The project cycle for a JI project starts off with the idea of developing the project as a JI project and with a first rough assessment of the amount of greenhouse gas (GHG) emission reductions that the proposed project could generate. If the first screening of the GHG emission reductions of the project is positive, the next step is a feasibility assessment. During this stage, the project proponent will establish contact with the national Designated Focal Point for JI or if this has not been appointed the Ministry with responsibility for JI and discuss the idea of developing the proposed project as a JI project. This includes an assessment of the applicable and relevant international  and national regulations and policies.

The project cycle for Second Track JI projects can analytically be split into two phases. The first one is the project design phase, which refers to all activities prior to the construction or start of any of the project activities. The second phase is the project operation phase, which refers to the phase during which the project starts operations. The latter is the point in time from which emission reductions can be generated. The main task of the project developer during the project design phase is to prepare all the required documentation for developing a JI project, which is also referred to as the Project Design Document (PDD). The next step will be to hire an Independent Entity for the determination of the proposed JI project. Once the project is operational, the main task of the project proponent is to monitor project performance and to report the results to an Independent Entity. The Independent Entity is responsible for: making the PDD publicly available, determining whether the PDD meets JI requirements, summarising stakeholder comments and taking into account stakeholder comments. The Independent Entity is then responsible for making the determination report, the stakeholder comment summary, and the report on how the stakeholder comments were taken into account, publicly available.

Project Identification

A project developer identifies a project that is located in an Annex I country. The project developer approaches the relevant JI Focal Point and/or promotion agency from both the investor and host counties to confirm eligibility to take part in JI and to request support for the project. At this point it is suggested that a request is made to the host government for a Letter of Endorsement (LoE) for the project. Although this is not a requirement, buyers often require an LoE from the host country authorities before they will consider entering into contractual negotiations.

National Approval

Approval is confirmed through the host country issuing a Letter of Approval (LoA). This confirms the country’s approval for the transfer of carbon credits called Emission Reduction Units (ERUs). An LoA will need to be issued by the investor nation government to authorise the project as a JI project.

Project Formulation and Design

Full project documentation needs to be prepared, including a Project Design  Document (PDD). The PDD contains a description of the project; the basis for determining the emissions that would occur without the project (the baseline), hence identifying the additionality case; and plans for monitoring the reductions. JI Second Track projects may follow the same process as CDM projects with regards to methodologies to assess the additionality and baseline. Furthermore documentation on analysis of environmental impacts of the project activity must be provided, and if necessary, an environmental impact assessment undertaken in accordance with procedures as required by the host Country.

Determination

The PDD, in particular the approach to baseline setting and the calculations, needs to be submitted to a third party, termed an Accredited Independent Entity (IE), for determination.

The Accredited Independent Entity makes the PDD publicly available through the Secretariat for 30 days, and receives comments. Based on the comments provided by the stakeholders, the Accredited Independent Entity will determine whether the project is
 eligible under JI.

Implementation

The project is implemented in the host country according to the specifications outlined in the PDD.

Monitoring

The project developer monitors the project to identify the emission reductions. Based on the monitoring results, the GHG emission reductions resulting from the JI project activity can be calculated. Monitoring reports are issued to the AIE.

Ex-post determination

Project developer submits the monitoring results to Accredited Independent Entity. The project developer has to contract an Accredited Independent Entity for ex-post determination of the monitoring results and the subsequent Emission Reductions Units as a result of the operation of the JI project.

Possible review by the JI Supervisory Committee

Once the Accredited Independent Entity has submitted the verification report to the JI Supervisory Committee (JISC), there is a possibility that a review of the determination report by JISC may be requested. This can only happen when a Party or three members of the JISC request such review. In case there is a request for review of the verification report the following will occur:

• The JISC will decide at its next meeting or within 30 days of the request being made, whether a request has merit and whether to proceed with the review.
• If a review is deemed necessary, the JISC will review the decision of the Independent Entity.
• JISC informs the project proponent of the outcome of the review and makes it decision and reasoning publicly available

Issuance of ERUs

For JI projects, ERUs will be issued by the host country. Under the JI mechanism, emission reductions can be claimed for the first commitment period 2008-2012.