By Nicola Ross

Republished with permission from Enviroline

John Palmisano from Enron’s European office summed up industry’s attitude toward Joint Implementation. He said: “Only one thing will make Joint Implementation happen, if there is a problem, regulate!” The corollary being, of course, that if there is no problem or government doesn’t regulate, then industry isn’t going to get involved in Joint Implementation.

Those following the climate change issue will know that Joint Implementation (JI) (or Activities Implemented Jointly (AIJ) as it is called during the 1995-2000 pilot phase) refers to a climate change mechanism. This mechanism allows companies or agencies in industrialized countries such as Canada to invest in projects that take place in developing countries and that reduce emissions or increase uptake of greenhouse gases. JI or AIJ has been controversial. Some developing countries, like Costa Rica, see it as a good opportunity to combine foreign investment, technology transfer and environmental protection. Others, however, are suspicious of the mechanism, believing it is yet another way for the rich to get richer. Between industrialized countries there is also a difference of opinion and a resulting difference in approach. And even further down the pike, there has been mixed response from the private sector. Overall, investment in AIJ projects has been patchy at best.

Late in May, at a week long meeting, about 200 delegates from over 40 countries met in Vancouver to talk about JI. They asked: Are legally binding targets and schedules going to be agreed to in Kyoto, Japan in December (at the next meeting of the Conference of Parties negotiating the Climate Change Convention)? Will JI be supported? What about credits? Will the JI pilot phase (AIJ) be deemed a success? All of these unanswerable questions were left largely unanswered and the discussion moved quickly to more concrete topics.

We learned that of 25 JI projects approved by the US Initiative on Joint Implementation, less than ten are fully funded. There was talk about the decision by Canada’s Joint Implementation office to not send a delegate to the Vancouver meeting. It was recognized that the audience included only a handful of industry representatives (major emitters of greenhouse gases and potential carbon buyers). Then there was acknowledgement that only two countries in the world plan to live up to their commitment to stabilize emissions of greenhouse gases at 1990 levels by the year 2000 (Britain and Germany).

Yet those involved in JI have almost a zealous fascination with the climate change topic. After the first day of sessions one industry representative, Joe Kostler from Alberta Power, was taken by the passion with which project proponents from Brazil or India spoke about their efforts to alleviate poverty, to protect their environment and by descriptions of how the JI mechanism can help solve what are often life and death problems. Kostler and others like him began to understand that the JI mechanism is more than just an investment opportunity.

And this trend seems to be taking increasing hold. Industry is talking about the issue with an improving level of understanding. Projects are better designed. Reducing emissions of greenhouse gases or of increasing their uptake is becoming less expensive. The range of energy efficient products has expanded. Fuel cells and other changes to our basic energy supply have made gains. In a recent announcement, British Petroleum sent a buzz through industry circles by formally recognizing the seriousness of climate change by stating it will invest heavily in non-fossil energy. In the June 9 issue of the prestigious Wall Street Journal, 130 CEOs in the US took out a two page advertisement to talk about their approach to the climate change issue. And agencies in Norway and the US kicked of a global trade in carbon emission credits by purchasing over $1-million worth of Costa Rica’s government-backed Certifiable Tradable Offsets.

But the public’s level of understanding of the potential consequences of rising levels of greenhouse gases in our atmosphere remains low. In an opinion poll carried out by Insight Canada for Environment Canada late last year, the majority of Canadians said they believe the earth’s climate is warming. However, only 38% of Canadians said they are “very concerned” and 48% were “somewhat concerned” that Canada will miss its stabilization target. The same poll found that 36% of Canadians finger private industry for Canada’s shortcoming. A further 21% put this blame on individuals and 23% say it is the federal and provincial governments’ fault.

“What we need,” says the Canadian Forest Service’s Dr. Michael Apps, “is a perceived benefit at the local level.” Industry representatives, generally, concur. As long as people buy our fossil fuel-based products, for example, we will keep producing them, was the general industry message. If society doesn’t have a problem with climate change then why should industry make an investment to reduce emissions and why would governments regulate carbon?

Yet this viewpoint is not proven out by Telecom Canada. This Canadian leader took the gamble and decided to phase out ozone-depleting CFCs irrespective of government or international initiatives. Not only did the company reap huge public relations kudos as a result, it also became a leader in CFC replacement technology. So where is the climate change leader, was the question posed by Dr. David Suzuki at a press conference dealing with what he believes is the most important issue facing society.

Although they fall short of Telecom’s example, a number of Canadian corporations, TransAlta Corporation and Ontario Hydro in particular, have made a foray into climate change. Their investments will help Canada reach its goal of stabilization. In fact, Ontario Hydro will more than meet the target of stabilization at 1990 levels by 2000. Furthermore, some government schemes are being changed to recognize the importance of reducing emissions of greenhouse gases. For example, the Ontario Energy Utility Board is expected to end its practice of setting pricing to encourage ever increasing sales of energy.

In British Columbia, the BC Offset Pilot Project could get going in early 1998. This greenhouse gas emission trading program will be a first in Canada. Its flexible approach is intended to try out the concept. Expectations of a “couple of million dollars” of investments by a few BC companies may expand since Albertan companies have expressed an interest in getting involved with this BC pilot and both BC and Alberta players want to invite Ontario to table.

The Intergovernmental Panel on Climate Change (IPCC) makes its opinion of how to deal with climate change clear. The IPCC’s four recent conclusions are that human actions are affecting climate; action is economically justified; current commitments are inadequate; and a portfolio of actions to combat climate change should be implemented.

With the IPCC’s conclusions in hand, the David Suzuki Foundation, in conjunction with a US counterpart, has succeeded in having 2,800 leading American and Canadian economists, including eight Nobel Laureates, support action on climate change. These economists have signed a statement that says climate change is a risk; that total benefits of reduction policies exceed total costs; and that “there are policy options that would slow climate change without harming North American living standards, and these measures may, in fact, improve productivity in the longer run.”

Currently, the Joint Implementation mechanism is only a minor aspect of climate change. But it is likely to receive greater consideration as the effects of climate change become more apparent. Dr. Stowell from the US Department of Energy explained to the audience in Vancouver that her department’s studies indicate that the financial cost of lowering emissions of greenhouse gases is reduced by 70% when US companies are allowed to take necessary actions anywhere in the world and are not limited to taking them on home territory. The US understands that if it agrees to legally binding targets and schedules, then it wants access to the JI mechanism as a cost effective solution. Staff from the US Initiative on Joint Implementation have, not surprisingly, been instructed to “beat the bushes” for JI projects.

Enron’s John Palmisano states that if governments were to implement flexible schemes for compliance, then countries, companies and citizens would discover cost effective means to meet targets. Now governments need to have the courage to put these schemes into place.

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