Country Profile – Slovakia Review of Status of Emissions Trading Activities in CG11 Countries Miroslav Malý - ENVIROS, Prague Jaroslav Jakubes - ENVIROS, Prague Jiřina Jílková - IREAS o.p.s., Prague Eva Šnajdrová - IREAS o.p.s., Prague Working version for CG11 workshop in Zagreb, Croatia, 28.-29.May 2002 Project No.: ECZ-2024 February 下午二下午二 February 下午二下午二 Country Profile – Slovakia TABLE OF CONTENTS 1. LATEST POSITION WITH REGARD TO RATIFICATION OF THE KYOTO PROTOCOL 2 2. BRIEF DESCRIPTION OF THE ENERGY SECTOR AND STATUS OF ENERGY SECTOR REFORM 2 2.1 2.2 PRIMARY ENERGY RESOURCES ENERGY UTILITIES, OWNERSHIP AND PRIVATISATION OF POWER SECTOR 2 2 Power generation, transmission and distribution................................................................................. 2 Privatisation of power sector ............................................................................................................... 3 Electricity market liberalisation............................................................................................................ 3 2.3 2.4 2.5 2.6 2.7 3. 3.1 3.2 3.3 3.4 3.5 ELECTRICITY PRODUCTION, CONSUMPTION, IMPORT AND EXPORT STRUCTURE OF INSTALLED CAPACITY AND POWER GENERATION FUTURE INVESTMENT PLANS DISTRICT HEATING / COMBINED HEAT AND POWER TYPICAL ELECTRICITY AND NATURAL GAS PRICES TO INDUSTRIAL AND DOMESTIC USERS 3 3 4 5 5 CURRENT NATIONAL CLIMATE CHANGE RELATED POLICIES 5 ENERGY RELATED TAXES AND SUBSIDIES TRANSPORT POLICIES TECHNICAL STANDARDS AGRICULTURAL POLICIES INFORMATION AND AWARENESS PROGRAMMES ON ENERGY EFFICIENCY 6 6 6 6 6 4. OPPORTUNITIES FOR COST EFFECTIVE, LOW COST AND HIGH COST GHG EMISSION REDUCTION POTENTIALS 7 5. CURRENT AND FUTURE AVAILABILITY OF DOMESTIC AND INTERNATIONAL CAPITAL FOR ENERGY SECTOR PROJECTS 7 6. ATTITUDE TO FUTURE COMMITMENT PERIODS 8 7. SPECIFIC COMMENTARY ON THE APPROACH IN EACH COUNTRY FOR USE OF FLEXIBLE MECHANISMS 8 8. CAPACITY BUILDING NEEDS WITH REGARD TO CLIMATE CHANGE STRATEGY 8 9. LIST OF THE KEY EMISSIONS TRADING STAKEHOLDERS AND PLAYERS 8 9.1 GOVERNMENTAL SECTOR 8 Slovak Energy Agency ........................................................................................................................ 8 9.2 PRIVATE SECTOR (ENERGY AND HEAT PRODUCTION, INDUSTRY, ASSOCIATIONS) 9 Slovenské elektrárne, a.s.................................................................................................................... 9 Union of Employers in the Slovak Energy Industry ............................................................................. 9 Slovak Association of Heating Plants.................................................................................................. 9 9.3 NGO´S AND OTHERS 9 Energy Centre Bratislava .................................................................................................................... 9 10. REFERENCES 11. SUMMARY TABLE 9 11 1- February 下午二下午二 Country Profile – Slovakia 1. LATEST POSITION WITH REGARD TO RATIFICATION OF THE KYOTO PROTOCOL Parliament of the Slovak Republic ratified the Kyoto Protocol on March 20, 2002; the process of deposition of instrument of ratification is underway. The Kyoto Protocol commitment for Slovak Republic is 8% reduction in comparison with base level in 1990. There are no problems with fulfilment of the objective expected. 2. BRIEF DESCRIPTION OF THE ENERGY SECTOR AND STATUS OF ENERGY SECTOR REFORM 2.1 Primary energy resources The Slovak Republic is a net importer of energy. In 1999, energy imports provided approximately 69% of Slovakia's energy supply (if not accounting imports of nuclear fuel1). Slovakia imports crude oil, natural gas, coal and nuclear fuel and exports petroleum products. The share of fossil fuels on total primary energy consumption is about 78%. Table 1: Primary energy sources balance of Slovakia (1999) in PJ (PJ) coal crude oil petrol. products gas nuclear Domestic production 42,7 2,9 net imports 167,5 221,1 -92,5 221,9 stock changes 5,9 1,7 -0,8 13,8 TPES 216 226 -93 243 7,1 143,2 hydro 16,3 RES + waste electricity heat TOTAL 216 3,3 0,4 518 21 143 16 3 0 754 Source: IEA 2.2 Energy utilities, ownership and privatisation of power sector Power generation, transmission and distribution Until 1994, Slovenský energetický podnik s.p. (SEP) was the state-owned national electricity utility. During Slovakia's initial privatisation efforts in 1994, SEP was transformed into joint-stock