A Japanese Style Joint Crediting Mechanism for Australia?

The Paris Agreement reinvigorated the use of carbon markets as a means to confront climate change. Both domestic and multi-jurisdictional mechanisms directed at carbon credit creation and trading were endorsed. In particular, a new measure was proposed to replace the Kyoto Protocol's Clean Development Mechanism (CDM) (and Joint Implementation) at the end of the Protocol's second compliance period in 2020.With carbon market measures increasingly likely to take centre stage Japan's Joint Crediting Mechanism (JCM) takes on renewed interest. Under this mechanism Japanese businesses can generate carbon credits from projects that reduce foreign emissions. As such, the measure borrows from the CDM but seeks to address its inadequacies.Although Australia's current emissions reduction policy is domestically focused it might be expected that cost considerations will necessitate a reconsideration of this policy. The opportunity for Australian entities to instigate cheaper emissions reductions in foreign jurisdictions which might count towards their, and the country's, reduction obligations could see a policy of embracing or replicating Japan's JCM.This paper explores the operation of the JCM. It concludes that should the Australian government alter its policy in the foreshadowed 2020 review and move to recognize foreign credits then it could adapt its Emissions Reduction Fund (and safeguard mechanism) to accept credits generated from the JCM. Alternatively, it could implement an Australian version of a JCM