have the necessary national guidelines in place to track, measure and report emissions and reductions are able to issue and transfer ERUs without recourse to an international body for approval.<sup>27</sup> As a practical matter however, many Annex I countries do not currently have in place the domestic institutions needed to fully comply with UNFCC JI eligibility rules.<sup>28</sup> And, rather than preclude projects in countries that have pledged emission ceilings while permitting them in countries that have not, the UNFCCC devised a second Track Two procedure for JI similar in structure to the CDM project cycles. Track Two projects are monitored by the Article 6 supervisory committee, also known as the Joint Implementation Supervisory Committee (JISC), which plays a role similar to the CDM Board. ERUs generated by track-two projects are measured against a baseline, whose methodology has been approved, as determined by an accredited independent entity (AIE) recognized by the JISC. In practice, several of the firms certified to validate CDM baselines (as DOEs) are also certified as to validate Joint Implementation baselines (as AIEs).

# <u>Land management projects</u>

Rule-making for sinks and land-use projects proved difficult and it was not until the Bonn Conference of the Parties in 2003 that guidelines for LULUCF CDM projects emerged. The projects are complex and involve measuring the net change in carbon stocks for particular sites and any related increases in emissions off-site, taking into account above-on-and-below-ground biomass and soil organic carbon. The projects are also long-lived and subject to reversibility because of human activity such as logging or natural events such as forest fires or disease. Because of these characteristics, many feared that the projects would not deliver sound environmental benefits. Added to this was a concern that CDM-market economics would favor projects based on fast-growing industrial plantations, crowding out projects that are community-based and that promote biodiversity.<sup>29</sup> Consequently there was opposition to allowing land-use projects under CDM and the rules that eventually emerged are cautious and restrict the scope for land-use projects.

In particular, current rules permit afforestation and reforestation projects but exclude projects designed to slow deforestation. Moreover, rules limit the total amount of land-use CERs that can be used to meet Kyoto obligations during the first commitment period.<sup>30</sup> To address reversibility, net removals from the project are certified every five years. Certified reductions from

> 27 To be eligible for participation in either project-based mechanism, Annex I countries: ratify the Kyoto Protocol; calculate their assigned amount; establish a national system for estimating emissions and removals; put in pace a national registry to record and track the creation and movement of related tradable assets.

> 28 As of February 2008, only the Czech Republic, Greece, Japan, New Zealand and Slovakia had met UNFCC eligibility requirements.

> 29 Hunt (2008) reports that this may be the case for tropical Australia.

> 30 An Annex B party’s use of LULUCF CERs cannot exceed 5 percent of their base-year emissions.

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