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News : CONFERENCE ON POLICY OPTIONS FOR PROJECT MECHANISMS IN EUROPE AFTER 2012

26 January 2011

Climate Focus, together with CDC Climat, organized a conference in Paris on 21 January to discuss policy options for project mechanisms in Europe after 2012. The Paris conference brought together EU policy-makers, climate change experts, market-participants and NGOs to assess the outcome of Cancun from the perspective of project mechanisms in the EU, identify the appetite for a new European offsetting mechanism under Article 24a of the EU ETS, and explore the next steps for putting such a mechanism in place.

A central theme underlying the conference was that the likelihood of a gap in international climate change regulation after 31 December 2012 has made the future of Joint Implementation in the EU after that date increasingly uncertain, creating a substantial risk that projects currently underway will be left without a mechanism under which to operate. This has already led to investors becoming reluctant to invest in new projects, and may lead to projects ceasing to produce emission reductions in 2013. Member State representatives present in Paris expressed considerable concern about this eventuality.

A key option discussed for addressing this gap was the development of a new European offsetting mechanism under Article 24a of the EU ETS. Presentations by members of Climate Focus, CDC Climat and the JI Supervisory Committee argued that Article 24a could help avoid many of the uncertainties currently presented by JI, as well as constituting a valuable policy-tool for reducing emissions within EU Member States. A presentation prepared by the EU Commission’s head of climate policy coordination, who was not able to attend on the day, indicated that the Commission was not in favour of a new project mechanism, and that the Commission would not exercise its delegated power to develop such a mechanism in the near future. Member States, on the other hand, expressed general support for the consideration of a new mechanism, though none had thus far developed official positions on the subject. Some also stressed that Article 24a did not need to be exclusive from JI, and that if designed appropriately the two mechanisms could work to complement one another. Inaction, by contrast, several participants argued, would not only make the legislative mandate to create a European offsetting mechanism redundant but would create uncertainty for Member State quota of non-EU ETS sectors which, from 2013 onwards, will fall under a cap of their own (‘Effort Sharing’). Many agreed that any new mechanism should draw on experience already gained, and that the development of a new instrument should not seek to “reinvent the wheel”.

The afternoon session saw a range of workshops taking place, addressing the key questions of the utility of a new mechanism, market potential and appetite, how a new instrument could improve and simplify upon the existing JI structure, and the comparative advantages of the Track 1 and Track 2 approaches for implementation. The outcomes of these workshops indicated that market potential exists in various sectors (from agriculture over energy to transport), with appetite largely depending on prevailing regulatory conditions, and that there was significant potential for making a new mechanism more user friendly without overly sacrificing environmental integrity, inter alia through organising knowledge-building workshops and learning from past experiences.

Member States participating in the first workshop discussed not only the utility of a new mechanism, but also how to bring the process forward. This culminated in an agreement to draft a common position paper in order to instigate action at the EU level. Though the initiative for drafting implementing measures ultimately lies with the Commission, Member States felt that drafting a common position would better demonstrate their concern over this issue, and help bring the matter on the Commission’s agenda.

You can find the background paper and presentations of speakers here:

Moritz Von Unger: Project Mechanisms in Europe. An Overview of Policy Options for After 2012

Jelmer Hoogzaad: JI 2.0A basis for article 24a

Rob Elsworth, Sandbag: Offsets and the EU ETS: The role of CDM and JI so far...

Ariane de Dominicis: Project mechanisms in Europe : Challenges, Options and Next Steps

Peter Zapfel: What role for offsetting in Europe’s post-2012climate policy?

Benoit Leguet: Join Implementation: lessons learned