Introduction 

The Joint Crediting Mechanism (JCM) is a pioneering approach to achieving global emissions reductions through bilateral cooperation. Established to facilitate the transfer of green technology from developed to developing nations, JCM helps participating countries achieve their emission reduction targets effectively. As a leader in sustainable development, I-REC and carbon credit solutions, GreenUP supports initiatives like the JCM that align with global climate change mitigation strategies.

Background and Development of JCM

The concept of the Joint Crediting Mechanism was born out of the need for new international cooperative strategies to tackle the pressing issue of global warming. Officially launched in the 2010s, the JCM aims to complement existing carbon offset mechanisms, such as the Clean Development Mechanism (CDM) defined by the Kyoto Protocol. Unlike the CDM, the JCM allows developed countries to meet part of their greenhouse gas (GHG) emission reduction targets through the implementation of emission reduction projects in developing countries.

Key players in the JCM include Japan, Mongolia, Bangladesh, and several other Asian and African nations. As of January 2024, the JCM partnership document has been signed with 29 countries. These countries have pioneered the implementation of JCM projects, ranging from renewable energy generation to energy efficiency improvements in industrial processes.

Objectives of the JCM

The primary objective of the Joint Crediting Mechanism is to facilitate measurable and verifiable reductions in greenhouse gas emissions. This not only helps developing countries leapfrog to cleaner, more modern technology but also allows developed countries to earn carbon credits by helping others reduce emissions. The JCM thus plays a crucial role in global efforts to mitigate climate change, intending to foster sustainable development and encourage the diffusion of low-carbon technologies.

Project Selection for the Joint Crediting Mechanism

Project selection in the JCM involves a stringent process that ensures only the most impactful projects receive approval. Proposals are evaluated based on their potential to significantly reduce emissions and contribute to sustainable development, mirroring our company’s criteria for selecting projects for carbon and plastic credits.

• Submission of Project Proposals: Interested parties, such as private companies, government entities, or joint ventures, submit project proposals to the JCM secretariat or the designated national authority in the host country. These proposals must detail the project’s scope, expected impact on emissions reduction, and alignment with local environmental and economic priorities.
  Initial Screening: Proposals undergo an initial screening to ensure they meet basic JCM criteria, such as feasibility, potential for significant emission reductions, and contribution to sustainable development. Proposals that do not meet these criteria are filtered out early in the process.
• Technical and Financial Assessment: Projects that pass the initial screening are then assessed for their technical viability and financial sustainability. This assessment includes a detailed evaluation of the technology to be used, the project’s operational plan, and its financial model. Projects must demonstrate that they are technically sound and financially viable without depending solely on JCM funding.
• Stakeholder Consultation: Stakeholder consultations are conducted to gather input from local communities, environmental groups, and other relevant stakeholders. This step is crucial for assessing the potential social and environmental impact of the projects and ensuring local community support.
• Approval and Endorsement: The final selection of projects is made based on a comprehensive review of the technical assessments and stakeholder feedback. Projects that are approved are then formally endorsed by both the host and investing countries. This endorsement is necessary for the projects to move forward to the development cycle and eventually receive JCM support.

Project Development Cycle in the JCM

The development cycle for JCM projects includes several key stages—from project identification and feasibility analysis to monitoring and verification of achieved emission reductions. Each project is assessed for its environmental impact and alignment with sustainable development goals, ensuring transparency and efficacy in reducing global greenhouse gas emissions.