company Slovenské elektrárne, a.s. (SE), which is state-owned, but it is likely to be partially privatised after undergoing organisational and financial restructuring. The government acknowledges that this restructuring will not be completed before the September 2002 elections. Today, SE is the primary generator and transmitter of electric power in Slovakia. SE generates about 85% of Slovakia's electricity at nuclear, fossil, and hydroelectric plants; operates the transmission lines, and delivers electricity to regional distribution companies. Joint-stock company SE operates two nuclear power plants, three thermal power plants and 34 hydroelectric power plants. Installed capacity of SE was 6 556 MWe in 1999, accounting for 84% of Slovakia's installed capacity. The remaining capacity resides with three regional distribution utilities and other electricity producers. Distribution is carried out by three regional companies: Zapadoslovenske Energeticke Zavody (ZSE), Stredoslovenske Energeticke Zavody (SSE), and Vychodoslovenske Energeticke Zavody (VSE). 1 According to IEA statistics, nuclear energy is accounted as domestic energy source 2- February 下午二下午二 Country Profile – Slovakia Slovakia is currently planning to restructure its electric system and privatise some assets. It is expected that generation will be separated from transmission and each power plant will be sold separately. It is not clear at this point whether the two nuclear power plants will remain state-owned. Privatisation of power sector In late September 2000, the Slovak Government approved under Decree No. 758/2000 a proposal for the transformation and the method of privatisation of property parts for power companies. Under the decree, Slovenské elektrárne, a.s., is to undergo restructuring into transmission network operator Slovenská prenosová a.s., power generation capacities operator Slovenské elektrárne, a.s., and heat sources operator Teplárenská spoločnosť tepelná energetika Košice, a.s. According to a statement by representatives of the Ministry of Economy, which is entrusted with the exercise of shareholder´s rights, generation sources to be retained by SE, a.s., following its restructuring should be privatised as a whole up to 49%. The privatisation advisor´s recommendation will also affect the selection of the method of the sale. The selection was scheduled to start in January 2002. In the restructuring process, the three regional electric companies are expected to become distribution companies, with their power plants offered for sale. It is expected that local governments will be given 49% of the shares of the power plants in their districts. The government has issued tenders for 49% stakes in these companies, and several foreign firms have expressed interest, including CEZ of the Czech Republic. Shares of the first of the regional companies, ZSE, were expected to be offered for sale before the end of 2001. Electricity market liberalisation The 1998 Law on Energy was amended in July 2001 to set up a regulatory body that would take effect January 1, 2003. This regulatory body, to be called the Office for Regulation of Network Industries, will take over the energy control functions of the Ministry of the Economy and will also take over the pricesetting functions of the Ministry of Finance for electricity, natural gas, and district heating. It is expected that the funding for the Office will come from fees assessed on the companies being regulated. Slovakia plans to harmonise its energy laws with the EU and to eventually eliminate crosssubsidisation On January 1, 2002, consumers of more than 100 GWh were supposed to have been allowed to choose their supplier. This covers about 19 large companies that represent some 28% of the market. This liberalisation was postponed by the Economy Ministry, however, because an independent electricity regulating agency has not yet been formed and the restructuring of SE is incomplete. Liberalisation for customers using more than 40 GWh is scheduled for 2003, and complete liberalisation for 2007. Under the current regulations, privately-financed construction of power plants to serve industrial users is permitted. However, any excess power must be sold to the grid, and any power generated from renewables must be sold to the grid. Direct "wheeling" of the power to selected customers will soon be permitted when new energy liberalisation rules take effect in January 2003. 