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Regional leadership in climate change Joint implementation policy in the Baltic Sea Region: 

Regional leadership in climate change Joint implementation policy in the Baltic Sea Region Olle Björk Ministry for Sustainable Development Sweden

Some aspects on: 

Some aspects on BASREC cooperation Experiences and development of JI in the BASREC region Linking Directive Impact on electricity prices Future of the Baltic Sea region as testing ground for flexible mechanisms

Think globally act regionally: 

Think globally act regionally Climate change mitigation is a global problem.Effects on global warming as well as benefits from mitigation emissions are independent of where the emissions take place Global cooperation a necessity but takes time to develop Long tem sustainability of effort requires cost effective approach BASREC region offers unique potential

Experiences and development of JI in the BASREC region: 

Experiences and development of JI in the BASREC region Early AIJ projcts showed cost-efficiency, importance of local participation and lack of adminstrative capacity Conclusion: potential is there, what is needed is understanding,regulatory framework and incentives Action: establishment of TGA; TGF, a BASREC JI Handbook and seminars

Testing ground framework agreement Objectives: 

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

Short history of international climate change co-operation: 

Short history of international climate change co-operation Kyoto protocol 1997 Testing Ground proposed 1998 and 1999 EU ETS-green book 2000 Linking Directive 2003 Entered into force 2005 Testing Ground Facility 2004, Testing Ground Agreement 2004,Testing Ground Committee 2005 ETS into force 2005 In force November 2005 First Kyoto Commitment period 2008-2012

New circumstances for the Testing Ground: 

New circumstances for the Testing Ground Kyoto protocol has entered into force since mid- February 2005 thanks to Russian decision to ratify EU Emissions trading since January 2005 includes power and heat production and affects scope for JI

Slide9: 

Kyoto protocol+ ETS= Linking Directive Allows operators in the EU ETS to use JI credits (ERUs) from 2008 Autumn 2004 Linking Directive enters into force Member states have 12 months to transpose directive into national legislation To watch:Ceiling for ERU imports and criteria for double counting

EU ETS: 

EU ETS

Linking directive: 

Linking directive EU-25

Interaction between ETS, energy supply and energy prices: 

Interaction between ETS, energy supply and energy prices The central BASREC idea is to provide for efficient means to exploit the potential for energy use, trade and investment and underpin transition to sustainable energy. JI and ET facilitate this. The price of ETS will as fuel prices partly be passed on to electricity prices and possibly affect investments in power production and energy efficiency

Market electricity prices reflect: 

Market electricity prices reflect Fuel prices (oil, coal and gas) Climate restrictions Other factors:market growth and expansion,economic development, rainfall etc What can be done to high prices?

Allocation of and demand for EAUs in EU ETS.Impact of linking directive: 

Allocation of and demand for EAUs in EU ETS.Impact of linking directive Initial allocation Volume [Mt CO2] Price [euro/tonne] Demand ”10 % shortage” Total supply

Imports of ERU:s could dampen power price increases: 

Imports of ERU:s could dampen power price increases Administrative bottlenecks likely to limit supply of CER:s JI track 2 could be similar to CDM JI track 1 requires more eligibility criteria to be fulfilled Conclusion: Develop JI to contribute to BASREC aims

The Testing Ground and the ETS: 

The Testing Ground and the ETS The concurrent entering into force of the Kyoto protocol and the ETS+linking Directive has implications for TG co-operation: JI between EU MS in the energy field is affected by the rules for avoidance of double counting and will require set- asides or that ERU issuance is balanced by cancellation of EUA:s The Linking Directive also creates a strong economic incentive for imports of ERU:s from Russia into the ETS

Current work on the Testing Ground in the climate field. Implementation of the Testing Ground Agreement : 

Current work on the Testing Ground in the climate field. Implementation of the Testing Ground Agreement Revision and update of the JI-handbook as foreseen JI courses Bilateral and multilateral projects through the TG facility Standard baseline development procedure Analysis of effects of EU enlargement, allocation to new entrants in EU/ETS and linking directive

JI projects in the Baltic Sea Region TGF Denmark Finland Sweden PCF TGF&SwedenPotential projects: 

JI projects in the Baltic Sea Region TGF Denmark Finland Sweden PCF TGF&Sweden Potential projects

Investor / Host country matrix over JI projects: 

Investor / Host country matrix over JI projects Potential JI projects

Slide21: 

Outlook for the Testing Ground Obvious:Baltic Sea Region Trade part of international trade Government projects still needed Companies will engage increasingly Guidance and capacity building will be important BASREC countries have bilateral programmes and projects The Testing Ground Facility will expand TG co-operation should become more flexible Energy sector will become increasingly involved JI to the fore

BASREC regional JI leadership requires: 

BASREC regional JI leadership requires that we take account of: Implementation of linking directive in late 2005 New NAPs to be ready by mid-2006 Growing company interest Necessity to develop horizontal co-operation within Governments

Thank You!: 

Thank You! Olle.Bjork@sustainable.ministry.se www.Basrec.org