• Project Identification and Feasibility Study: This initial stage involves identifying potential projects and conducting feasibility studies to assess their viability, environmental impact, and potential for emissions reduction. Stakeholders, including local governments and potential technology providers, collaborate to outline project scopes and objectives.
• Preparation of Project Design Document (PDD): Once a project is deemed feasible, a detailed Project Design Document is prepared. The PDD includes comprehensive information on the project’s objectives, expected emission reductions, technology to be used, and a monitoring plan. This document is crucial for the validation process.
• Validation: An independent third-party conducts the validation to ensure the project’s compliance with JCM guidelines and its potential to achieve the stated emission reductions. Validation is a critical step to maintain transparency and integrity within the JCM framework.
• Implementation: Upon successful validation, the project moves to the implementation phase. During this stage, technologies are transferred, installed, and operationalized. This phase often involves significant collaboration between technology providers, local workforce, and government entities.
• Monitoring and Reporting: Continuous monitoring is carried out to assess the performance of the project against its objectives. Data collected during this phase is used to compile monitoring reports, which are essential for verifying the project’s impact on reducing emissions.
• Verification and Issuance of Credits: After monitoring, another independent third-party verifies the reported results. If the project has achieved the predicted emission reductions, the JCM issues carbon credits corresponding to the amount of reduced emissions. These credits can then be applied towards the emission reduction targets of the supporting country.

How JCM Works

The mechanism of JCM starts with the identification of a project that can reduce emissions in a developing country. These projects often involve the transfer of technology and expertise from developed countries. For example, a typical project under the JCM might involve the installation of advanced biomass boiler systems in Indonesian factories to replace less efficient, more polluting coal-fired systems.

In the JCM framework, projects that reduce emissions receive rigorous monitoring and assessment, earning them ‘JCM credits‘. These credits are akin to the carbon credits our company offers, which also encourage sustainable practices and technological advancements in various industries.

Benefits and Challenges of JCM

The benefits of the JCM are manifold. Economically, it stimulates green investment and technology transfer between countries. Environmentally, it contributes directly to the reduction of GHG emissions. However, the JCM faces several challenges, including the complexity of project validation processes and the risk of ‘double counting’ credits.

Critics also point out that the JCM might allow developed countries to ‘outsource’ a part of their emission reduction obligations rather than taking domestic action. Moreover, the scale of its impact is still limited compared to global GHG emissions.

Future Prospects

As JCM continues to evolve, it is expected to play a significant role in the international carbon market, influencing how carbon credits are integrated into national and international regulations. For companies like ours, staying ahead in the carbon trading market means engaging with mechanisms like the JCM, which pave the way for more sustainable and innovative solutions in combating climate change.

About GreenUP

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References

1. Asian Development Bank, n.d. Handbook for Developing Joint Crediting Mechanism Projects. [online] Available at: https://www.adb.org/sites/default/files/institutional-document/219486/handbook-developing-joint-crediting-mechanism-projects.pdf.
2. Global Environment Centre Foundation, 2021. JCM Projects: Facilitating Green Growth. [pdf] Tokyo: Global Environment Centre Foundation. Available at: https://gec.jp/jcm/jp/publication/JCM2021Oct_En_Web.pdf.
3. Global Environment Centre Foundation, n.d. JCM. [online] Available at: https://gec.jp/jcm/.
4. International Institute for Sustainable Development (IISD), n.d. Joint Crediting Mechanism (JCM) Implementation. [online] Available at: https://enb.iisd.org/joint-crediting-mechanism-jcm-implementation.
5. Joint Crediting Mechanism, 2023. Outline of JCM. [pdf] Available at: https://www.jcm.go.jp/opt/all/about/202311_JCM_goj_eng.pdf.
6. Joint Crediting Mechanism, 2023. JCM Methodology Guidelines. [pdf] Available at: https://www.jcm.go.jp/jc_decisions/1203/JCM_MM_GL_PM_ver01.0.pdf.
7. Joint Crediting Mechanism, n.d. About JCM. [online] Available at: https://www.jcm.go.jp/about.
8. Mo, J., 2016. Chapter 7: Joint Crediting Mechanism for Achieving NDCs under the Paris Agreement. In: T. Okubo, ed., Carbon Pricing in Japan. Springer International Publishing, pp.85-101. Available at: https://link.springer.com/chapter/10.1007/978-3-319-43702-6_7.