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ACTIVITIES IMPLEMENTED JOINTLY (AIJ)

List of Programmes

Annex II

 

PROPOSED UNIFORM REPORTING FORMAT:

NATIONAL PROGRAMME

1. Designated national authority for activities implemented jointly

A) Please fill in if not already communicated or if changes have occurred.

Item Swedish Co-reporter

Name of organization(a):

Statens energimyndighet(1

Name of organization (English):

Swedish National Energy Administration

Department:

Secretariat for Climate Policy and International Cooperation

- EAES Programme

Acronym:

STEM

Acronym (English):

STEM

Function within activity:

Assigned by the Swedish Government for Implementation including financing arrangements.

Street:

Kungsgatan 43, P.O. Box 310

Post code:

SE-631 04

City:

ESKILSTUNA

Country:

Sweden

Telephone:

+46-16 544 20 00

Fax:

+46-16-544 22 64

E-mail:

klas.tennberg@stem.se

WWW-URL:

http://www.stem.se

Contact person (for this activity):

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

Surname:

Knutsson

First name, middle name:

Gudrun

Job title:

Head of Section, Climate Investment Programme

Direct telephone:

+46-16-544 20 72

Direct fax:

+46-16-544 22 64

Direct E-mail:

gudrun.knutsson@stem.se

(1 From 1 January, 1998, the new Swedish National Energy Administration has taken over the responsibility for the Programme for an Environmentally Adapted energy System in the Baltic region and Eastern Europe (EAES Programme) from NUTEK (Swedish

National Board for Industrial and Technical Development).

1. Designated national authority for activities implemented jointly

A) Please fill in if not already communicated or if changes have occurred.

Item Estonian Co-reporter

Name of organization(a):

Eesti Vabariigi Keskkonnaministeerium

Name of organization (English):

Ministry of the Environment of the Republic of Estonia

Department:

International Relations Department

Acronym:

EKM

Acronym (English):

MoE

Function within activity:

Estonian Climate Responsible Organisation

Street:

Toompuiestee 24

Post code:

EE 0100

City:

Tallinn

Country:

ESTONIA

Telephone:

+372 62 62 800

Fax:

+372 62 62 801

E-mail:

Min@ekm.envir.ee

WWW-URL:

http://www.envir.ee

Contact person (for this activity):

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

Surname:

Kratovits

First name, middle name:

Andres

Job title:

Councellor

Direct tel:

+372-62 62 841

Direct fax:

+372-62 62 845

Direct E-mail:

andres@ekm.envir.ee

1. Designated national authority for activities implemented jointly

A) Please fill in if not already communicated or if changes have occurred.

Item Latvian Co-reporter

Name of organization(a):

Name of organization (English):

Ministry of Environmental Protection and

Regional Development of the Republic of Latvia

Department:

Environmental Protection Department

Acronym:

VARAM

Acronym (English):

Function within activity:

Latvian Climate Responsible Organisation

Street:

Peldu Str. 25

Post code:

LV 1494

City:

RIGA

Country:

LATVIA

Telephone:

+371-7 026 508

Fax:

+371-7820 442

E-mail:

erna@novell.gov.lv

WWW-URL:

Contact person (for this activity):

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

Surname:

Apene

First name, middle name:

Ingrida

Job title:

Senior Official

Direct tel:

+371 - 7 026 508

Direct fax:

+371 - 7 820 442

Direct E-mail:

erna@novell.gov.lv

1. Designated national authority for activities implemented jointly

A) Please fill in if not already communicated or if changes have occurred.

Item Lithuanian Co-reporter

Name of organization(a):

Aplinkos Apsaugos Ministerija

Name of organization (English):

Ministry of Environment of the Republic of Lithuania

Department:

Dept. for Environmental Quality

Acronym:

AAM

Acronym (English):

EPM

Function within activity:

Assigend by the Lithuanian Government for activities implmented jointly

Street:

A. Jaksto 4/9

Post code:

LT 2694

City:

VILNIUS

Country:

LITHUANIA

Telephone:

+ 370 – 2 610 558

Fax:

+ 370 – 2 220 847

E-mail:

atm@nt.gamta.lt

WWW-URL:

http://www.gamta.lt

Contact person (for this activity):

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

Surname:

Bilkis

First name, middle name:

Mindaugas

Job title:

Director of Environmental Quality Dept.

