Joint implementation (JI) is one of three flexibility mechanisms set forth in the Kyoto Protocol to help countries with binding greenhouse gas emissions targets (so-called Annex I countries) meet their obligations. JI is set forth in Article 6 of the Kyoto Protocol.[1] Under Article 6, any Annex I country can invest in emission reduction projects (referred to as "Joint Implementation Projects") in any other Annex I country as an alternative to reducing emissions domestically. In this way countries can lower the costs of complying with their Kyoto targets by investing in greenhouse gas reductions in an Annex I country where reductions are cheaper, and then applying the credit for those reductions towards their commitment goal.

A JI project might involve, for example, replacing a coal-fired power plant with a more efficient combined heat and power plant. Most JI projects are expected to take place in so-called "economies in transition," noted in Annex B of the Kyoto Protocol.[2] Currently Russia and Ukraine are slated to host the greatest number of JI projects. [3]

Unlike the case of the Clean Development Mechanism, the JI has caused less concern of spurious emission reductions, as the JI, unlike the CDM, takes place in countries which have an emission reduction requirement.

The process of receiving credit for JI projects is somewhat complex. Emission reductions are awarded credits called Emission Reduction Units (ERUs), where one ERU represents an emission reduction equaling one tonne of CO2 equivalent. The ERUs come from the host country's pool of assigned emissions credits, known as AAUs. Each Annex I party has a predetermined amount of AAUs, calculated on the basis of its 1990 greenhouse gas emission levels. [4] By requiring JI credits to come from a host country's pool of AAUs, the Kyoto Protocol ensures that the total amount of emissions credits among Annex I parties does not change for the duration of the Kyoto Protocol's first commitment period.[5]

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  1. For more on JI see
  2. Annex B of the Kyoto Protocol identifies 12 economies in transition: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Russian Federation, Slovakia, Slovenia, and the Ukraine.
  3. For a list of JI projects currently in the pipeline see [1]
  4. The initial assigned amount of AAUs is equal to a country's 1990 level of greenhouse gas emissions, less five percent, multiplied over five years. Each AAU is worth 1 ton of C02 equivalent. This formula is set forth in Article 3 Paragraph 1 of the Kyoto Protocol. The actual emission limitations for each Annex I Party are listed in Annex B of the Kyoto Protocol.
  5. To illustrate, suppose the Kyoto Protocol only had three Annex I parties, countries A, B and C, each having 100 AAUs for the whole first commitment period. This would mean that the total amount of credits at the beginning of the first commitment period would be equal to 300. Now suppose that A hosted a JI project for B, resulting in 10 credits-worth of emissions reductions. A would have to convert 10 of its AAUs to ERUs and transfer them to B. So in the end, A would have ten less credits, or 90 AAUs (100 AAUs minus 10 converted ERUs); B would have ten more credits (100 AAUs plus 10 ERUs from the project), and country C would remain with its 100 AAUs. The total number of credits at the end of the first commitment period would be the same -- 300.