Green Investment Scheme in
Romania: lessons learnt and
challenges ahead
Maria Khovanskaya
Climate Change Department
REC
Kiev,Ukraine
6 April 2007
Presentation outline
1. Brief overview of the development of the GIS in CEE
2. Position of Romania vis-à-vis GIS
3. First problems identified by the legal experts
4. First solutions found
5. Challenges ahead
• Eligibility
• Institutional framework - which institution to chose
• Balance of potential buyers’ needs and Romanian interests
• Asset management over two Kyoto commitment periods
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GIS in Central and Eastern Europe
• Latvia – Law on GIS is under interministerial consultation
till 16 April 2007
• Hungary – Law on the Implementation of the Kyoto
Protocol is submitted for the Parliamentary approval.
There is a provision for GIS there
• Czech Republic
• Romania – Governmental Decision on GIS is under
preparation
www.rec.org
Position of Romania vis-à-vis GIS
• AAU expected surplus in the first Kyoto commitment
period – 80 ml tons of CO2 eq. per year
• Adopted National Strategy on Climate Change and
National Action Plan on Climate Change with provisions
for GIS
• On the way to acquire eligibility for the IET (GIS)
• Currently existing institutional framework prepared to
accommodate GIS
• Experience with the other flexible mechanism – JI
• Experience with the other funds (Structural, Cohesion)
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First problems identified
• Ambiguity of the legal nature of AAUs
• Consolidated state budget:
• Timing - the budget (income and spending) is adopted in the previous
year when the price of AAUs hasn’t yet been negotiated. The Parliament
cannot set the price in advance since it is the breach of contractual
rights
• Public procurement issue
• Tax issues
• Accounts at the National Treasury
All the potential recipients of the GIS money should have had the
accounts within the National Treasury
• State Aid/Competition issues
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First Solutions found
• Legal nature of AAUs – “rights”, not “goods”. The
requirement to channel all the revenues from the selling
of the state owned asset applies only for “goods”.
• Opportunity to channel revenues from AAU transactions
to a GIS fund, not to consolidated state budget
• Amendment of the legislation: potential recipients of GIS
funds/project developers can receive it now through the
commercial banks system
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Priority areas for GIS
• “Hard greening” projects: investments in equipment and
activities leading directly to quantifiable GHG emissions
reductions:
• energy projects: energy efficiency, renewable energy, specific
waste management projects (methane capturing)
• non-energy projects: forestry, agriculture, transports, etc
• “Soft greening” projects: capacity-building, awareness
raising, education and other types of projects where GHG
emissions reductions cannot be quantified:
•
•
•
•
information dissemination about GIS, projects calls
consultancy on climate change activities (NSCC, NAPCC)
training for public authorities experts, education in schools
seminars and conferences on climate change issues
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Challenges ahead (1)
• To acquire eligibility:
• Initial Report
• National System to estimate the emissions of GIS
(GD under interministerial approval process)
• For the Ministry of Environment and Water Management
to acquire a mandate from the President to be the
institution to negotiate GIS transactions
• Governmental Decision for establishing the GIS in
Romania
• To sought the official opinion of both national Competition
Council and one in Bruxelles regarding the application of
the state aid-related legislation for GIS funding
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Challenges ahead (2): cooperation with the
buyers
•
Cooperation with potential buyers – decision on concluding
bilateral agreements for every transaction or an MoU with a buyer as
a framework agreement for all transactions
•
Terms of contracts
•
•
Traded goods/rights
•
Proceeds from the GIS transactions
•
Contract type and structure
•
Government’s obligations
•
Buyer’s obligations
Establish the negotiation terms regarding the price and amounts of
AAUs to be transferred, the timing of the payments, monitoring and
reporting procedures
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Challenges ahead (3): institutions
• To finalize the governmental reform
• To assess the benefits and drawbacks of the institutions
as the potential hosts of the GIS Fund:
• National Environmental Protection Agency (NEPA)
• National Environmental Fund Administration
• Special project unit within the MOEWM
• Procedures, regulations, TORs
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Challenges ahead (4)
• Carefull management of AAU surplus
• Commitment for the second Kyoto period is unclear
• Romania is a EU member-state: will take part in burden sharing
in the 2nd commitment period
• No flexibility at the moment in the 2nd commitment period
• Dilemma to be solved
• To sell some AAUs now – invest in GHG reducing technologies –
have less GHG emissions in future
Risks: insufficient amount of AAU in future
Benefits: sustainable economic growth on the basis of advanced
technologies;
Parallel fulfillment of EU Directives requirements
• To keep all the AAUs – to bank the surplus for the 2nd
commitment period
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Designing GIS: Issues to be considered
• What domestic (EU – not relevant for Ukraine) legislative
framework is in contradiction with GIS concept? Any
significant amendments to be done?
• What institutional set up is necessary? Can existing
institution(s) be utilised to manage the fund? (Again not
relevant for Ukraine – Ecological Investment Agency)
• How to accommodate different AAU purchasers’
requirements/preferences while satisfying host country’s
needs?
• How the whole process can be simplified compared to JI
while keeping the environmental integrity?
• How the proceeds from AAU sale can be managed in a
transparent manner?
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Designing GIS: Capacity needs
• Development of necessary legislation and rules
• Development of responsible institution, task allocation
• Training of fund manager
• Capacity for project development and implementation
• Training for monitoring and reporting of implemented
projects
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I would like to thank Mr. Jozsef Feiler (National Focal Point,
Hungary), Ms. Veronica Toza (Consilium Consultant,
Romania), Mr. Vlad Trusca (National Focal Point,
Romania) for their kind help in preparation of this
presentation.
Thank you for your attention!
mkhova@rec.org
www.rec.org