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ACTIVITIES IMPLEMENTED JOINTLY (AIJ)

List of Projects

Uniform Reporting Format:

Activities Implemented Jointly Under the Pilot Phase

Description of project

A.1 Title of Project: Swiss Energy Efficiency Project (Bucina a.s., Zvolen)

  • Document last modified: 10 March 2000 (DMS#161215.3)
  • For further information on the project, see the report: Federal Office for Foreign Economic Affairs (FOFEA), 1999: Project Appraisal SK FH 42 "Bucina Zvolen a.s.". Bern: FOFEA. The report is available over the SWAPP web site (http://www.admin.ch/swissaij/pdf/in_fs_bucina.pdf).

A.2 Participants/actors:

Item

Please fill in if applicable

Name of organization:

Staatssekretariat für Wirtschaft

Name of organization (English):

State Secretariat for Economic Affairs

Department:

Swiss AIJ Pilot Program

Acronym:

Acronym (English):

SWAPP

Function within activity:

Focal Point for Swiss AIJ Activities

Street:

Effingerstrasse 1

Post code:

3003

City:

Bern

Country:

Switzerland

Telephone:

Fax:

WWW-URL

http://www.admin.ch/swissaij

Contact person (for this activity):

-------------------------------------

Surname:

Enderlin

First name, middle name:

Martin

Job title:

SWAPP Program Manager

Direct tel:

+41 31 323 08 85

Direct fax:

+41 31 324 09 58

Direct E-mail:

swapp@seco.admin.ch

Item

Please fill in if applicable

Name of organization:

Staatssekretariat für Wirtschaft

Name of organization (English):

State Secretariat for Economic Affairs

Department:

Division Project Finance

Acronym (English):

seco/PFET

Function within activity:

Coordinator for project finance, Swiss Government

Street:

Effingerstrasse 1

Post code:

3003

City:

Bern

Country:

Switzerland

Telephone:

Fax:

WWW-URL

http://www.seco-admin.ch

Contact person (for this activity):

-------------------------------------

Surname:

Kuriger

First name, middle name:

Janine

Job title:

Program Manager

Direct tel:

+41 31 324 92 13

Direct fax:

+41 31 324 09 64

Direct E-mail:

janine.kuriger@seco.admin.ch

Item

Please fill in if applicable

Name of organization (English):

Ministry of Foreign Affairs of the Slovak Republic

Department:

International Economic Cooperation and Foreign Assistance

Function within activity:

Street:

Hlboka cesta 2

Post code:

833 36

City:

Bratislava

Country:

Slovak Republic

Telephone:

Fax:

E-mail:

WWW-URL:

Contact person (for this activity):

------------------------------------------------

Surname:

Moravek

First name, middle name:

Stefan

Job title:

Director

Direct tel:

+421 7 5978 3561

Direct fax:

+421 7 5978 3579

Direct E-mail:

Item

Please fill in if applicable

Name of organization (English):

Ministry of the Environment of the Slovak Republic

Department:

Air protection

Function within activity:

Street:

Namestie L. Stura c. 1

Post code:

812 35

City:

Bratislava

Country:

Slovak Republic

Telephone:

+42 17 5956 22 20

Fax:

+42 17 5956 26 62

E-mail:

WWW-URL:

Contact person (for this activity):

------------------------------------------------

Surname:

Mojik

First name, middle name:

Ivan

Job title:

Director

Direct tel:

same as above

Direct fax:

Direct E-mail:

Item

Please fill in if applicable

Name of organization (English):

Ministry of the Environment of the Slovak Republic

Department:

Implementation of Environmental Projects

Function within activity:

Street:

Namestie L. Stura c. 1

Post code:

812 35

City:

Bratislava

Country:

Slovak Republic

Telephone:

+421 7 5956 2400

Fax:

+421 7 5956 2511

E-mail:

WWW-URL:

Contact person (for this activity):

------------------------------------------------

Surname:

Kelbel

First name, middle name:

Frantisek

Job title:

Director

Direct tel:

Direct fax:

