APPENDIX II

GROUNDRULES FOR U.S. INITIATIVE ON JOINT IMPLEMENTATION

Section 1 - Purpose

1. encourage the rapid development and implementation of cooperative, mutually voluntary projects between U.S. and foreign partners aimed at reducing net emissions of greenhouse gases, particularly projects promoting technology cooperation with and sustainable development in developing countries and countries with economies in transition to market economies;

2. promote a broad range of cooperative, mutually voluntary projects to test and evaluate methodologies for measuring, tracking and verifying costs and benefits;

3. establish an empirical basis to contribute to the formulation of international criteria for joint implementation;

4. encourage private sector investment and innovation in the development and dissemination of technologies for reducing net emissions of greenhouse gases; and

5. encourage participating countries to adopt more complete climate protection programs, including national inventories, baselines, policies and measures, and appropriate specific commitments.

Section 2 - Evaluation and Reassessment of Pilot Program

Section 3 - Eligible Participants

• A. Domestic
  1. Any U.S. citizen or resident alien;

  2. any company, organization or group incorporated under or recognized by the laws of the United States; or

  3. any U.S. federal, state or local government entity.

• B. Foreign
  1. Any country that has signed, ratified or acceded to the United Nations Framework Convention on Climate Change;

  2. any citizen or resident alien of a country identified in B(1) of this section;

  3. any company, organization or group incorporated under or recognized by the laws of a country identified in B(1) of this section; or

  4. any national, provincial, state, or local government entity of a country identified in B(1) of this section.

Section 4 - Evaluation Panel

• A. An Evaluation Panel is hereby established.

• B. The Evaluation Panel shall consist of eight members, of whom:
  1. one shall be an employee of the Department of Energy, who shall serve as Co-Chair;

  2. one shall be an employee of the Environmental Protection Agency, who shall serve as Co-Chair;

  3. one shall be an employee of the Agency for International Development;

  4. one shall be an employee of the Department of Agriculture;

  5. one shall be an employee of the Department of Commerce;

  6. one shall be an employee of the Department of the Interior;

  7. one shall be an employee of the Department of State; and

  8. one shall be an employee of the Department of the Treasury.

• C. The Panel shall be responsible for:
  1. Advising and assisting prospective U.S. and foreign participants on the technical parameters (including with respect to baselines, measuring and tracking) of projects submitted for inclusion in the USIJI;

  2. accepting project submissions from eligible U.S. participants and their foreign partners;

  3. reviewing and evaluating project submissions;

  4. approving or rejecting project submissions for inclusion in the USIJI, based on criteria contained in section 5;

  5. providing written reasons for its decisions, which shall be made publicly available, within 90 days of receipt of a complete submission or resubmission;

  6. certifying net emissions reductions estimated to result from projects; and

  7. preparing an annual report of its activities, including a summary of approved projects.

Section 5 - Criteria

• A. To be included in the USIJI, the Evaluation Panel must find that a project submission:
  1. is accepted by the government of the host country;

  2. provides data and methodological information sufficient to estimate current and future net greenhouse gas emissions in the absence of, and as the result of, the project;

  3. will produce net reductions in greenhouse gas emissions that would not reasonably be likely to occur, based on available information, but for the proposed project, and if federally funded, is or will be undertaken with funds in excess of those available for such activities in fiscal year 1993;

  4. contains adequate provisions for tracking the actual net greenhouse gas emissions resulting from the project, and on a periodic basis, for modifying net greenhouse gas emissions reduction estimates and for comparing actual results with those originally projected;

  5. contains adequate provisions for external verification of the actual net greenhouse gas emissions resulting from the project;

  6. identifies any associated non-greenhouse gas environmental impacts/benefits;

  7. provides adequate assurance that actual net greenhouse gas reduction benefits accumulated over time will not be lost or reversed;

  8. provides for registration of the project in the national inventory established under section 1605 of the Energy Policy Act of 1992[*]; and

  9. provides for annual reports to the Evaluation Panel on the actual reduction achieved in net greenhouse gas emissions and on the share of such reduction attributed to each of the participants, domestic and foreign, pursuant to the terms of voluntary agreements among project participants.

• B. In determining whether to include projects under the USIJI, the Evaluation Panel shall also consider:
  1. the potential for the project to lead to net changes in greenhouse gas emissions elsewhere;

  2. the potential positive and negative effects of the project apart from its effect on net greenhouse gas emissions;

  3. whether the U.S. participants are net emitters of greenhouse gases within the United States and, if so, whether they are taking measures to reduce such net emissions; and

  4. whether efforts are underway within the host country to ratify or accede to the United Nations Framework Convention on Climate Change, to develop a national inventory and/or baseline of net greenhouse gas emissions, and whether the host country is taking measures to reduce its net emissions of greenhouse gases.