JCM_PW_RoI_ver01.002.0

Rules of Implementation forTthe Joint Crediting Mechanism (JCM)
The Joint Committee of the JCM, mentioned in “Memorandum of Cooperation on Carbon
Reduction Partnership between the Government of Japan and the Government of the Republicof Palau”, hereby establishes the rules of implementation for the JCM as follows:A.
1.

Purpose of the JCM

The JCM has the following purposes:(a)

To facilitate diffusion of leading low carbon technologies, products, systems,services, and infrastructure as well as implementation of mitigation actions, andcontributing to sustainable development of the Republic of Palaudevelopingcountries;(b)

To appropriately evaluate contributions to greenhouse gases (hereinafterreferred to as “GHG”) emission reductions or removals from Japandeveloped
countries in a quantitative manner, through mitigation actions implemented in
the Republic of Palaudeveloping countries and use those emission reductions or
removals to achieve emission reduction targets of the countries involved;(c)

To contribute to the ultimate objective of the United Nations Framework
Convention on Climate Change (UNFCCC) by facilitating global actions foremission reductions or removals.
B.

2.

Scope

GHG are those gases of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),

hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen
trifluoride (NF3).
3.

Credits are issued based on quantified amount of GHG emission reductions orremovals achieved by the contribution of project participants in the implementation of GHG
emission reductions or removals project activities under the JCM (hereinafter referred to as“JCM projects”).
4.

The JCM starts its operation as the non-tradable credit type mechanism. The Japaneseside and the Palauan side (hereinafter referred to as “both sides”) continue consultation for the1

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transition to the tradable credit type mechanism and reach a conclusion at the earliest possible
timing, taking account of implementation of the JCM.
C.
5.

Joint Committee

Both sides establish the Joint Committee which consists of the representatives fromboth sides and other persons designated by each side as necessary.
6.

The Joint Committee may develop or modify the Rules of Implementation and otherrules and guidelines necessary for the implementation of the JCM, including, but not limited to:(a)rules of procedures of the Joint Committee;(b)guidelines for the development of methodologies;(c)methodologies;(d)guidelines for the designation of as a third-party entitiesentity;(e)guidelines for the validation;(f)monitoring guidelines;(g)guidelines for the verification of GHG emission reductions or removals;(h)common specifications for registries;(i)formats forms for project design document (hereinafter referred to as “PDD”),
request for registration of JCM projects, monitoring report, request forverification of emission reductions or removals, etc.

7.

The Joint Committee designates the third-party entities.

8.

On the basis of a request for registration of JCM projects submitted by project

participants, the Joint Committee registers JCM projects which were validated by the third-partyentities.
9.

On the basis of a request for notification to each side for issuance of credits submitted

by project participants, the Joint Committee notifies both sides to issue the credits which wereverified by the third-party entities.
10.

The Joint Committee develops reports on the status of the implementation of the JCM

and, where necessary, discusses issues related to the operation and management of the JCM.
11.

In conjunction with meetings of the Joint Committee, both sides conduct policy2

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consultations about the relevant policy measures of the JCM.
12.

The Joint Committee establishes its secretariat for the implementation of the JCM.
D.

13.

Each Side

Each side, based on the rules and guidelines as developed by the Joint Committee

and/or in accordance with relevant domestic laws and regulations in respective countries for theimplementation of the JCM:(a)

Prepares draft methodologies and submits them to the Joint Committee;(b)

Establishes and maintains a registry in line with the common specifications forregistries, as developed by the Joint Committee;(c)

On the basis of notification for issuance of credit by the Joint Committee(including for allocation of credits among participants), issues the notified
amount of credits to its registry.

14.

Each side promptly informs the Joint Committee on the issuance of credits under theJCM.
15.

Each side takes necessary measures to ensure transparency in the implementation ofthe JCM.
16.

Neither side uses any mitigation projects registered under the JCM for the purpose of

any other international climate mitigation mechanisms to avoid double counting.
E.
17.

Third-party Entities

A third-party entity that is designated by the Joint Committee:(a)On the basis of requests from project participants, validates the project as
described in a PDD prepared by the project participants, in line with theguidelines for the validation as developed by the Joint Committee, and informs
the validation result to the project participants;(b)

On the basis of requests from project participants, verifies GHG emission
reductions or removals achieved by the JCM project as described in themonitoring report prepared by the project participants, in line with theguidelines for the verification of GHG emission reductions or removals as3

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developed by the Joint Committee, records the verification result in averification report and sends the report to the project participants.
F.
18.