Direct E-mail:

Item

Please fill in if applicable

Name of organization (English):

Ministry of the Environment of the Slovak Republic

Department:

Air, Water, Waste and Environmental Risks

Function within activity:

Street:

Namestie L. Stura c. 1

Post code:

812 35

City:

Bratislava

Country:

Slovak Republic

Telephone:

Fax:

WWW-URL:

Contact person (for this activity):

------------------------------------------------

Surname:

Zavadsky

First name, middle name:

Ivan

Job title:

Director

Direct tel:

Direct fax:

Direct E-mail:

Item

Please fill in if applicable

Name of organization:

Bucina Zvolen a.s.

Department:

Function within activity:

Private wood processing company, project host

Street:

Lucenecka cesta 1335/21

Post code:

960 96

City:

Zvolen

Country:

Slovakia

Telephone:

+421 855 530 1100

Fax:

+421 855 530 1121

E-mail:

bucina-tech@zv.sanet.sk

WWW-URL:

Contact person (for this activity):

-------------------------------------

Surname:

Lispuch

First name, middle name:

Peter

Job title:

General Director

Direct tel:

+421 855 530 1900

Direct fax:

+421 855 530 1124

Direct E-mail:

peter.lispuch@bucina.sk

Item

Please fill in if applicable

Name of organization:

Ernst Basler + Partner AG

Name of organization (English):

Ernst Basler + Partners Ltd.

Department:

Energy Planning

Acronym:

EBP

Acronym (English):

EBP

Function within activity:

Consulting engineers, appraisal and AIJ studies

Street:

Zollikerstrasse 65

Post code:

8702

City:

Zollikon

Country:

Switzerland

Telephone:

+41 1 395 11 11

Fax:

+41 1 395 12 34

E-mail:

WWW-URL:

Contact person (for this activity):

-------------------------------------

Surname:

Füssler

First name, middle name:

Jürg

Job title:

Project Manager

Direct tel:

+41 1 395 16 57

Direct fax:

Direct E-mail:

juerg.fuessler@ebp.ch

A.3 Activity:

Item

Please fill in if applicable

General description:

Improvement of energy efficiency in the privately owned wood processing plant Bucina a.s. Project components include:

  • Installation of a natural gas-fueled turbine in the wood drying process for the co-generation of electricity and heat
  • Upgrade and extension of a energy control system for heat, lighting and wood processing technology to decrease the overall heat and electricity demand

Type of project:

Energy efficiency

Location:

Bucina a.s. (wood processing company), City of Zvolen, Central Slovakia

Activity starting date:

2000

Expected activity ending date:

2008

Stage of activity:

mutually agreed

Lifetime of activity if different from ending date:

technical lifetime of turbine: 15 yrs
theoretical "crediting time": 8 yrs

Technical data:

  • turbine: gas turbine - generator set; 3.2MWe, 5.6MWth
  • control system: Network of substations which measure and control the energy used in the production process and for the operation of the buildings (heating, lighting), centralized data management and consumption control

Details on the specific technology to be employed will not be available before procurement is completed.

A.4 Cost (to the extent possible):

Item

Year 0
(total investment cost) 		Year 1 ... 1) Year 7 Year 8

Cost of the project in US$:

2 710 000 2) -465 000 3) -410 000 3) -1 444 000 4)

AIJ component in US$:

2 710 000 2) -465 000 3) -410 000 3) -1 444 000 4)

US$ per avoided ton of CO2 equivalent 5):

18.37 -24.7 -22.7 -80.2

  • 1) Data for Years 2-6 are linearly interpolated between the values for Years 1 and 7. For the purpose of brevity, these data are not shown in the table, but can be provided upon request.

    2) Up-front investment in year 0 to purchase and install equipment. Investments in turbine: 1.85 mio. USD from Switzerland (including 2 yr maintenance and engineering), 0.4 mio. USD from Bucina (local); investments in control system: 0.46 mio. USD from Switzerland (including maintenance and engineering), negligible investment from Bucina (local); total investment: 2.31 mio. USD from Switzerland, 0.4 mio. USD from Bucina (local).

