Brussels, 24 August. A new study by the Stockholm Environment Institute (SEI) finds that bogus carbon offsets issued under the Kyoto Protocols’ Joint Implementation (JI) offsetting mechanism to date have increased global emissions by 600 million tonnes CO2. The study comes timely as countries gear up for the next round of UN talks next week in Germany; they will need to work to ensure the new Paris climate treaty is not undermined, as Kyoto was, by hot air carbon credits.

Joint Implementation (JI) was created under the Kyoto Protocol to enable developed countries to host offset projects. To date, almost 900 million carbon credits were issued under the mechanism.

For every JI credit that is issued, a country has to cancel one of its Kyoto allowances (AAUs) to avoid so-called ‘double counting’ of emissions reductions. To stay within their allocated carbon budget, this should be an incentive for countries to increase domestic climate mitigation when JI credits are sold. However, the new SEI study has found that more than 90% of ERUs were issued by Russia and Ukraine, countries with significant surpluses of emission allowances in the first commitment period of the Kyoto Protocol.

“Joint Implementation has suffered from poor oversight and quality for a long time. This study has likely given the deathblow to the JI as we know it” commented Eva Filzmoser, Carbon Market Watch’s director.

“However, the study’s findings should not be misinterpreted: although Russia or Ukraine have profited from the JI, it was all Parties that decided to give emission allowances to some countries above their projected emissions when agreeing on the Kyoto Protocol, a risk that we might also see in Paris. A key issue in Paris must therefore be to ensure that only countries with stringent targets are able to participate in international carbon markets and that environmental integrity standards are rigorously implemented and enforced.”

The study also makes a significant finding on the need for international oversight: 97% of JI credits were issued under so called “track 1” by the host countries themselves that largely establish their own rules for approving projects and issuing credits, without international oversight. The study found that the share of JI credits issued from project types under “track 2” – which provides for international oversight – had a larger plausible environmental integrity with 54% of credits having plausible environmental integrity, as opposed to 3% from track 1.

“Discussions on how to oversee the use of markets at the Paris climate treaty are vague at best. This study shows that importance of a rigorous, robust and transparent common accounting framework and strong environmental standards being enforced” commented Filzmoser.

 ENDS.

Information for journalists:

Background:

Joint Implementation is one of two offsetting mechanisms under the Kyoto Protocol, along with the Clean Development Mechanism. Both allow for projects that are certified as reducing greenhouse gas (GHG) emissions to issue credits for each tonne of carbon dioxide equivalent (CO2 e) abated, which can then be transferred for use in another country. CDM projects are hosted by developing countries, which do not have emission reduction commitments under the Kyoto Protocol, whereas JI projects are hosted by countries with commitments under the Kyoto Protocol.

Use of JI credits in Europe:

Between 2008 and 2014, European companies have used 566 million JI credits in the EU’s Emissions Trading System (EU ETS) [1]. A clear majority of these JI credits are issued from project types under “track 1”. In addition, EU governments have bought 58 million JI credits to comply with their Kyoto Protocol targets in the 2008-2012 period[2]. The study by the Stockholm Environment Institute finds that about three-quarters of JI credits may not represent actual emission reductions. This means that the poor quality of the bought JI projects may have undermined the EU’s emission reduction target by up to 500 million tonnes of CO₂.

Related links:

• The main study is available at http://www.sei-international.org/publications?pid=2803
• For a policy brief summarizing the findings, see: http://www.sei-international.org/publications?pid=2802

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[1] The EU ETS data viewer by the EEA shows that 378 million JI credits were used in the 2008-2012 period and the European Commission’s press release writes that 191 million JI credits were used in 2013 and 2014.

[2] SWD(2014) 336, Commission staff working document accompanying the “Progress report towards achieving the Kyoto and EU 2020 objectives” see here