The Linking Directive and the Potential for Joint Implementation in the Baltic Sea Region

The "Linking Directive" establishes a link between the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) and the project-based mechanisms of the Kyoto Protocol to the United Nations Framework Convention on Climate Change. The Linking Directive allows installations within the EU ETS to use emission reduction units from joint implementation (JI) in order to comply with the emission caps in the scheme. This increases the geographical scope of the EU ETS and aim to ensure cost-efficient reductions are achieved. The Linking Directive will however considerably reduce the potential for JI in EU Member States due to the so-called double-counting provisions. This report examines the significance of the Linking Directive for the JI potential in the Baltic Sea Region. The report commences with a review of the double counting provisions set by the European Commission for JI host countries. Then it proceeds to examine, the status and implications of the Linking Directive in the countries of the Baltic Sea Region are described. Finally, an overview is given on the country studies and on the total potential for JI, the results are compared with JI potential elsewhere, and the prospects of Green Investment Schemes are also discussed.