POLAND AS JOINT IMPLEMENTATION HOST COUNTRY – GREAT POTENTIAL CONTRA POOR MANAGEMENT? Anna Pasławska, EPA SP. Z O.O. European Wind Energy Conference & Exhibition Athens 2006 Climate Change Policy

Head office: Szczecin, north-west of Poland. Core Business - WIND POWER: Turnkey Project Development, Wind Measurements, Micrositing, Productivity Analyses, Consultancy Services: Verification of project documentation provided by the Customer, Feasibility studies of planned investments, Tender and procurement documentation, Fund acquisition, ect., Joint Implementation. Member of Polish Wind Energy Association and EWEA. EPA SP. z o.o.

1.JI as one of Kyoto mechanisms. 2.Poland as a party of UNFCCC and a Host of JI projects. 3.Polish JI Potential. 4.Approval of the project as a JI project. 5.Bottlenecks and facilitations of the process in Poland. 6.Is it worth to develop JI projects in Poland? Aim and plan of presentation

JI – 1 out of 3 mechanisms established to achieve cuts in emissions and help tackle climate change. Joint implementation allows industrialized countries to implement projects that reduce emissions or increase removals using sinks, in other industrialized countries. JI projects are most likely to take place in Central and Eastern European „transition economies”, where there is more scope for cutting emissions at lower costs than in the west. JI as a mechanism

Reduction or avoidance of GHG emission - eligible projects: Construction of combined heat and power installations, Fuel-switch from energy sources with high carbon content to energy sources with lower carbon content, RES projects, Energy efficiency projects, ect. Product = ERU = Emission Reduction Unit 1ERU = 1 CO2teq saved in the system (not emitted, reduced), other GHG are re-calculated into CO2 equivalent. ERUs can be generated and transferred between and used to fulfill obligations under Kyoto Protocol.

What wind has to do with JI? RES projects qualify as JI projects (avoidance of CO2 emissions): => Wind is evaluated as clean technology with no leakage. JI as a tool to „finance” RES projects: => Increase of project IRR by 1-2 %, => Early payments up to 30% of total ERU value. Exchange of ERU into EUA based on Linking Directive: => Starting from ERU=1EUA, => Current price difference: 1EUA ≈ 23-27(€/tCO2), 1ERU ≈ 4-8 (€/tCO2).

Poland as a party of UNFCCC and JI Host Country 28 July 1994 – ratification of United Nations Framework Convention on Climate Change: => Stabilization of GHG emissions on 1988 level, => Poland as the economy in transition. 26 July 2002 – ratification of Kyoto Protocol: => Obligation to reduce GHG emissions by 6% in comparison to 1988 level. 16 February 2005 – Kyoto Protocol entered into force, => Delayed publication of Document in Journal of Law (17 October 2005).

Poland as a JI Host Country Annex A country with the surplus of emissions. Track II from the Marrakesh Accords: => CDM-like approach to JI projects with international validation, approval and performance verification. Poland is still not eligible for Track I: => There is no national registry to record the acquisition and transfer of AAUs, ERUs, => Some experts predict change of the country status.

Country Rating JI (of , Point Carbon) Country Rating (JI) Last (24 October) Rating (AAUs) 1.Bulgaria BBB+ BB 2.Romania BBB BB 3.Poland BBB- BB- 4.Hungary BB CC+ 5.Estonia BB CCC 6.New Zealand BB-BBB-- 7.Czech Rep. B+ BB 8.Slovakia BBB+ 9.Russia BBCCC 10.Ukraine B-BB Source: Point Carbon

Officially approved projects (till ) 1.Polish-Dutch Biomass Project in Jelenia Góra (2000), 2.Polish-Canadian Project - Small Hydropower Plant on the Bóbr river near Leszno Górne (2001), 3.Polish-Danish Project – Zagorze Wind Power Project (2002), 4.Polish-Dutch Project - Landfill Gas Recovery in Konin (2005), 5.Polish-Danish Project - Zakopane Methane Utilisation Project - undergoing implementation, 6.Prototype Carbon Fund - Geothermal Base-load Heating Plant in Stargard Szczeciński (2005).

JI Procedure 1.Expression of Interest: Project Idea Note, Letter of Endorsement. 2. Offer: Business Plan and Environmental Assessment Study + additional documents if required by ERU-buyer, Opinions from Project’s Stakeholders, Project Design Document (Monitoring Plan and Baseline Scenario), Validation of the Project – Determination Report, Letter of Approval. 3. Emission Reduction Purchase Agreement.

Country’s JI potential 2010 indicative target – 7.5% of gross energy consumption coming from RES (2,3% from wind) + obligation to purchase electricity and heat generated by RES. Obsolete power generation system: => 94% of electricity produced in professional power and heat and power plants based on coal, => Power blocks technically and economically worn, => Many installations do not meet EU emission standards defined in Directives 2001/80/EC and 2001/81/EC and Polish obligations under Goeteborg Protocols, => Modernizations made in the 90. aimed at decreasing exhaust gasses pollution contributed to fulfillment of Kyoto obligation + „surplus” of GHG emissions.

Facilitations Established Focal Point - Department of Environmental Protection Instruments, Ministry of Economy. Basic guidelines on governmental web site: Some experiences: 6 approved projects + around 20 undergoing approval process. Most validation companies are present in Poland – at least 3 have experiences. Positive JI investment climate.

Bottlenecks No standardization of approval procedures: => Different emission factors in different projects, => Different credit sharing between host and donor country. No help by defining the Baseline, proving additionality, calculating emission factor. => Difficulties with obtaining the data about the power sector (especially concerning the emission and production level of power plants). MoU only with some countries and programmes. Time – the whole procedure takes around 12 months. No transposition of Linking Directive so far – still not possible to dedicate credits from JI to private companies under EU ETS.

Is it worth to develop JI projects in Poland? Great potential – investments in different sectors! Poland as EU member state needs to follow and implement EU policies and law – reduction of political risk. Attractive geographical location for companies active in Europe. Experiences with JI, stable place in JI country ratings. Most of bottlenecks can be overcome with the help of local technical advisors. Possibility to exchange ERU to EAU starting from 2008.

Thank you for your attention! Anna Pasławska Project Manager EPA SP. Z O.O. Wojska Polskiego Szczecin, Poland