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Introduction

The Clean Development Mechanism (CDM) and Joint Implementation (JI) are tools established as part of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). These tools allow Annex I (or developed) countries, or companies within those countries, to invest in projects that help them meet their greenhouse gas emission reduction commitments.

Joint Implementation

JI allows Annex I countries to work together by jointly implementing initiatives that will reduce overall greenhouse gas emissions. This mechanism enables Annex I countries to meet part of their required cuts in greenhouse gas emissions by paying for projects that reduce emissions in other Annex I countries, in return for emission reduction units (ERUs). This means that countries, or entities within those countries, can find the least-cost method for meeting their emission targets.

Clean Development Mechanism

CDM allows Annex I countries, or entities within those countries, to invest in projects in non-Annex I (or developing) countries that either reduce greenhouse gas emissions or sequester carbon in sinks. These projects help non-Annex 1 countries achieve sustainable development and generate certified emission reductions (CERs). CERs are used by Annex 1 countries or entities to meet their emission targets at the least cost.

Approval for JI or CDM projects can be obtained through a ‘letter of approval’. In New Zealand, the Ministry for the Environment is the designated authority for issuing letters of approval for these purposes under, and in accordance, with these guidelines.

Who these guidelines are for

These guidelines are for New Zealand-based entities wishing to invest in a JI or CDM project outside of New Zealand, and who want to transfer the resulting ERUs or CERs into the New Zealand Emission Unit Register (NZEUR). Under Article 6 and 12 of the Kyoto Protocol, project activities must have the approval of the Parties involved.

Who these guidelines are not for

New Zealand-based investors in New Zealand projects

New Zealand-based investors do not need a letter of approval to invest in a New Zealand project. New Zealand-based investors in New Zealand projects that have the agreement from the Crown to be issued emission units (for example through the Projects to Reduce Emissions programme) will receive Assigned Amount Units (AAUs) rather than ERUs. To be considered a JI project, and receive ERUs, overseas investors are required.

Development of JI projects in New Zealand

Development of JI projects in New Zealand

If you have a New Zealand-based project (either a project under the Projects to Reduce Emissions programme, Te Apiti or Tararua 2 wind farms), or you have an overseas investor, and want to have your project considered as a JI project please see New Zealand’s Guidelines and Procedures for Track 1 Joint Implementation under the Kyoto Protocol.

New Zealand-based project developers of JI and CDM projects outside of New Zealand

Approval is required from the host party to register a JI or CDM project. In addition, formal acceptance is needed from the CDM Executive Board for a CDM project. Under certain circumstances formal acceptance may be needed from the JI Supervisory Committee for a JI project. More information on these processes is available at the UNFCCC website at http://unfccc.int/, the CDM Rulebook at http://www.cdmrulebook.org/ and the JI Rulebook at http://www.jirulebook.org/ The New Zealand Designated Focal Point (NZ DFP) and New Zealand Designated National Authority (NZ DNA) are not involved in authorising entities to develop project activities outside of New Zealand. The NZ DFP and NZ DNA are only involved in authorising entities wishing to invest in a JI or CDM project outside of New Zealand for the purpose of transferring the resulting emission units (ERU or CER) into the NZEUR.

Investors based outside of New Zealand or Australia

Investors based outside of New Zealand or Australia

The NZ DFP and NZ DNA will only authorise entities to participate in JI or CDM projects if the entity meets the definition of a qualified person as defined by regulation 3 of the Climate Change (Unit Register) Regulations 2008. Only a ‘qualified person’ is able to open an account in the NZEUR. Information on how to open an account in the NZEUR is available at https://www.eur.govt.nz/eats/nz/

Fees

Currently there is no application fee associated with letters of approval.

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