ANNEX 1 JOINT IMPLEMENTATION IN DISCUSSION The UN Conference on Environment and Development, held in Rio de Janeiro last year, saw the signing of the UN Framework Convention on Climate Change (FCCC). The FCCC entered into force on March 21, 1994, with the first meeting of the Conference of the Parties (CoP) in early 1995. The CoP will examine the performance of the obliga­ tions of the Parties, and will elaborate and specify the articles of the Convention. The Intergovernmental Negotiating Committee (INC) is engaged with the preparation of the first CoP meeting. During the regular INC meetings the interpretation of the language of the FCCC is a central issue. Many of the deliberately rather fuzzily formulated articles of the Convention have led to intense discussions. One of the contentious issues is joint implementation. This concept is built into the FCCC to enable countries to undertake cost-effective measures to limit the global cost of managing the problem of global warming. The provision allows countries to invest in emission-reducing measures in other countries, where the marginal costs of abatement are lower than at home. Whether such investment should be rewarded by some form of inter­ national recognition of the effort or a 'climate credit' is a controversial question. Interna­ tional cost-effective options are supposed to exist in particular in Central and Eastern European countries and in developing countries. This annex aims to give insight in the origin of the political sensitivity of joint impl­ ementation.1 The first section gives a summary of different perceptions of joint imple­ mentation in developing countries, as expressed by several government officials and NGOs during interviews held in Kenya and during the eighth INC conference, held in Geneva in August 1993. The second section gives a summary of the key issues of the eighth INC conference, when joint implementation was on the agenda for the first time. In addition, this section outlines the statements on these key issues, as expressed by governments officials during this INC meeting. The perception of joint implementation in developing countries At present, many efforts are undertaken by industrialized countries to investigate the concept of joint implementation. However, due to limited resources, such studies are scarce in developing countries. As a result, developing may not always be fully aware of the implications of joint implementation for their economies and population, and of the merits and limitations of the joint implementation concept in general. This has raised many concerns, which were reflected during several interviews with government officials and NGOs from Kenya (held in Nairobi, May 1993), as well as in several publications of the Climate Action Network Africa (IMPACT). In addition, during the eighth meeting of This annex is based on the confidential report ''Joint Implementation in Discussion", written in the context of this research project. This report is based on information gathered in three different activities. First of all, several meetings/interviews have taken place in the United States as well as in Kenya. Second, dwing a teleconference, the members of our Advisory Board have discussed some specific issues related to joint implementation. To complete the picture of the various points of view, the eighth INC meeting (held in Geneva in august 1993) has been carefully followed. 181 the Intergovernmental Negotiating Committee (held in Geneva, August 1993), a number of representatives of developing countries have expressed anxieties towards joint imple­ mentation. A summary of these concerns is given below. A number of objections relate to the principle of joint implementation, sometimes based on moral concerns. These include the following arguments. Joint implementation resembles the concept of tradeable emission permits. Market structures are typically underdeveloped in Africa. In addition, international trade is often unequal. Why would 'trade' be equal in the case of joint implementation? Such policies will not work as long as there is inequality between the partners negotiating on these matters; Joint implementation will give Northern countries a right to pollute. This is morally indefensible. Developing countries equate emissions rights with the right to devel­ opment because emissions of greenhouse gases are typically considered a part of normal economic development. Hence, developing countries are not inclined to sell such rights. Moreover, marketing those rights will allow the fortunate to 'buy up the environment'; Joint implementation enables rich countries to continue their excessive, wasteful lifestyles. The burden of responsibility for global warming rests with the North. In order to restore the North/ South balance, the essential lifestyle changes must occur in the North, not in the South. During the eighth INC conference, the latter argument was also phrased as "no export of sacrifices". Developed countries have created the greenhouse gas (GHG) problem and should therefore take care of their own emissions. Some other arguments expressed dur­ ing this conference include: Developed countries (listed in Annex II) have committed themselves in the Conven­ tion to pay for necessary action by developing countries; it is not fair for them now to demand carbon credits in return for such payments; Developed countries will take advantage of developing countries in taking away from them the most cost-effective emission reduction options. Given the desperate fman­ cial situation in many developing countries, these countries may be tempted to accept joint implementation projects to gain fmancial transfers from the North, without con­ sidering the longer term obligations. When in due course developing countries also have obligations with respect to their emissions, the cheapest opportunities for emission reductions will have been used up. Joint implementation projects may tum developing countries into 'carbon repositor­ ies'. For example, covering large areas with trees infringes on the future develop­ ment opportunities of these countries. This is also denoted as 'environmental colo­ nialism'. The joint implementation mechanism may pull developing countries into the Frame­ work Convention in a way they want to avoid. Developing countries have as yet limited obligations under the Convention. A formal participation in joint implementa- 182 tion projects may involve additional reporting requirements. The transition towards actual emission reduction requirements is then narrowed; Joint implementation undercut the impact and effectiveness of the Convention by allowing countries to avoid undertaking measures at home. This is contrary to the spirit of the Convention, and will delay the transition to alternative energy economies and life styles in industrialized countries. This transition will be necessary if GHG emissions are to be stabilized at levels that do not threaten the climate and ecosys­ tems; By allowing for joint implementation, existing technology will be disseminated, while technological innovation will be delayed. Technological progress is indispens­ able to reach long-term reductions. A decade of innovation could be lost as a result of joint implementation. There is some fear that in practice the effects of joint implementation may tum out dis­ advantageous for developing countries. This concern is based on the following argum­ ents. Given the existing inequalities in bargaining positions of partners in a joint imple­ mentation project, a fair distribution of benefits is unlikely; There is no insurance that the benefits of a joint implementation project will accrue to the majority of people and satisfy their basic needs, such as food, shelter, energy, and so forth; There is a danger that joint implementation investments will not fit in with the devel­ opment priorities of developing countries; There is no guarantee that developing countries will get the best technology; Joint implementation will favour the export of technology of Northern corporations and may hinder development/dissemination of technology developed in the South; A too narrow focus on technology transfer could lead to more "white elephants" in the South; technologies that do not work because adequate infrastructure is not in place to operate the system and maintain and replace equipment; Increased production costs in the industrialized countries resulting from costs incurred with joint implementation may be transferred back to the developing coun­ tries through higher prices for manufactured goods; The system is open to manipulation and corruption. During the INC meeting there was some discussion on criteria. The criteria proposed by different countries are included in Table 1 in the next section. The discussion on criteria in Kenya was rather premature. However, some suggestions were made. Equity and social acceptability should be emphasized. The joint implementation projects should be in complete agreement with the needs of the inhabitants; There should be an equitable distribution of benefits. The benefits should be measured in broad terms. In Africa, monetary values alone are typically inadequate as criteria for decisions. In allowing for funding a joint implementation project, a cost-benefit approach which systematically sets out the good and bad consequences 183 of alternatives should be applied. The criterion of cost-effectiveness in money terms does not make sense; Criteria should take into account the specific circumstances prevailing in