Direct tel:

+370 – 262 54 88

Direct fax:

+370 - 2 61 11 30

Direct E-mail:

atm@nt.gamta.lt

B) Describe the structure of the programme:

The EAES programme (Swedish Programme for an Environmentally Adapted Energy System in the Baltic region and Eastern Europe) was introduced by the Swedish Government in connection with the ratification in spring 1993 of the UN Framework Convention on Climate Change, UN/FCCC. The programme forms an essential part of the Swedish energy and climate policy further manifested in the Energy Bill of 1997 where the programme for a sustainable development of the energy sector was further manifested.

The development in the three Baltic States follows a similar direction which can be demonstrated by the Baltic Energy Strategy presented in April 1999 by the Energy Committee of the Baltic Council of Ministers (enclosed as appendix.) Furthermore the Baltic Governments have decided to form a regional electricity market to be in force March the first, 2001.

The aim of the Swedish EAES Programme is to mitigate climate change and improve the environment. It also have a direct reference to the undertaking by the Parties of the UN/FCCC to formulate and implement national programmes containing measures to mitigate climate change and that Parties may implement such policies and measures jointly with other Parties. The programme is the Swedish contribution to the development of joint implementation although FCCC criteria and guidelines were at that time not yet established. The EAES Programme is adapted in line with the criteria for the pilot phase of Activities Implemented Jointly as agreed upon at the first conference of the Parties in Berlin in April 1995.

The main activities are directed towards a reduction of emissions, hazardous to the climate and the environment, from oil or coal-fired energy production plants. The programme is financed through special allowances from the Government Budget. Up to 1997 altogether a sum of MSEK 293,5 (around 40 MUSD) has been allocated to the programme. NUTEK, the Swedish National Board for Industrial and Technical Development, was assigned by the Government to implement the programme up to the end of 1997. From 1 January, 1998, the new Swedish National Energy Administration (STEM) is responsible for the EAES Programme. Following the Swedish Energy Bill of 1997, 40 MSEK of this sum was allocated to the EAES Programme for 1998 and 35 MSEK for 1999 for investment projects.

In accordance with the directives for the allocations for 1999 a further adaptation of the programme to the provisions of the Kyoto mechanisms has been made aiming at agrements on future crediting for projects started from 1999. A least preparation of one CDM project is foreseen for 2000.

2. Process for obtaining approval

A) Brief description of procedure:

Direct contacts for approval and endorsement have been developed with the ministries responsible for energy and environment in the respective countries. Both ministries in the respective countries are involved in the endorsement of the projects and reports and information on the projects are provided to and discussed with both ministries. In the regular follow-up activities the climate data required in the uniform reporting format are included together with other operation and performance data. Furthermore, in 2000 local experts in the respective countries have undertaken most of the climate data and evaluation as regards socio-economic aspects.

B) Description criteria for acceptance of an activity implemented jointly:

In the rules and regulations laid down by the Swedish Government, STEM is required to present basic information on each project to the responsible party or parties of the recipient country prior to the final decision to implement the project. Such basic information normally consists of pre-studies undertaken by Swedish consultants in co-operation with local experts on all aspects of the project, in particular the climate and environmental assessment and data for settling the baseline reference scenario for the project together with a business plan. These studies and data are enclosed in a Letter of Intent stating the rights and obligations and other provisions to be observed for the project partners. If all requirements are fulfilled and the project has been endorsed the host country will sign the loan agreement and the project can start. In connection with the commissioning of the project data are collected for the uniform reporting format and a confirming endorsement of the report is made by both parties in connection with its submission to the UN Climate Secretariat. In subsequent reports the information is based on data

for the preceding year/heating season collected and evaluated as described under 2 A.

