Analysing design options for a European Project Mechanism (EPM) for reducing greenhouse gas emissions

In recent years there have been considerable differences within the EU Member States regarding the practical implementation of flexibility mechanisms set out in the Kyoto Protocol. This applies not only to Joint Implementation (JI) mechanism projects, but also to other mechanisms such as Green Investment Schemes (GIS).The European Commission thus announced a regulatory proposal on the Effort Sharing Decision after 2020 (ESD II) for the first half of 2016. The Commission’s initiative will contain proposals with view to enhance flexibility in the Effort Sharing by application of a project based mechanism. The so-called "European Project Mechanism" (EPM) could become an important additional building block for meeting the long-term emission reduction targets of the EU cost-effectively. Bearing this objective in mind, an EPM must be defined along policy requirements as well as technical and economic criteria.

Financed from a grant by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), adelphi and FutureCamp conducted this research project to take on the current discussion on flexibility elements and systematically investigate possible options for the further development of European climate policy in this area. The principal objective was to collect essential information and develop approaches that may inform the debate on the design of a future EPM. Various design options were discussed, taking into consideration both regulatory perspectives as well as opinions of project developers and other stakeholders. The research programme thus included:

• Stock-taking of rich and varied experience from reference instruments of the Joint Implementation (JI) mechanism and Green Investment Schemes (GIS)
• Preparation of dedicated case studies from EU Member States
• Discussion of core criteria and design options for an EPM
• Preparation of country profiles on conditions, requirements and potentials with view to an EPM

To this end, adelphi conducted in-depth desk research, and organized and implemented exchange formats for the expert community. This included expert interviews, roundtables as well as workshops.