Environmental guidance for your business in Northern Ireland & Scotland

How to get involved with Clean Development Mechanism and Joint Implementation projects

How to get involved

Clean Development Mechanism (CDM) and Joint Implementation (JI) projects can offer a range of business opportunities including:

meeting emission reduction targets
generating additional revenue in the form of tradable credits or raising investment capital
improving funding opportunities
providing services - eg lawyers, insurers, risk ratings, auditors and project developers
brokerage and trading of allowances and carbon
selling credits to businesses and consumers.

The Environment Agency is responsible for the approval of CDM and JI projects made after 1 June 2011. CDM and JI projects must be established in accordance with the procedures and processes given by the United Nations Framework Convention on Climate Change (UNFCCC). If a methodology does not exist for a project type, a new methodology can be developed and submitted to the UNFCCC.

UNFCCC: List of approved methodologies

To register a project a developer must:

develop a project proposal and get agreement in principle for the project from the host country
identify the existing emissions (known as the baseline), calculate the level of emissions reductions associated with the project, confirm how the calculation was carried out, and describe how the emissions reductions will be monitored
have the project proposal approved by the host nation for CDM and JI projects
have the project audited and then submit it for international approval to the CDM Executive Board (CDM projects) and to the Joint Implementation Supervisory Committee or the host country (JI projects)
deliver the project and monitor the savings
submit the monitoring for third party verification, based on which the carbon credits will be issued.

Not all emissions reduction projects automatically qualify. A concept referred to as 'additionality' underpins all carbon offset projects. A project activity is deemed additional if emissions of greenhouse gases are reduced below those that would have occurred in the absence of the registered project activity. A carbon credit will eventually be retired to offset a tonne of emissions elsewhere, so if credits are issued to projects for emissions reductions that would have occurred without the project, then there would be no overall emissions reductions. The Environment Agency is the UK's Designated National Authority (DNA) for the CDM, and issues the Letters of Approval (LOA) for voluntary participation in the scheme.

Environment Agency: Establishing a CDM project

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Annex I countries are able to host JI projects and Non Annex I countries can host CDM projects, subject to certain conditions being met.

UNFCCC: List of Annex 1 countries

UNFCCC: List of Non Annex 1 countries

To host CDM projects, Non Annex I countries need to have appointed a Designated National Authority (DNA).

UNFCCC: Countries with a DNA

UNFCCC: Parties currently involved in JI projects

Please note some countries are ineligible for either mechanism.

If you are registering your project with a UK project participant you will need:

a letter of approval from the Environment Agency
a letter from the designated national authority or designated focal point in the country hosting your project.

Please note that the UK Government does not approve JI projects in the UK, but can issue letters of approval to UK companies wishing to participate in JI projects overseas. The Environment Agency is the UK's Designated National Authority (DNA) for the CDM and is the UK's Designated Focal Point (DFP) for JI. The Environment Agency issues the Letters of Approval (LOA) for voluntary participation in both schemes.

Environment Agency: CDM and JI letters of approval

If you have any queries on letters of approval you can email:

cdm@environment-agency.gov.uk for CDM projects
ji@environment-agency.gov.uk for JI projects.

All CDM project applications must be validated by a UN accredited validation agency, known as a Designated Operation Entity (DOE), before being submitted to the UNFCCC.

UNFCCC: List of accredited DOEs

JI projects need to be determined by a UNFCCC approved Accredited Independent Entity (AIE).

UNFCCC: List of approved AIEs

There are a range of companies offering consultancy services that can help you register your CDM or JI project with the UNFCCC. You could also opt to register your project yourself. There are significant costs associated with registering a project under the CDM or JI. However, for small scale projects there are simplified procedures which alleviate some of these costs.

There are a wide range of companies, from large well known organisations to specialist SMEs that have developed services around the global carbon market.

Department of Business Innovation and Skills (BIS): Global carbon market business support

There are two trade associations operating in the sector, the Carbon Market and Investors Association (CMIA) and the International Emissions Trading Association (IETA) .

CMIA: Companies operating in the global carbon market

IETA

To receive credits from a CDM or JI project you will need to hold a registry account.

EU Registry for Emissions trading: Registration and application information

Funding and support

The Carbon Trust offers zero percent interest loans to help organisations finance and invest in energy saving projects. Find out more about loans for energy saving projects on the Carbon Trust website.

Energy saving Trust: Finance and savings