a) Decision 5/CP.1 (Appropriate sections from 5/CP.1 in italics) :

Criteria applied nationally

Activities implemented jointly should be compatible with and supportive of national environment and development priorities and strategies; In the selection process of the projects appropriate local and national authorities are informed about the planned project. These authorities give their first endorsement and in some cases the initial project proposals are channelled through the national energy/environment authorities. As soon as relevant documents (feasibility study, business plan and Letter of Intent) are available stating the basic features of the project, including estimated environmental and climate effects, these documents are handed over to the National AIJ Authority for approval in the form of a letter. In this letter both AIJ Authorities give their confirmation of the project to be regarded and reported as an AIJ project.

Activities implemented jointly should contribute to cost effectiveness in achieving global benefits; The investment part of the projects are financed by loans. The economy of the project shall allow for repayment of the loan and also generate a profit. The implementation of the projects also aims at cost effectiveness. As an example - procurement is made in open competition, where local and foreign companies participate. All consultant services for investigations, prefeasibility studies, advice during the implementation and commissioning of the project as well as follow-up activities are grant parts which are paid by the Lender/STEM and thus not included in the loan sum.

Activities implemented jointly under this pilot phase require prior acceptance, approval or endorsement by the Governments of the Parties participating in these activities;

The Swedish Government has initiated a process of bilateral agreements/understandings with the relevant Government Ministry in the partner countries concerning AIJ reporting. There are mutual understandings reached, although in some cases the administrative process has not yet been finalised. Furthermore each project shall have prior acceptance of both parties.

Activities implemented jointly should 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;

Additionality is in many cases linked to over-coming of barriers.

Restraining factors in the host country for the implementation of projects within the EAES-programme have been a. o.

  • that local investment funds are not available allowing financing at reasonable costs as long-term loans are not available at reasonable interest rates
  • a weak local tradition to apply the technologies focused upon in the EAES Programme, using wood waste from industry or from forest operations as fuel, or applying an up to date technology for energy saving. Consequently the local technology for the applications has largely been missing.

These factors still restrain a local development, notwithstanding the fact that the technology development and local tradition have progressed rapidly as a consequence of not least the EAES Programme. The EAES-programme concentrates on investments in the municipal sector with foreseeable and long-term energy consumption.

The financing of activities implemented jointly shall be additional to the financial obligations of Parties included in Annex II to the Convention within framework of the financial mechanism as well as to current official development assistance (ODA) flows;

The Swedish EAES-programme is financed from funds for climate issues allocated by Ministry for Industry, Communications and Employment which is the government ministry responsible for Swedish energy policy. These funds are separated from development assistance funds.

b) Other criteria:

Criteria applied nationally

Important selection criteria for projects are a combination of the factors - high specific CO2 reduction in relation to investment, the project demonstration value and the sustainability of the climate effect of the project. This implies:

  • High specific CO2-reduction, i e reduction in relation to cost of investment is achieved through the selection in the first place of RES projects, conversion of base-load boilers to use wood fuel. High climate effects show also landfill gas projects.

The project demonstration value. In countries, where a technology has been demonstrated in some installations, priority is given to proposals meaning an extension of an existing project or to applications using a technology which has not been demonstrated previously in the country, even if the specific CO2-effect is not so high. In those cases the projects have a value added effect as regards sustainability, cost-efficiency and in the end indirect climatic effects, for instance, in the form of decreased demand for heat produced in fossil fuelled boilers at peak demand occasions and, in its turn, avoided investment costs for production.

Borrower’s ability and motivation to enlarge the activity. The selection of an application with a good economy, like a base-load wood-fuelled boiler, allows for a positive cash-flow. The amount that is not needed to cover loan costs allows the borrower to make further RUE or RES investments. An important criterion in the selection of a project is the qualification and motivation of the borrower’s staff to implement the project and to further develop their energy system. An important factor is then institutional co-operation that can be established with the borrower's/plant owner's staff.

