: Energy Efficiency Under Joint Implementation & The Clean Development Mechanism

Authors:
Adriaan Perrels, Government Institute
for Economic Research VATT
Johanna Pollari, Tampere University

Abstract

The Baltic region is an excellent area for Joint Implementation, since it encompasses both wealthy and less wealthy but energy intensive nations, while common interests are broadly acknowledged. Despite this favourable starting position there are a lot of obstacles when moving from experimental actions to a steady use of Joint Implementation projects. The article discusses the possibilities and position of Joint Implementation (JI) as a part of Finnish climate policy. The aims of JI are to enhance cost efficiency and to facilitate the spread of clean and efficient technologies: governments and companies can complement national policies and implement JI-projects where the cost of abatement is lowest. Transaction costs of JI-projects can be high, notably when experience is still scarce. The international scene is still uncertain and only crude estimates of benefits and potentials are achievable for Finland.

The article is based on an inventory study as well model simulations assessing the position of Joint Implementation compared to other ÿ domestic ÿ instruments.

The article confirms that the best opportunities for JI for Finland are in the Baltic countries and Poland. Notably for energy companies the potential seems significant. Finland has recently launched a JI/CDM Pilot Programme which aims at gaining experience and providing guidelines for JI and CDM projects. Although the position of JI in the Finnish ministerial climate policy arena is still indistinct, we claim that JI should receive sufficient attention, considering its potential, reasonable cost level and other benefits compared to other instruments. Beneficial co-ordination with the domestic climate programme is feasible.