Foreword

The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) specifies greenhouse gas (GHG) emissions reduction targets for countries included in Annex I of the Convention. These emission reductions have to be achieved by 2008-12. Domestically, the 38 industrialized nations in Annex I can reduce GHG emissions or enhance GHG sinks within their own territorial borders or jurisdictions. Internationally, the Kyoto Protocol includes four "flexibility" instruments, which enable countries to achieve these reductions with other states. The intention of the mechanisms is to allow emission reductions at the lowest possible costs. The Protocol mechanisms include:

• emissions trading;
• joint implementation (JI);
• the clean development mechanism (CDM); and
• the regional bubble formed by the European union member states.

Only two of these mechanisms - emissions trading and JI - can be used within Annex I by all 38 industrialized or transition countries. CDM is a mechanism to be implemented only between an Annex I country and a developing country. In addition, two of these mechanisms - JI and CDM - are project-based and envision investment in projects to reduce GHG emissions. The project-based mechanisms have not yet entered a phase where investor and recipient countries can transfer emission credits. Nevertheless, experience in implementing such projects is being gained through a pilot phase known as Activities Implemented Jointly (AIJ).

The papers presented in this publication focus on the experience of four Annex I Economies in Transition (EITs) in implementing AIJ projects. The country reports from Bulgaria, the Czech Republic, Poland and Slovenia provide examples of country efforts in building a national JI system to streamline investment. At the same time they illustrate the significant hurdles that governments and the Conference of the Parties to the Convention need to address to make JI investment cost effective and attractive for recipient and investor countries.