What is the letter of approval?
Parties involved in JI project activities must give approval for:
- a proposed project to take place; and
- the participation of the project participants in the project.
Unlike the Clean Development Mechanism (CDM), letters of approval are not formally discussed in the JI rules. However, the requirement for project-level approval by Parties is implied by Article 6, paragraph 1(a) of the Kyoto Protocol:
For the purpose of meeting its commitments under Article 3, any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases in any sector of the economy, provided that:
- Any such project has the approval of the Parties involved (Kyoto Protocol, Article 6, paragraph 1(a)).
Similarly, the need for participant-level approval is implied by 9/CMP.1, Annex, paragraph 29:
A Party that authorizes legal entities to participate in Article 6 projects shall remain responsible for the fulfilment of its obligations under the Kyoto Protocol and shall ensure that such participation is consistent with the present annex. Legal entities may only transfer or acquire ERUs if the authorizing Party is eligible to do so at that time (9/CMP.1, Annex, paragraph 29).
In practice, the project-level and participant-level approvals are collapsed into a single approval process. For Track 1 projects, these approvals are obtained and confirmed internally, according to national regulations.
For Track 2 projects, approvals are confirmed by the accredited independent entity (AIE) as part of the project determination:
The accredited independent entity shall determine whether:
- The project has been approved by the Parties involved (9/CMP.1, Annex, paragraph 33(a)).
Although this appears to refer only to project-level approval, the JI rules do not provide specific rules for confirmation/determination of participant-level approval, so this paragraph should be read as requiring both approvals.
It should be noted that even where projects are conducted under the Track 2 process, participants will still need to follow national regulations for obtaining a letter of approval from the Parties involved. This may require following a detailed pre-approval process and/or obtaining a letter of support from the host Party.
Several Parties have established detailed pre-approval processes for Joint Implementation (JI) projects. These processes, which are implemented through national laws, are designed to ensure that these Parties have the opportunity to select and approve the best JI projects to be hosted in their country.
In Russia, the Regulations on Adopting, and Checking the Development of Projects Implemented Under Article 6 of the Kyoto Protocol to the United Nations Framework Convention on Climate Change adopted on 28 May 2007 (the Russian JI Rules) set out a detailed procedure for obtaining the letter of approval, as described below:
- Project documentation, including the project design document and a determination report must be submitted to the designated focal point for pre-approval. The determination report must be prepared by an expert selected from a list of organisations that have been authorised by the Commission established by the Russian Ministry of Economic Development and Trade (the Commission).
- The designated focal point rejects applications that either contemplate emission reductions or removals prior to 1 January 2008 or after 31 December 2012, or that are otherwise not in compliance with the Russian JI Rules.
- The designated focal point forwards pre-approved applications to the relevant Authorised Body within a Government Ministry (chosen according to the sector in which the project is to be implemented). The Authorised Body recommends that the project should be approved or rejected.
- The Authorised Body forwards the projects for which it has recommended approval to the Commission. The Commission recommends whether to approve or reject the project based on further criteria.
- The Commission forwards its recommendation to the designated focal point, which then sends a consolidated list of approved projects to the Russian Government for final approval.
- If projects are finally approved by the Russian Government, the designated focal point issues a letter of approval.
In the Ukraine, the Resolution of Approval of the Procedure for Consideration, Approval and Implementation of Projects Aimed at Anthropogenic Emission Reduction or Greenhouse Gas Absorption Increase Pursuant to Kyoto Protocol to the United Nations Framework Convention on Climate Change (Ukraine JI Rules), adopted 22 February 2006, sets out a shorter pre-approval process, as follows:
- Project participants are required to submit a written and electronic application with supporting documentation to the Ministry of Environmental Protection of Ukraine.
- The Ministry considers the documentation and decides, within one month, whether to issue a letter of support.
- If a letter of support is issued, project participants are required to develop a project design document (PDD) for the project and submit it to the Ministry.
- The Ministry considers the PDD, with assistance from experts where required, and decides whether to issue a letter of approval.
Information on Track 1 procedures, including designated focal points (DFPs) and national guidelines and procedures for approving JI projects, is available for each Party from the UNFCCC website here.