    3) Annual reduction of costs to Bucina resulting from the project as compared to the baseline, taking into account all operating & maintenance costs (but excluding the original investment cost); because natural gas and electricity are saved through the project, the annual incremental operating costs are negative and represent a financial benefit to Bucina.

    4) Annual reduction of costs to plant operators resulting from the project as compared to the baseline in Year 8, taking into account all operating & maintenance costs, as well as income expected from salvation of the turbine after 8 years (US$ 1'042'000), assuming linear depreciation.

    5) In our view, this measure of costs is not the most appropriate. We therefore present a calculation of the incremental abatement cost of the project in the following table:

Incremental abatement cost of the project over the theoretical 8-year "crediting time" of the project

turbine sub-project control system sub-project total project

Incremental cost2) of the project in US$:

-559 000 1) -1128 000 1) -1687 000 1)

US$ per avoided ton of CO2 equivalent:

-5.7 1) -22.6 1) -11.4 1)

  • 1) Negative values indicate a net financial benefit of the AIJ project to Bucina as compared with the agreed baseline.

    2) Calculated by subtracting the Net Present Value of the assumed baseline from the Net Present Value of the AIJ project; key assumptions: theoretical "crediting time" = 8 yrs; discount rate = 12%; linear depreciation of turbine (15-yr lifetime) and control system (8-yr lifetime); fuel prices: electricity = actual price paid for grid electricity plus an escalation of 1%/yr after 2002, natural gas = actual price paid plus 3.44%/yr.

A.5 Mutually agreed assessment procedures:

Describe the procedures, including name of organizations involved

Procedures for monitoring, independent verification and reporting will be agreed in the form of a "Monitoring & Verification Protocol", which remains to be drafted.

  • B Governmental acceptance, approval or endorsement

B.1 For the activity:

  • * First report and joint reporting: please add copies of letters of endorsement by each designated national authority of Parties involved in the activity. (not yet available)

    * Subsequent reports: Activity was: o suspended
    o terminated earlier
    Describe:

B.2 This report is a joint report:

Yes. Confirmation of endorsement will be sent by the Slovakian authorities.

B.3 General short comment by the government(s) if applicable:

Slovakia - represented by the Ministry of Environment and the Ministry of Foreign Affairs - proposed to the Swiss State Secretariat for Economic Affairs to finance an energy efficiency project in the private wood processing company Bucina Zvolen a.s. as a Project in the framework of the pilot phase for activities implemented jointly. The Bucina proposal was identified through the National Strategy Study on Greenhouse Gas Reduction of the Slovak Republic, elaborated with the support of the Swiss Government in 1997-98 under the World Bank's National AIJ/JI/CDM Strategy Studies Program.

  • C Compatibility with and supportiveness of national economic development and socio-economic and environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national economic development and socio-economic and environment priorities and strategies

The project supports the Energy Strategy for the Slovak Republic up to 2005 (published in 1997), the objectives of which include a reliable energy supply at acceptable cost and at the least possible negative environmental impact and increased domestic energy production.

Other economic and socio-economic benefits include:

  • the positive economical impact of the project on the company which will be strengthened by the project and will be able to maintain its important role as a major employer in the region;
  • the demonstration effect of the project which may enable other actors in Slovakia (and in other Central and Eastern European countries) to implement similar projects for domestic electricity production and increased energy efficiency in other locations in industry and in the public sector from which, from the point of view of the national economy, the whole country could benefit;
  • know-how transfer by joint project performance and a training program for operators.

  • D Benefits derived from the activities implemented jointly project

Item

Please fill in

Describe environmental benefits in detail:

Both sub-projects contribute to:

  • reduced air pollutant emissions (CO, SO2, dust)
  • reduced GHG emissions

Do quantitative data exist for evaluation of environmental benefits?