2.3 Electricity production, consumption, import and export Slovakia generated about 27,8 TWh of electricity in 1999, and it is estimated that this total increased in 2000 and 2001. SE alone, which supplies about 85% of Slovakia's electricity, is estimated to have generated about 23,4 TWh in 1999 and 26,3 TWh in 2000.. Slovakia was a small net electricity importer in 1999, but it is estimated to have become a net exporter in 2001. 2.4 Structure of installed capacity and power generation In 1999, Slovakia's installed electric power generating capacity was more than 7 800 MW, about the same as that of Hungary, despite Slovakia having a smaller population. Slovakia's generating capacity is diversified, with coal, natural gas, hydro, and nuclear power plants each having less than 1/3 of overall capacity in 1999. With two nuclear reactors coming on line in 1998 and 2000, Slovakia has become more reliant on nuclear generation and less reliant on coal and fuel oil (mazout) for electricity generation. Slovakia still has substantial unused hydroelectric potential. 3- February 下午二下午二 Country Profile – Slovakia Picture 1 : Installed Electricity Generation Capacity in Slovakia (MW) in 1999 Structure of domestic power generation - Slovakia - 1999 16% 23% coal oil and oil products gas nuclear 1% 49% hydro (excl. storage) geothermal / solar / wind biomass / waste 11% Source: DOE/EIA Picture 2 : Structure of power generation in Slovakia in 1999 Structure of installed capacity - Slovakia -1999 (MW) 1 737 735 Nuclear Thermal Hydro Pumped Storage Hydro 2 200 3 169 Source: Slovenské elektrárne 2.5 Future investment plans The country agreed to close the two oldest of four blocks at the Jaslovske Bohunice nuclear power plant. In June 2001, Slovakia completed negotiations with the EU on decommissioning Bohunice Units 4- February 下午二下午二 Country Profile – Slovakia 1 & 2 in the 2006-2008 time frame. It is expected that the EU will cover part of the expenses. The Slovak Economy Ministry is arranging a contract for financing with the European Bank for Reconstruction and Development. Current expectations are for Bohunice 1 to cease operation in 2006, and Bohunice 2 in 2008. 2.6 District Heating / Combined Heat and Power Approximately half of over five million Slovak inhabitants live in apartment buildings. Of these, 40% are supplied with heat and hot water by DH systems. The total heat production in district heating systems was approx. 29 520 GWh in 1997. District heating systems, formerly owned by the state, were privatised in 1992-93 and are now owned and operated mostly by municipalities, joint stock companies and/or limited companies. Currently in Slovakia there are approximately 3 100 heat sources, of which around 1 300 are classified as DH systems (i.e. heat power plants, municipal DH systems, block heat sources). These DH heat sources are operated by 1 200 utilities. The remaining 1 800 heat sources are individual sources of heat (i.e. building heat sources). The CHP accounted for approx. 10% of total power production in Slovakia in 1996. More than 50% of power generated by CHP plants comes from public power plants and public CHP plants, additional more 40% from industrial CHP plants. The share of small-scale CHP plants is still rather low - about 5%. 2.7 Typical electricity and natural gas prices to industrial and domestic users Over the past seven years, Slovakia has gradually raised household electricity prices, removing some of the subsidies. The following table gives a brief review of average electricity prices for households and industry in 1999. The following table gives a brief review of average electricity and natural gas prices for households and industry in Slovakia in 1998 - 2001. Table 2: Average end-user electricity and natural gas prices in Slovakia (USD/kWh) electricity year households natural gas industry households industry 1998 0,028 0,049 0,0063 0,0107 1999 0,035 0,041 0,0067 0,0094 2000 0,050 0,042 0,0093 0,0088 2Q/2001 0,063 0,041 0,0093 0,0088 Source: IEA 3. CURRENT NATIONAL CLIMATE CHANGE RELATED POLICIES The document “National Environmental Action Program of SR II” approved in December 1999 lays down priorities, principles and objectives of the environmental polity of the Slovak Republic. The priorities of the state environmental polity include the area of air protection from pollutants, particularly greenhouse gases, and global environmental safety, as