IETA congratulates the Japanese government for the progress made on developing the JCM/BOCM and its intention to create a strong and robust bilateral offset market, February 18
IETA has sent a letter to METI in Tokyo providing its views and seeks clarification on the development of the Japanese Bilateral Offset Mechanism

February 18, 2013

Mr. Koji Hachiyama
Director, Global Environment Partnership and Technologies Office
Industrial Science and Technology Policy and Environment Bureau
Ministry of Economy, Trade and Industry, Japan
1-3-1, Kasumigaseki Chiyoda-ku
Tokyo, Japan

Dear Mr. Hachiyama,

IETA congratulates the Japanese government for the progress made on developing the JCM/BOCM and its intention to create a strong and robust bilateral offset market. IETA believes that competitive markets are the most effective way of incentivizing private companies to undertake emissions reduction activities. IETA’s +150 members are interested in learning more and eventually participating in the JCM/BOCM. We support efforts to harmonize standards across various offsets systems, in order to make future linking of programs more feasible.  In this letter, IETA seeks clarifrication of several questions related to competitiveness and implementation of the JCM/BOCM.

On competitiveness, ensuring a level playing field for all technologies that contribute towards reducing emissions is essential for a healthy market. It is expected and welcomed that the Japanese government is paying attention to the use of domestic Japanese technologies and technology providers to export to participating developing nations. From a carbon markets perspective, however, all the policy measures should comply with international trade rules as this will strengthen the mechanism over time. IETA seeks an international crediting mechanism which allows fair competition among international private actors and includes the participation of the international market for low carbon technologies and services. We also hope that MRV approaches are done in coordination with other jurisdictions that are establishing emissions trading schemes-such as Australia, China and California. This will only lead to a better system at the UN level. IETA believes that such a mechanism shall be effective and practical for reducing emissions globally. As such, we have a few questions related to competitiveness of the JCM/BOCM that we hope METI will help us answer:

•    How will the Japanese government determine the benchmarking and the list of technologies as eligible criteria under the JCM/BOCM?
•    How will the Japanese government ensure eligible technologies are the least-cost option and most effective?
•    Can you confirm that the private sector (both Japanese and international) has a role in the scheme in supplying technology for projects and receiving credits directly?
•    Can you clarify how non-Japanese firms can participate in purchasing credits from the JCM/BOCM? For example, what are the criteria--having a registered Japanese entity? Or just an account in the Japanese registry? Etc.
•    What kind of measures are planned to support fungibility/international recognition of bilateral offsets in the context of NMMs developed under the UNFCCC?

On implementation of the JCM/BOCM, IETA seeks clarification on the ‘basic elements’ that will be used to determine methodologies by the Joint Committee. A crediting mechanism should allow for the broadest suite of options to reduce emissions. This will enhance the cost-effectiveness of the program. A scheme that excludes particular technologies will lower the possibility of crediting more cost-effective projects and raise program costs. Based on years of experience through the CDM Executive Board, IETA strongly believes that the Joint Committee must be a neutral judge of the technologies available for crediting under the BOCM, and provide recommendations that benchmarking should be more positively considered. On implementation, IETA requests more information from METI on the following:

•    What criteria that will be used to determine methodologies at the Joint Committee level?
•    What is the decision making progress, and safeguards to ensure equal competition between different methodologies and projects for registration?
•    How will decisions of the joint committee be made towards accepting projects from all technology providers-both in and outside Japan?
•    Will the JCM/BOCM recognize or accredit existing methodologies approved under the CDM?
•    To what extent does support for REDD+ fall within the scope of the JCM/BOCM?
•    How, if at all, will the actual crediting will take place (governing body, who will get the credits, who will be verifying the emission reductions based on which rules etc)?
•    What kind of international/UNFCCC recognition will credits from the JCM/BOCM have? Could they be used by other countries for emission reductions? Will they be exchangeable with other credits that are used for compliance through the UNFCCC?
•    How will JCM/BOCM transform into to new market mechanisms after 2020?

IETA looks forward to an extensive and open discussion with METI in the future on this matter and receiving answers to our clarifying questions.


Dirk Forrister
President and CEO, IETA

Download the letter here
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