Emission reduction units (ERUs) represent a reduction of 1 ton of CO2e relative to a hypothetical baseline or business as usual scenario. These assets are produced through the Joint Implementation mechanism which promotes technology transfer between Annex 1 Countries. Specifically the JI is most prevalent between developed Annex 1 countries and former Eastern block states.
The JI i
s very similar in process and design to the CDM. However, it comes with its own nomenclature. Although the pipeline of ERU’s for issuance is growing, structural problems with the scheme and lack of host government commitment means the JI hasn’t been nearly as successful as the CDM.
The key problem has been that whereas in the CDM, the host country can benefit from income from the sale of credits with no government penalty, within the JI, if a net reduction in CO2e is achieved and results in a ERU, which can then be sold, this net reduction is then cancelled from the host countries AAU allowance. AAUs (Authorised Allowance Units) are permits to pollute at country level i.e. the EU issues AAU to host countries, then the country issues EUA’s to organizations through its NAP (National Allocation Plan). Hence, with the JI, the organisation gains an asset while the country looses an asset.
The process does however, lead to the freeing up of one EUA, which thus benefits the country itself. Unfortunately, many governments have been slow to realize this.
The structure of the JI is likely to be re-examined and improved at COP 15. The improvement of which, should make the JI or its successor a major tool in the fight against CO2e propagation post 2012.