well as the issues of generation, utilisation and correct disposal of different types of waste. Slovakia also prepared a National Strategy Study under the Swiss/World Bank Program. For attainment of the global objective from the view of the Slovak Republic, the main goals were defined for short-term, medium-term and long-term periods. In the framework of the medium-term strategy (2003 to 2008) the objective is to achieve such a development of greenhouse gas emissions until 2005 which shall provably allow meeting the commitment of the Kyoto Protocol. This Strategy is directly followed by the Action Plan of Fulfilment of the Kyoto Protocol Commitmets to the UNFCCC 5- February 下午二下午二 Country Profile – Slovakia brings an overview of measures, quantification of their impacts on reduction of GHG emissions, together with an estimate of the costs of their implementation, as well as a proposal for competences and a time schedule of their implementation. 3.1 Energy related taxes and subsidies In Slovak Republic, the following energy related taxes are imposed Objective of the tax Excise tax rate VAT rate Unleaded petrol 266 EUR/kl 23% Diesel 207 EUR/kl 23% Liquefied natural gas 55.4 EUR/t 10% 3 Compressed natural gas 0,047 EUR/m 10% Light fuel oil 385.5 EUR/t ? Heavy fuel oil 385.5 EUR/t ? Kerosene 222 EUR/t ? In Slovak Republic, there is a lower rate on so-called ecological fuel, which is the fuel mixture produced from substances that are at least 90% biodegradable within 21 days. The revenue from excise taxes and VAT goes into the central budget. There is no excise tax on coal and electricity (social reasons), the VAT rates for these are 10%, and the same goes for district heating and biogas. 3.2 Transport policies The following CHG mitigation policies are applied in the transport sector in Slovakia: Taxation of hydrocarbon fuels and oils, road tax Requirements on technical condition of vehicles Formation and development of combined transport systems Utilisation of alternative fuels Acceleration of the vehicle fleet replacement Program supporting rationalisation of fuel and energy consumption in transport 3.3 Technical standards The proposal of Energy Efficiency Law includes obligatory labelling of selected energy equipment and appliances and minimum limits of efficiency for operated heat equipment. 3.4 Agricultural policies Proposal for long-term measures regarding the adaptation of the Slovak Republic to Climate changes was negotiated and approved by management of the Ministry of Agriculture of the Slovak Republic in November 2000. It comprises a proposal for a comprehensive set of reduction measures in agriculture and management of water supplies and forestry. 3.5 Information and awareness programmes on energy efficiency The Second and Third National Communications on Climate Change, Slovak Republic in its Slovak version were distributed to members of Slovak Parliament, ministries, state administration, schools, 6- February 下午二下午二 Country Profile – Slovakia research institutes, libraries, non governmental organisations. The Communication was also distributed in an English version and it is available on Internet. One of the most active organisations in the field of raising awareness and information on energy efficiency is the Slovak Energy Agency. The Agency, fulfilling the tasks of the Slovak Ministry of Economy within the framework of its authority in decision-making: educates, trains and instructs energy experts, publishes and disseminates publications aimed to provide an energy-oriented public education and to mitigate environmental impacts caused by the use of energy, organises or performs expert supervision at conferences, seminars and exhibitions dedicated to energy themes, in co-operation with organisers initiates and supports promotion and popularisation events and campaigns focused on the more effective use of energy and participates in international campaigns. 