Domestic UNFCCC Kyoto Protocol Mechanisms Project Supply Coordination Through Tendering – Lessons from the New Zealand Experience

A United Nations Framework Convention on Climate Change (UNFCCC) Joint Implementation (JI) host country has to make sure that JI projects are additional to avoid extra costs to generate the reductions necessary to cover the deduction of Emission Reduction Units (ERUs) from the country’s Kyoto Protocol emissions budget. A tender of ERUs by the government allows to generate additional reductions beyond the ERUs issued if it thoroughly checks project additionality. The government of New Zealand is running a tender for JI projects under the title “Projects to Reduce Emissions” since 2003. In two rounds, 10 million ERUs have been awarded and several projects have already entered into contracts with European buyers. The ratio of ERUs awarded to reductions achieved was 0.8 in the second tender. However it remains to be seen whether the additionality test of this tender is sufficient to exclude clearly non-additional projects.