Project Participants

Project participants:(a)

Prepare a draft methodology and submit the draft to the Joint Committee for its
approval;(b)

Prepare a draft PDD and submit the draft to a third-party entity selected fromthe designated third-party entities for validation and notify the Joint Committee;(c)Submit the PDD that was validated by the third-party entity to the Joint
Committee for its registration of the project;(d)

Implement the JCM project and conduct monitoring in line with the PDD;(e)

Prepare a monitoring report and send the report to a third-party entity selectedfrom the designated third-party entities for verification;(f)Submit a verification report prepared by the third-party entity to the Joint
Committee, and request notification to each side for issuance of credits underthe JCM.
G.

19.

Development of Methodologies

Each side or project participant prepares a draft methodology and submits it to theJoint Committee. The submitted draft methodology, after its completeness being checked, goes
through public inputs process.
20.

The Joint Committee determines either to approve or reject the draft methodology,

taking account of, among other things, inputs received and notifies the result to each side or
project participant, as applicable. The Joint Committee makes publicly available the relevant
information on the approved methodologies through a website.
H.
21.

Designation of Third-party Entities

Upon receiving an application for designation of as a third-party entity submitted by acandidate, the Joint Committee designates a third-party entity in line with the guidelines for thedesignation of as a third-party entitiesentity, and makes publicly available the relevant
information on the designated third-party entity through a website.
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22.

The Joint Committee may suspend or withdraw the designation of a third-party entity

if it has found fraud, malfeasance or incompetence of the entity.
I.
23.

ValidationValidation is the process of independent evaluation of a proposed JCM project by athird-party entity against the validation guidelines as developed by the Joint Committee on thebasis of the PDD.
24.

Project participants develop a PDD by filling in the format form and request athird-party entity to validate the proposed JCM project.
25.

The third-party entity, in line with the guidelines for the validation as developed by theJoint Committee, validates the proposed JCM project as described in the PDD and notifies theresult of the validation to the project participants.
J.
26.

Registration

Registration is the formal acceptance by the Joint Committee of a validated project asa JCM project.
27.

Project participants submit the PDD, which was validated by the third-party entity, tothe Joint Committee and request for registration.
28.

Upon receiving the request for registration from project participants, the Joint

Committee registers the project, notifies each side of the registration and makes publicly
available the relevant information on the JCM project through a website.
K.
29.

Monitoring

Project participants implement a JCM project and monitor GHG emission reductions

or removals by the JCM project based on the PDD.
L.

Verification

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30.

Verification is the periodic independent review and ex post determination by athird-party entity of the monitored GHG emissions reductions or removals as a result of aregistered JCM project during the verification period.
31.

Project participants prepare a monitoring report and request a third-party entity forverification.
32.

The third-party entity, in line with the guidelines for the verification of GHG emission

reductions or removals as developed by the Joint Committee, verifies the amount of GHGemission reductions or removals on the basis of the monitoring report submitted by the project
participants, prepares a verification report and sends the report to the project participants which
requested verification.
M.

Issuance of Credits

33.

Each side establishes a registry to record and use the credits.

34.

Project participants of a JCM project consult among themselves, and determine, theallocation of credits taking into consideration their contribution (funding to initial investment,
provision of project sites, endorsement/promotional contribution, in-kind contribution, finance,technology, training, support for O&M, etc.) to GHG emission reductions or removals.
35.

The project participants may allocate part of the credits to the respective project

participants and/or respective sides.
35.36.

Project participants request the Joint Committee to notify each side to issue the credits

to its respective account in the registry on the basis of the verification report with thedetermined allocation of the credits among the project participants.
36.37.

The Joint Committee conducts a completeness check on the request, including forallocation of the credits among the project participants, and notifies each side of the result.
37.38.

The Joint Committee makes publicly available the relevant information on theissuance of credits through a website.
N.

Use of Credits
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38.39.

Credits issued by each side can be used to achieve emission reduction targets of bothsides.
39.40.

Each side checks the status of the issuance and use of credits and makes sure that nodouble counting as described in paragraph 16 of credits is discovered.
O.
40.41.

OthersA project which started operation on or after 13 January 2014 is eligible forconsideration as a JCM project.
41.42.

The JCM covers the period for verified emission reductions or removals from themitigation projects under the JCM to be made until 2030until a possible coming into effect of a
new international framework under the UNFCCC. Both sides consider possible extension of theabove-mentioned period JCM and reach a conclusion by 2030 before its termination, taking intoaccount, inter alia, the progress made in the United Nations negotiations on climate change.

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