Central Europe eagerly awaits Joint Implementation
Selling the Greenhouse
By L. Stephen Joyce in Prague

As negotiations surrounding the approval of a key amendment to a United Nations convention on lowering greenhouse gas emissions continue, four Central European countries are readying themselves for the amendment’s implementation, a process that could generate billions of dollars in revenue for the region.

According to the historic Kyoto Protocol of the United Nations Framework Convention on Climate Change (FCCC), convention parties must reduce greenhouse gas emissions by a fixed percentage over the period 2008–2012 based on 1990 emissions levels. The Czech Republic and Slovakia must reduce greenhouse gas emissions by 8 percent while Hungary and Poland must cut their emissions by 6 percent on average over the five-year period, according to the agreement.

The protocol, agreed on 11 December 1997 in Kyoto, Japan, allows a country exceeding its reduction target to trade or sell its excess emissions reductions to a nation not reaching its own reduction obligation. The protocol refers to this mechanism as emissions trading.

A country might also benefit from a second mechanism in the protocol referred to as joint implementation, which would allow countries to invest in projects outside their borders and receive emissions credits for the reductions brought about by the projects when calculating its domestic reductions.

Exactly how these two mechanisms will work has not yet been decided, so it is unclear how these markets will ultimately operate. Can a country with excess emission reductions, for instance, sell these for hard currency? If so, who or what receives that money—a country’s general fund, or perhaps the company providing the technology? Will a company reaping foreign investment through a joint implementation program have to give the investor equity in the enterprise? The answers to these and other questions are not yet known. Parties to the convention tried to develop the two concepts during a 2–12 June meeting in Bonn but according to a United Nations official familiar with the proceedings “progress was slow.” The issue will be raised again at the next Conference of the Parties held in Buenos Aires in November. It will be the fourth so-called COP and thus is known as COP-4 of the FCCC....

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