Projected cumulative emission reductions (t/y)

SO2 CO particulate matter

turbine 98 34 4
control system 26 20 5
TOTAL 124 54 9

Describe social/cultural benefits in detail:

see Section C

Do quantitative data exist for evaluation of social benefits?

no

Describe economic benefits in detail:

see Section C

Do quantitative data exist for evaluation of economic benefits?

no

  • E Calculation of the contribution of activities implemented jointly projects that bring about real, measurable and long-term environmental benefits related to the mitigation of climate change that would not have occurred in the absence of such activities

E.1 Estimated emissions without the activity (project baseline):

The gas turbine was originally part of the EBRD energy project, which is used as the baseline for the present project. Due to technical problems and the development of inflation in the Slovak republic, the original fixed budget of the EBRD loan is no longer sufficient to cover all parts of the initially planned EBRD project, which was confirmed in writing by the EBRD. In particular, the financing of the turbine would have been cancelled and the turbine would not have been implemented by Bucina without Swiss investment, at least for the next eight years.

By this time, the loan for the ongoing parallel EBRD project will have been paid off, and Bucina could ask for a new loan for the investments in the turbine and the control system. Prior to that time, the conditions of the EBRD loan prohibit Bucina from taking out additional loans, unless approved by the EBRD. Thus, it is assumed that in the absence of the Swiss project, both sub-projects would be carried out with a delay of 8 years (i.e. in 2008). The restriction of the project period to 8 years demonstrates clearly that the opportunity for a significant emission reduction is only there if the project is implemented immediately; if the project’s implementation is delayed, the associated GHG emission reduction decreases rapidly and would become less attractive to potential investors.

Potential AIJ/JI projects are often considered to be environmental additional if they are more expensive than the baseline, i.e. if their incremental costs are positive. Obviously, this approach considers only part of the barriers of project implementation. In the present case, the company Bucina would not be able to carry out the project in the absence of the Swiss assistance, because they would not be able to obtain the approval of the EBRD for a commercial loan under current local interest rates, even though the project is profitable. It is thus not the positive incremental cost of the project components, but the lack of access to the necessary capital which determines the additionality of this project. Overcoming this important barrier, and the expected significant environmental benefits, demonstrate the environmental additionality of the project.

However, since AIJ/JI investments should not be used to subsidize profitable projects by private firms (which would lead to perverse incentives), we adopted a financing model whereby the Swiss AIJ/JI investment is made in the form of a grant, but because of the significant financial benefits that accrue as a result of the AIJ/JI investment to Bucina, Bucina must repay the Swiss investment to a "counterpart fund" under the auspices of the Slovak Government. The Slovak Government can reinvest this money in other environmental protection projects, increasing the net environmental benefit of the project (these additional benefits are not taken into account in calculating the environmental impact of the AIJ/JI project).

The offsets calculation for the turbine sub-project is based on the replacement of the electricity purchased from the grid by the electricity produced in the gas turbine. For the grid electricity, an emission factor based on the mix of thermal power plants in Slovakia was used.

The offsets calculation for the control system sub-project is based on the assumption of a 10% reduction in energy consumption in the Bucina plant. The resulting decrease in the consumption of electricity and natural gas leads to the above mentioned emission reductions.

More details are available in the feasibility study, which can be downloaded from the SWAPP web site at http://www.admin.ch/swissaij/pdf/in_fs_bucina.pdf

E.2 Estimated emissions with the activity:

Indicated project and baseline emissions do not include indirect emissions such as pre-combustion emissions or leakage due to elasticities in demand and supply. The baseline emission projections indicated below are based on a constant production output.

Summary table: Projected emission reductions

GHG b) Year 1
(2001) 		... c) Year 5
(2005) 		Year 6
(2006) 		... c) Year 8
(2008)

A) Turbine sub-project baseline scenario

CO2 [t/a] 69260 69260 67708 67708

B) Turbine sub-project activity scenario a)

CO2 [t/a] 56680 56680 55797 55797

C1) Effect of turbine sub-project ( B-A )

CO2 -12580 -12580 -11911 -11911

C2) Additional effect of control system

CO2 -6279 -6279 -6105 -6105

C) Total effect of project (C1+C2)

CO2 [t/a] -18859 -18859 -18016 -18016

D) Cumulative effect

CO2 [t] -18859 -75436 -93452 -148300

  • a) Indirect GHG leakages are not included, as these were judged to be negligible (for further information, refer to feasibility study).