4. OPPORTUNITIES FOR COST EFFECTIVE, LOW COST AND HIGH COST GHG EMISSION REDUCTION POTENTIALS Some examples of cost curves in the Slovakia case are on the following figures, The cost curves were designed for the higher and lower range of abatement cost values, considering uncertainties of technology investment cost and project baselines. Abatement costs USD/t CO2 low range high range CO2 abatement potential kt CO2 Biomass in DH -44 -24 380 Biomass in space heating -24 -20 680 Biomass in industrial energy -42 -26 320 9 120 180 Geothermal in DH -39 20 160 Combined cycle in industrial energy 22 24 220 Combined cycle in public CHP 26 28 520 Solar heating 5. CURRENT AND FUTURE AVAILABILITY OF DOMESTIC AND INTERNATIONAL CAPITAL FOR ENERGY SECTOR PROJECTS The new Slovak government has taken important steps to reduce macroeconomic imbalances and reinvigorate structural reform. In 2000, important progress was made in this regard: the external current account deficit has narrowed, and important steps have been made towards restructuring and privatising state-owned banks and enterprises. Persistently high unemployment, social security fund overspending and the continuing poor performance of certain industrial sectors are the most important challenges to be addressed. Increased FDI flows from privatisation deals and continuing good trade performance are likely to help Slovakia to narrow its current account and trade balance and also accelerate GDP growth in 2002. The government has implemented a serious set of measures to encourage foreign capital inflows, including further strengthening incentives, and has given important impetus to the privatisation process. to be updated 7- February 下午二下午二 Country Profile – Slovakia 6. ATTITUDE TO FUTURE COMMITMENT PERIODS Slovak Republic plans to bank app. 10% of the emissions surplus for second commitment period, however no clear position on the development of future commitments was presented yet. 7. SPECIFIC COMMENTARY ON THE APPROACH COUNTRY FOR USE OF FLEXIBLE MECHANISMS IN EACH Slovak Republic participated in the so-called Activities Implemented Jointly (AIJ) and four projects focused on the use of biomass are now being prepared or implemented (realised with Norway and Netherlands). The level of the utilisation of JI projects is expected to be lower in Slovak Republic, mainly due to high transaction costs. Slovak Republic signed the MoU with PCF, but no projects were implemented yet, some projects were submitted to Dutch ERU-PT tender. CDM is not considered, as the Slovak Republic will be capable to meet the Kyoto target through internal activities. The Slovak Republic focuses more on the use of emissions trading, with SO2 trading scheme already on place and domestic CO2 trading scheme under preparation. Within the framework of the strategy on climate change, the Slovak Republic would preferentially participate in international emissions trading at two levels - intergovernmental and individual enterprises, according to exactly defined international and domestic rules. Practical implementation is however connected with number of institutional and political problems and with some practical issues (monitoring, verification, transfer of technologies etc.). Special attention is given to the latest proposal of the European Commission on establishing the domestic emissions trading scheme for GHG within the EU. As the Slovak Republic is one of the accession countries, the possible participation in this scheme becomes one of the key aspects when establishing a domestic GHG emissions trading scheme. 8. CAPACITY BUILDING NEEDS WITH REGARD TO CLIMATE CHANGE STRATEGY The high priorities from capacity building needs point of view are theoretical issues related to JI and emissions trading, policy design and institutional issues related to emissions trading and design of a national registry. The medium priorities are improvements in general awareness on UNFCCC and Kyoto protocol obligations, identification and preparation of JI projects and data collection. Development of national emissions factors and preparation of national GHG reduction strategies is a low priority at the moment (some of them already on place). 9. LIST OF THE KEY EMISSIONS TRADING STAKEHOLDERS AND PLAYERS 9.1 Governmental sector Slovak Energy Agency Bajkalska 27, 827 99 Bratislava 27, Slovakia Ing. Ludovit Mikula, International co-operation manager tel.: + 421 (2) 58 248 325; fax : + 421 (2) 53 421 019; e-mail: ludovit.mikula@sea.gov.sk Ministry of the Environment of the Slovak Republic - UNFCCC National Focal point Nam. L. Stura 1, 812 35 Bratislava 2, Slovakia Mr. Ivan Mojik, Director Air Protection 8- February 下午二下午二 Country Profile – Slovakia tel: +421 7 5956 2220; fax: +421 7 5956 2662; e-mail: mojik.ivan@lifeenv.gov.sk Ministry of Economy of the Slovak Republic Mierova 19, 827 15 Bratislava, Slovakia Ms. Fazekasova, Department of Energy Policy tel.: +421-7-4854 1913; fax: +421-7-4333 9287; e-mail: fazekasova@economy.gov.sk 9.2 Private sector associations) (energy and heat production, industry, Slovenské elektrárne, a.s. Hraničná 12, 827 36 Bratislava 212, Slovakia tel.: +421 2 5069 1111; fax.: +421 2 5341 7525; e-mail: info@hq.seas.sk Union of Employers in the Slovak Energy Industry Hraničná 12, 827 36 Bratislava 212, Slovakia Ing. Vladimír Tonka, Secretary General tel.: +421-2-50693586, fax: +421905675586; e-mail: zzes@zzes.sk Slovak Association of Heating Plants Ing. Jozef Kovačovič, director Culenova 6, 816 47 Bratislava 1, Slovakia 9.3 NGO´s and others Energy Centre Bratislava Bajkalska 27, 821 01 Bratislava 2, Slovakia Mr. Vladimir Hecl, Executive Director tel: +421 7 5824 8472; fax: +421 7 5824 8470; e-mail: hecl@ecbratislava.sk 10. REFERENCES 1. Acosta, R.: Guidelines for Reporting and Review GHG Inventories under the Convention and Guidelines under Article 5.1 of the Kyoto Protocol (Presentation at the workshop "National Systems for Flexible Mechanisms: Implementation Issues in EIT Countries" - Szentendre, Hungary, May 2002); UNFCCC secretatiat 2002 2. Balajka J.: Kyoto Flexible mechanism in EEC - case Slovakia; working document from Joint Implementation in CEE Workshop, Szentendre, Hungary, April 18-19, 2001, The Regional Environmental Center for Central and Eastern Europe (REC), 2001 3. Coey, M.: Country Report: Poland on “Energy Efficiency and Climate Change Policy”, KAPE S.A. 4. DOE Fossil Energy International Activities website (http://www.fe.doe.gov/international/eeur.shtml) 5. EIA/DOE Country analysis briefs website (http://www.eia.doe.gov/cabs/contents.html) 6. Energy balances of OECD countries 1998-1999 (2001 edition); OECD/IEA Paris, 2001 7. Energy statistics of OECD countries 1998-1999 (2001 edition); OECD/IEA Paris, 2001 8. Key World Energy Statistics from the IEA - 2001 Edition, OECD/IEA Paris, 2001 9. Slovak Republic- The Third National Communication on Climate Change, Ministry of Environment of the Slovak Republic, Bratislava, 2001 9- February 下午二下午二 Country Profile – Slovakia 10.Speck, S., McNicholas, J. and Markovic M.: Environmental Taxes in an Enlarged Europe – An Analysis and Database of Environmental Taxes and Charges in Central and Eastern Europe. Regional Environmental Centre, Szentendre, Hungary, October 2001. 11.World resources Institute website http://earthtrends.wri.org/country_profiles/ 10 - Climate and Atmosphere country profile February 下午二下午二 Country Profile – Slovakia 11. SUMMARY TABLE Country Date of Ratification of Kyoto Protocol Kyoto Preparation (Yes/No) National Communication in CRF National Registry Monitoring and Verification Protocols JI Projects Office Climate Change Policies (Yes/No) National GHG mitigation strategy included in national communications Carbon taxes ($/tonne) Electricity taxes ($/kwh) Renewables taxes ($/kwh) Energy Sector subsidies for fossil fuels Energy Sector subsidies for renewable energy Programmes to raise awareness and promote energy-efficiency Performance Standards Energy and GHG Emissions Intensity of Economy (1999) CO2 Emissions (Mt of CO2) TPES/capita (toe/capita) TPES/GDP (toe/thous. 1995 USD) Elec. Consumption / capita (kWh/capita) CO2 / TPES (t CO2/toe) CO2 / capita (t CO2/capita) CO2 / GDP (kg CO2/1995 USD) Opportunities for low and high cost GHG reduction JI projects (best sectors) Current and Future Level of domestic and international capital for investment in the energy sector Experience with JI (e.g – World Bank PCF, Erupt etc …) Experience with international emissions trading (any deals brokered?) Experience with emissions trading (policy studies, discussion documents) Establishment of Registry (work underway or not yet started?) Policies on Allocation of Surplus (work underway or not yet started) Attitude to future commitment periods of KP (no discussion or some discussions) Slovakia March 20, 2002 yes no no yes yes 0 0 (10% VAT) 0 0 0 yes yes 39,36 3,33 0,82 4 828 2,19 7,29 1,79 Biomass in DH Biomass in space heating Biomass in industrial energy Geothermal in DH several AIJ projects National AIJ/JI Strategy Study completed June 98 MoU with PCF, no projects implemented yet some projects submitted to ERU-PT CDM not considered none focus on ET domestic ET scheme under preparation no no no clear position presented yet some plans to bank app. 10% of the emissions surplus for second commitment period highlighted data – to be checked/updated 11 -