Long-term sustainability of the project through selecting installations where heat to a large extent is used for comfort heating. Projects are generally selected where project owners belong to a municipal administration or organisation In some cases projects are selected in industries, where a large part of the heat load is attributable to surrounding housing stock. In case the industry would stop operating, the heat supply from the boiler would prevail.

Short-term sustainability is promoted through the follow-up or consolidation programme combining technical support and knowledge transfer for follow-up programmes.

In accordance with the general approach in Sweden’s climate policy, underlining a pragmatic approach, the selection of AIJ-projects focuses on projects meeting the following requirements:

  • Projects shall be implemented quickly, meaning that priority is given to small and medium-sized project, which do not call for complicated co-ordination or require lengthy feasibility and design works. The motivation of the project owner is also an important selection criterion. However, the project is always evaluated against its effects from the point of view of the total situation for the heating company as regards its future economy and its total heat supply obligations.
  • Projects shall be affordable, meaning that the avoided costs of the formerly used fossil fuel pay for the new equipment and the new fuel within a reasonable time, usually shorter than the maturity period of the loan.
  • Projects shall be reliable, meaning that the technology used should have proved to function well in earlier projects and that there will be no experimenting on the behalf of the borrower.
  • A partnership relation, involving institutional co-operation with the borrower’s staff, shall be feasible.
3. Description of programme features:

With reference to the positive effects of measures undertaken in Sweden in the energy sector in order to improve the environment and the climate, the EAES Programme activities in the Baltic States and Eastern Europe are considered as an important step and a contribution to the work of developing a system for joint implementation in line with the obligations in the UN Framework Convention on Climate Change.

The programme mainly consists of following main types of projects:

  • Conversion of heat production plants to the use of biofuels

    Reduction of heat losses in district heating systems

    Energy efficiency in buildings

    Investigations are furthermore initiated for projects comprising

  • Cogeneration/Combined Heat and Power
  • Use of waste heat from industrial processes for district heating purposes

The activities are directed towards the heating systems: heat production, heat distribution and the residential sector, as Sweden in these areas can offer the required well-developed technology. To that can be added that the preconditions, i.e. forest resources and access to wood wastes etc., in the countries concerned are favourable for a conversion to the use of domestic biofuels. Special efforts are directed towards support for sustainable forestry and the creation of a viable biofuel market. Other important issues in the co-operation are the possibilities to supply with thoroughly tested, energy efficient technologies at affordable prices together with the transfer of know-how and training which is also a prerequisite for a lasting result of the measures undertaken and an inspiration to initiate further improvements within the framework of domestic programmes in these countries.

Besides climatic and environmental effects and energy savings there is also a demand for cost-efficiency and participation by the plant owner during all the steps in the process of a project. The projects are financed by loans from STEM to the owners of the plants. The conditions for the loans from STEM are in conformity with those applied by international finance institutions. All repayments, including interest, are made to a special income account and are then to be returned to the programme’s allowance account in the Government's annual budget allocations to finance future projects. The repayment time is maximum ten years and usually two years grace period are applied. Normally the projects show good profitability with short pay-off periods, around 3-5 years for boiler conversion projects. In addition to loans STEM is providing consultancy assistance to the plant-owner. The consultancy costs are paid by STEM and is thus not included in the loan. The consultants act as advisors to the plant-owners during the whole implementation phase, i.a. in connection with procurement of equipment and works which are undertaken in open competition, and during the commissioning of the plant.

The projects are followed and evaluated from technical and economic points of view by local experts. In all projects comprising conversion to renewable fuels the local staff is supplied with a portable measurement instrument box for measuring emissions from the plant. Special

measurement programs and performance tests were carried out in 1995 and 1996 of boiler conversion projects implemented in Estonia, Latvia and Lithuania so far, allowing also for comparisons between different projects.

Certain in-depth cases studies were undertaken during 1998. For the regular follow-up activities a special format has been developed where performance data are collected from each plant for each heating season. This format includes also environmental data from continuous measurements using the supplied measurement equipment. In connection with the preparation of the reports to the UN