  1. Only CO2 is considered; CH4, N2O and others are neglected.
  2. The data for Years 2-4 are the same as for Year 1 and the data for Year 7 are the same as for Year 6 (excluding cumulative effect).

Comment: the small shift in the annual emissions between Year 5 and Year 6 is due to the assumed retirement of units 3 & 4 of the power plant ENO B in Novaky and the resulting change in the emission factor for grid electricity production with fossil fuels.

Summary table: Actual emission reductions

Not available, since project has not yet been implemented

  • F Bearing in mind that the financing of activities implemented jointly shall be additional to financial obligations of Parties included in Annex II to the Convention within the framework of the financial mechanism as well as to current official development assistance flows, please indicate:

Source of project funding

including pre-feasibility phase

Approximate Amount
(million US dollars)

Swiss Government funding (grant) *

TURBINE

equipment cost (turbine)

maintenance / 2-year guarantee for turbine

engineering (7% of capital investment cost)

CONTROL SYSTEM

equipment cost (control system)

engineering (10% of capital investment cost)

TOTAL Swiss funding

  • 1.85

    1.60

    0.14

    0.11

    0.46

    0.42

    0.04

    2.31

Slovak funding

LOCAL COSTS associated with turbine (installation, additional housing cost, transformator & switch cell, gas line cost)

  • 0.40

* From the point-of-view of Switzerland, the Swiss funding is a grant. However, due to the profitability of the project, Bucina only receives loan financing, of which US$ 2.16 mio (Swiss funding excluding engineering costs) must be repayed into the Swiss-Slovak Counterpart Fund of the Slovak Government. This "revolving fund" will be used by the Government of Slovakia to finance other energy efficiency and environmental projects in Slovakia, which will lead to a multiplication of the effect of the Swiss AIJ/JI investment beyond the emission reductions listed in this Uniform Reporting Format.

  • G Contribution to capacity building, transfer of environmentally sound technologies and know-how to other Parties, particularly developing country Parties, to enable them to implement the provisions of the Convention. In this process, the developed country Parties shall support the development and enhancement of endogenous capacities and technologies of developing country Parties.

The use of a gas turbine for the drying processes in the wood processing industry is a new application for Slovakia (although state-of-the-art in Western Europe). Also, comprehensive energy management and control systems for entire plants are not common in Slovakia. The Swiss project will serve as a demonstration project in the wood processing sector (accounts for 3% of GDP), as well as in other industrial sectors and public installations. It will demonstrate the feasibility and the profitability of domestic industrial co-generation and the increase in energy (and cost) efficiency gained by the factory-wide monitoring and control of energy flows in the production processes.

The demonstration of the short pay-back period (3-4 years) of domestic industrial co-generation will make these projects more attractive for possible financing institutions such as the EBRD, which may lead to an additional multiplyer effect of the project.

  • H Additional comments, if any, including any practical experience gained or technical difficulties, effects, impacts or other obstacles encountered

H.1 Any practical experience gained:

--

H.2 Technical difficulties:

--

H.3 Negative impacts and/or effects encountered:

Item

Please fill in

Describe environmental negative impacts/effects in detail:

--

Do quantitative data exist for evaluation of environmental negative impacts/effects?

no

Describe social/cultural negative impacts/effects in detail:

Potential for reduced employment in the Slovak coal sector (lowered demand for domestic coal-generated electricity). The Slovak Government should consider adequate provisions to minimize associated social hardships, notably in the coal mining sector.

Do quantitative data exist for evaluation of social negative impacts/effects?

no

Describe negative economic impacts/effects in detail:

--

Do quantitative data exist for evaluation of economic negative impacts/effects?

no

H.4 Other obstacles encountered: --

H.5 Other: