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Germany

A case for joint attention

Examining the concept of Joint Implementation (JI), coined in Article IV of the Framework Convention on Climate Change signed in Rio in 1992, its definition, implications and problems. And its importance for the wind industry.

A new phrase has entered the CO2 abatement debate: Joint Implementation, or JI. As political shorthand goes, this one is more obtuse than most. Joint implementation of what, with whom, pray? And what has it got to do with wind energy? There are those who believe JI is the one stop solution to solving all our energy pollution woes; and there are others who see it as the thin end of a utility wedge to block renewable energy's march into the power markets of the Western world. But JI stands for neither "Jolly-good Idea" nor "Jackass Idiocy." We argue here, that devised with due care and applied with intelligence, JI could go some way to achieving its aim: the reduction of CO2 emissions by creating markets in the developing world for cleaner technology. That's where wind energy comes in.

Joint Implementation was coined in Article IV of the Framework Convention on Climate Change, signed in Rio in 1992. Here it was suggested that developed and developing countries could jointly implement measures to reduce or prevent emissions of CO2. Such measures would be implemented in third world countries, the idea being that one dollar invested in energy production could lead to greater greenhouse gas reductions in countries with a lower environmental standard than in high-technology countries. A "donor" government or company would invest in a "host" country in exchange for credits, which it would use to offset its pollution at home. The incentive for the investment would be to meet national reduction targets.

Wind as an emission free energy would seem to be a promising candidate for such JI projects. And utilities are attracted by the concept's cut-price approach. We could have a real win-win-situation: relief of CO2 emissions in a cost effective way and access to international know-how and capital for developing countries.

So much for the "jolly-good idea." JI also has its downsides. First, it has not necessarily been welcomed with open arms by those it will benefit most. Host countries in Africa and Asia consider JI as yet another way in which industrialised countries are trying to impose their superiority. This even led to renaming the negatively loaded term "Joint Implementation" to "Activities Implemented Jointly" (AIJ) under the present five year pilot scheme. Another danger lies in the very aspect that utilities embrace: JI's promise of a cut-price solution. Critics warn that industry has little incentive to continue research and development of clean power technologies if it can clock-up pollution credits with existing plant in JI schemes. Other open issues are whether JI reductions should be seen as additional or alternative to national climate programmes and how to distribute the emission reductions achieved between donor and host country.

The biggest stumbling block, however, is how to measure emission reductions. Most non government organisations say that JI projects must result in a reduction of emissions that would not otherwise have been achieved. JI, they say, should enable the construction of cleaner, otherwise unprofitable, power stations (profitable plants will be built anyway) and each proposed project must score positively against a reference model to win JI status. It is a way of thinking which the power industry has not yet begun to grasp. The E 7 group of utilities* fails to even mention the problem of reference models -- and German utility giant RWE, an E7 member, states that "a JI project has to be profitable in itself. We cannot spend money without having an economic benefit." Thus there is a need to bring market forces into play. Without an energy tax or tradable CO2 emission credits -- enabling a utility to offset its additional JI costs through reduced CO2 emissions -- there is no incentive for power companies to build JI projects. It is therefore absurd when German utilities, in negotiations with the government, try to play off their participation in JI projects against a CO2-tax.

As it is today JI is being tossed about as a sedative within the climate battle. As with all sedatives it produces woolly thinking, with each player knitting a definition of JI to his own aims. But let us be optimistic. Let us assume that over time and in all donor countries there will be energy taxes or emission credits with reference models accepted. What would that mean for wind energy? Not too much, unfortunately. The goal of the JI investor is to achieve the optimum relation between incremental cost and reduced CO2 emissions. Gas would be the energy carrier of choice. No other energy can beat its cost combined with its moderate CO2 emission. Do not be fooled by current utility tinkering with wind based JI projects. These mini-projects are experiments -- and wind turbines are the cheapest power station to experiment with.

There is hope, though. Last month saw the first airing of a "global warming standard" specifically applied to gas. Wind is in the equation (page 20). Now is the time for the wind community to actively participate in turning JI into a well-defined, ecologically sound concept, a concept in which renewables have a fair chance. One way would be to reserve a fixed percentage of JI credits for renewables, though this would require a complex country-internal reshuffling of credits between the different projects. A more consequent approach would be to set up a non-linear credit rule which gives greater priority to "zero-CO2" projects than "reduced-CO2" projects. Wind associations the world over could put their heads together and devise still better models. JI will not help us automatically. We have to mould it to fit our needs. And then it could become a beautiful instrument to spread wind energy all over the world.

*EdF (France), ENEL (Italy), RWE (Germany), Kansai and Tokyo electric utilities (Japan), Hydro-Quebec and Ontario Hydro (Canada) & SCE (California).

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