Joint Implementation and the Clean Development Mechanism
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1 Joint Implementation and Joint Implementation and the Clean Development the Clean Development Mechanism Mechanism John Paul Miller Natsource World Bank Carbon Forum Moscow April, 2008 Some new thinking from Natsource. More growth. Less pollution.
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Joint Implementation and the Clean Development Mechanism. John Paul Miller Natsource World Bank Carbon Forum Moscow April, 2008. Some new thinking from Natsource. More growth. Less pollution. Overview. Comparison of CDM and JI Duration of Risks Side By Side Comparison - PowerPoint PPT Presentation
Transcript of Joint Implementation and the Clean Development Mechanism
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Joint Implementation and the Joint Implementation and the Clean Development MechanismClean Development Mechanism
John Paul Miller
Natsource
World Bank Carbon Forum
Moscow
April, 2008
Some new thinking from Natsource.More growth. Less pollution.
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OverviewOverview
Comparison of CDM and JI
Duration of Risks
Side By Side Comparison
Buyer (Investor) Preferences: Track I and II
Conclusions
Some new thinking from Natsource.More growth. Less pollution.
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Comparison of CDM and JI I and IIComparison of CDM and JI I and II
Major Risk(s) Minor Risk(s)
CDM ProjectRegistration Issuance
Host Country*
JI (I) Country Project
JI (II) CountryJISC/AIEProject
Some new thinking from Natsource.More growth. Less pollution.
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Duration of RisksDuration of Risks All projects involve investment in activities that must persist over time, therefore all
projects entail inherent technology/performance risk
Distinction between CDM and JI relates to regulatory and country risks
CDM
– Major regulatory risks “ends at registration”
Host country approval is irrevocable
– Potential tax liability/credit retention may continue
JI Track I
– Major regulatory risk “ends at country acceptance”
Country risk continues
JI Track II
– Country risks persist throughout crediting period
Major JISC/AIE risks “end at final determination”
Some new thinking from Natsource.More growth. Less pollution.
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Side by Side Comparison Side by Side Comparison
Some new thinking from Natsource.More growth. Less pollution.
CDM Mature process, though significant risks remain due to EB’s project by project approach
JI Track I Limited experienceCounterparties experience risk differently
(government to government vs. government to private)
JI Track II JI risk plus JISC issues
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Buyer (Investor) Preferences: Track I and IIBuyer (Investor) Preferences: Track I and II
Track I
Strength of sovereign guaranty (perceived and actual)
Reliability of project/ technology and counterparty
Relatively short payback (short carbon revenue window from 2008-12)
Track II
Same as Track I, but take account of JISC risk
Project activities with existing methodologies
Some new thinking from Natsource.More growth. Less pollution.
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Once issued CERs, ERUs, likely fungible
Differential value function of when investment is made and who carries risk
At present JI carries more uncertainty (therefore risk) than CDM and this will be reflected in pricing, all else being equal
Track II carries more risk than Track I
Risk is attractive to investors that understand how to mitigate
– JI is thus viewed as a value opportunity
Some new thinking from Natsource.More growth. Less pollution.
ConclusionsConclusions
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For Additional Information:JP Miller/Tim Atkinson
Natsource [email protected]+44-208-439-9515
www.natsource.com
