Joint Implementation (JI) is a means for reaching cheaper solutions to CO2 emission reductions. The global potential for JI is defined as the portion of the necessary regional CO2 emission reductions to meet the goals defined for a target year that can be more cost-effectively implemented in other regions.
The goals will come from multilateral negotiations and may be the starting point of any bilateral negotiation process concerning JI-agreements. The more the goals will take cost-effectiveness criteria into account the less scope there will be for additional JI-agreements. In cases where the goals are stricter, the globally required emission reductions will be larger and consequently larger emission reductions could be be achieved in other regions. (However, as compared to the other cases presented in the report the potential for JI will be lower, since the potential is defined as a fraction of the necessary global emission reduction).
JI could reduce the total costs of CO2 emission reduction by more than 75 percent compared to the situation without JI, depending on the initial distribution of CO2 targets, the target year and the scenario-assumptions. For donor countries the cost reductions could be more than 50 percent, even when it is assumed that the subsidies for emission-reduction measures in receptor countries are 50 percent higher than the actual costs. In donor countries the resulting domestic CO2 emission reductions after JI could be more than 50 percent less than the original goals before JI. In comparison to other OECD regions (Japan, Oceania, and the United States), Western Europe's gains from JI are less. In other words, in a world market for JI projects, Western Europe could face strong competition.