Implementation of the Kyoto protocol mechanisms in the Czech Republic Climate Change Department Ondrej Bores Pavel Zamyslicky Climate Change Department Ministry of the Environment of the Czech Republic Vrsovicka 65 Praha 10, 100 10 Phone: +420 267 122 937 Fax: +420 267 126 937 E-mail: Ondrej_Bores@env.cz Pavel_Zamyslicky@env.cz

Contents of the Presentation Overview of JI projects JI approval and criteria in the Czech Republic Planned activities Domestic requirements for Track I Linking directive (Opportunities and Threats) Implementing of GIS in the Czech Republic Process of Establishing GIS

Current information (JI) In total 96 projects registered (PIN) → about 1 000 000 tons of CO2ekv./year Two portfolios PCF Portfolio of projects (16 small hydro, 2 centralized heating) – total emission reduction 100 000 tons of CO2 / year BTG Portfolio of projects (15 biomass central heating projects) – total emission reduction 120 000 tons of CO2 / year Last approved projects (LoA): Lovochemie, SHP Vraňany Implementation of (CDM) Landfill Gas Methodology (29 projects in pipeline) Rest of projects in various stages of implementation

Projects registered in 2006  249786 083/JI/2006 Bohemia Waste Management Landfill Gas Capture and Energy Use Project - Zdechovice (Chvaletice) 50775 084/JI/2006 EKOBIOENERGO Heating plant JIH (Třebíč) -Biomass central heating 8410 085/JI/2006 Boiler house K-13 (Třebíč) - Biomass central heating 2617 086/JI/2006 MAEN s.r.o. Landfill Gas Capture and Energy Use Project- Mrsklesy 10000 087/JI/2006 ECOENERG Wind Power Plant Farm Kryštofovy Hamry 91407 088/JI/2006 BTG New biomass energy source (CE WOOD, a.s.) 31378 089/JI/2006 Biomass energy and heat production Trhové Sviny 12155 090/JI/2006 Biomass central heating system Kněžice 2587 091/JI/2006 Biogas Unit Kněžice 5507 092/JI/2006 Biogas Unit Kostelci na Hané (Statek Kostelec na Hané, a.s.) 4346 093/JI/2006 Biogas Unit Čejč (Horák energo, s.r.o.) 9863 094/JI/2006 Bierhanzl Biogas Biogas Unit Rožmitál pod Třemšínem 14311 095/JI/2006 TEDOM Landfill Gas Capture and Energy Use Project - Kozlany 3869 096/JI/2006 Landfill Gas Capture and Energy Use Project - Dačice 2562

JI projects registered by MoE

Approval process in the Czech Republic Registration of the project by MoE – PIN (LoE) Registration by State Environmental Fund (SEF) – program 2.8 (assessment) Discussion in working group of MoE (suggestion for approval or refusal) Ministerial approval (LoA)

Criteria Defined relatively generally Priority areas (renewables, energy savings, landfill gas projects, non - CO2 gases, transport…) Non-priority areas also possible Assessment takes into account environmental, technical and economic issues Case-by-case basis Link to → Methodical Guideline for JI Projects in the Czech Republic http://www.env.cz/AIS/web-pub.nsf/$pid/MZPPZFEQYNJ6/$FILE/Methodical%20Guidelines_EN.doc

Track I eligibility criteria Track 1 - necessity of moving forward Criteria for Track 1: Reporting issues http://unfccc.int/national_reports/initial_reports_under_the_kyoto_protocol/items/3765.php Initial Report was submitted to the UNFCCC GHG Inventory National Inventory Report National Registry System (International Transaction Log) ITL - testing operation are starting during spring 2007. Operator – Czech Electricity Market Operator, linking with EU ETS registry Other things should not be a major problem

Domestic requirements for Track I Learning from problems in JI track 2 Standardization to a maximum extent possible Validation and verification done by accredited local bodies Additionality issues? To be considered Simplification of procedures as much as possible Pooling of projects needed Potential for new JI projects?

Linking directive Opportunity for EU ETS developers (limit 10 % in the second NAP for CERs and ERUs) Big problem for new member states of the EU - New JI potential shortening Reserve 99 389 allowances per year in NAP2 for indirect linking (only RES projects with LoA, No allowances for projects with LoE) Is there a room for JI in linked regime at all? New JI – only (biomass) heating and non – CO2 projects) Room for AAU crediting, International Emission Trading and Green Investment Scheme - GIS)

Implementing GIS in the Czech Republic (I) MoU – Denmark, Austria, (Preparation -Japan, Netherlands, Finland, Portugal, Spain, Slovenia... ) Czech Republic in a relatively advantageous situation Projected emissions are below Kyoto target (- 24%) = surplus AAUs for sale Available cca 30 mil AAUs per year

Implementing GIS in the Czech Republic (II) Expected amount 50-150 million AAUs per commitment period (estimation with the highest probability) – Uncertainty - allowances surplus, national reserve issue ??? What is the difference between Track I and IET (Article 17 trading in the form of Green Investment Scheme – GIS)? Potential exists in various sectors (energy, transport, industry, …) Domestic resources limited – foreign funding welcomed Existing framework for funding – National programs Capacity of State Environmental Fund, Czech Energy Agency

GIS responsibilities Number of issues (responsibilities) to be clarified, but in general: MoE responsible for Climate Change and Kyoto flexible mechanisms (Main coordinating role MoE – Department of Climate Change) Cooperation with other ministries (Industry of industry and Trade, Foreign Affairs, Transport, Agriculture) Greening facility – transferring of money to individual projects on the basis of pre-defined criteria (issue for working group) Greening facilities on the Czech side – State Environmental Fund (SEF) – www.sfzp.cz – Czech Energy Agency (CEA) – www.ceacr.cz

The process of establishing GIS 1) signature of Memorandum of Understanding (MoU) 2) establishing bilateral expert working group for GIS 3) criteria for selection of projects (greening, scope of projects,…. ) Approach for choosing projects (kind, size, sector,…….) 4) preparation of ERPA(s) 5) Pilot phase of GIS (testing) 6) Work phase of GIS Funding programme with defined criteria established Applicants send applications – assessed against criteria List of approved projects – funding

Issues to solve State aid – need to be checked (depends on who is the recipient of money) EU ETS – AAU trading not explicitly mentioned – could be a problem in terms of „crossing“ of various ways of funding „Soft“ or „Hard“ greening? Resources available up front (payments)? When the concrete projects need to be presented? Role of investor country in approval process? Validation and verification projects

Thank you for your attention !