AIJ Pilot Phase Crediting and Credit Sharing

Abstract

The activities implemented jointly (AIJ) pilot phase does not include provisions for crediting of greenhouse gas (GHG) emission reductions. The absence of crediting is a major deficiency of the AIJ pilot and has contributed to the relatively small number of projects developed. In contrast, the provisions of the Kyoto Protocol permit crediting for joint implementation (JI) or Clean Development Mechanism (CDM) projects. The issue of which entities will receive emission reduction (ER) credits is a matter of considerable analysis and negotiation. Countries that could potentially participate in the CDM may only be interested in credits if they can sell or bank them for future use. Credit sharing may raise the cost per unit of GHG reduced for investors and act like a tax on project development. Credits developed via joint implementation projects may also be traded or banked based on the mutual needs of the investor or host country entities.Key wordscertified emission reductions discountingemission reduction unitsexternalitieshost countriesinvestorsquotas