1. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n A regional response to global climate change The Baltic Sea region as a testing ground for for the Kyoto protocol A climate policy initiative by the Baltic Sea Region Energy Cooperation – BASREC - under the CBSS umbrella

2. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n Starting points Climate change is a global issue. Reduction of emissions of greenhouse gases is the main abatement instrument From a climate point of view it does not matter where you reduce emissions - the effect is the same on the GHG concentration in the atmosphere Cost-efficiency is of major importance The Climate convention and the Kyoto protocol therefore acknowledge the use of flexible mechanisms like joint implementation

3. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n Baltic Sea Region: a testing ground for mechanisms Tasks decided by the BASREC energy ministers: Write a JI handbook Simulation of emissions trading and arranging a conference on the results Prepare and set up a JI investment facility Prepare a Testing Ground Agreement Information: www@basrec.org and www@cbss.orgwww@basrec.org

4. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n The BASREC JI handbook First version of the handbook – now ready – but on- going process, subject to revisions Interpretation of the international agreements– Kyoto Protocol and the Marrakech Accords (COP7), Nov 2001 Covers two key areas: 1.Requirements that Parties have to meet to participate in JI - BSR status in meeting them 2. Advice to project developers on the Track 2 procedures, & steps to a succesful ERU purchase agreement translated into Russian and available on website

5. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n Testing ground framework agreement Objectives to build capacity and competence to use the Kyoto mechanisms and promote common understanding of concepts to promote realisation of high quality projects in the energy sector generating emissions reductions to gain experience with the Joint Implementation (JI) mechanism in the energy sector to develop methods and procedures to collaborate in addressing administrative and financial barriers, especially regarding small scale JI projects to facilitate generation, ensure issuance and transfer of ERUs from JI projects to implement projects early and offer credits for emission reductions prior to 2008 by appropriate means

6. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n The BASREC Testing Ground Agreement Open to participation for BASREC governments and companies ( and others! ) “As if” application of Kyoto rules before start in 2008 on projects within the energy sector. From 2008 and onwards Kyoto rules apply in full Projects to be approved by investor and host country Core element: already decided Testing Ground Facility to invest in JI projects for 10-20 million Euros in BASREC TGA countries Model project agreements and handbook to support activities

7. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n Testing Ground Facility Managed by NEFCO – Nordic Environment Financing Corporation Decision by the Nordic Council of Ministers Initially BASREC investor countries Open for others Fund Management Agreement with NEFCO being finalized right now

8. M i n i s t r y o f I n d u s t r y, E m p l o y m e n t a n d C o m m u n i c a t i o n s S w e d e n BASREC work ahead in the climate field Implement the testing ground agreement and facility (the agreement has been signed by 9 countries and the TGF is being capitalised) Analyse effects of EU accession Revise and improve the JI-handbook as needed Baseline development in Arkangelsk Continue building capacity and knowledge