GIS in HungaryGIS in HungaryContext and architectureContext and architecture

József FeilerJózsef Feiler

ContentsContents

• Background• National Climate Change Policy• Legal framework• Hungary’s GIS potential

• Greening Framework• Project selection• Where to reduce?• GIS Windows• Target areas• Procedural framework• Monitoring and verification

• Price

Background

• National Climate Change Policy• Legal framework• Hungary’s GIS potential

National Climate Change National Climate Change PolicyPolicy

• National Climate Strategy (2008-2025): – determines the objectives, priorities, tasks

and instruments related to research and measures about domestic impacts, mitigation and adaptation

• NCS priority areas on GHG emission reductions:– Energy efficiency in the residential sector– Energy efficiency in the public sector– Renewable energy use in micro, small and

medium scale– Emission reduction in the transport sector

Legal frameworkLegal framework

• Act LX of 2007 on the implementation framework of the Kyoto Protocol– defines the crucial elements of the treasury asset management of

Kyoto units by Minister of Environment;

– the Kyoto units can be used:• to offset GHG emissions occurring in Hungary;• to generate ERUs for JI projects implemented in Hungary;• to trade under International Emission Trading

– revenues from sale of Kyoto units (GIS and EU ETS auction) can be used only for

• GHG emission reductions, including LULUCF• Adaptation to climate change

• Act on Budget –defined treatment of GIS revenues and earmarking

Legal framework

• Government Decree 323/2007. (XII. 11.) Korm. on the implementation of Act LX of 2007– Objectives of the GIS– Conditions for the sale of AAUs– Contract regarding the sale of AAUs– Support conditions and types in the GIS– Conditions for & decisions over applications– Monitoring and verification

Hungary’s AAU potentialHungary’s AAU potential

0

20

40

60

80

100

120

2008 2009 2010 2011 2012

mill

ion A

AU

available AAU

Approved JI projects

Projected GHG emissions - high case

Projected GHG emissions - low case

• Total assigned amount units: 542 million

• Commitment period reserve: 395 million

• Emission trends (low): 432 million

• Emission trends (high): 443 million

• JI reserve: 10 million• Available AAU: 80-90

million• GIS pilot phase: 15 million• GIS 2nd phase: 30-40 million

Greening Framework

• Project selection• Where to reduce?• GIS Windows• Target areas• Procedural framework• Monitoring and verification

Greening Framework

• Defintion of areas of support under GIS, their priorities, technical details and precondtions attached as well as the definition of support intensity (Greening Objectives)

• Principles and technical description of the greenhouse gas emission reduction verification by areas of support

• Monitoring framework for the activities supported in GIS, including reporting to Buyers (financial and evaluation of verification)

• General provisions for the call for applications under the GIS (Procedural framework)

Project selectionProject selection

• Hard greening: all activities supported by the Scheme should result in emission reduction

• Focus on areas where support can create enabling environment

• Climate additionality and legal additionality• Carbon effectiveness calculation considers post-

Kyoto period in proven areas• Focus on areas with the highest cost-benefit

ratio concerning emission reduction• Matching funds from other Hungarian state

sources

Where to reduce? - Where to reduce? - CO2 CO2 emissionsemissions

Transport21%

Industry21%

Agriculture4%

Commercial services

20%

Transformation sector and non-

energy users4%

Residential sector30%

CO2 emissions by final energy end-users in Hungary, 2004

Source: Novikova, Dr. Ürge-Vorsatz, based on ODYSSEE (2007)

0

100

200

300

400

500

600

700

800

900

1000

millio

n t

on

s

<20 <0 0<20 20<100

Where to reduce? - Where to reduce? - Mitigation Mitigation potentialpotential

Estimated potential for CO2 mitigation in „EITs” at a sectoral level in different cost categories in 2030

Source: Novikova, Dr. Ürge-Vorsatz, based on IPCC (2007)

Cost categories (US$/tCO2eq)

Where to reduce? – Residential Where to reduce? – Residential sectorsector

Source: Novikova, Dr. Ürge-Vorsatz, (2007)

poormedium

good

multistorey terrassed houses

multistorey traditional

industrialized

family houses

0

200

400

600

800

1000

1200

1400

1600

1800

2000

thousands dwellings

Distribution of the existing dwelling

stock from the point of view of

the thermal insulation level in

Hungary

GIS windowsGIS windows

Program window (start in mid 2008)• emission reduction activities which are easy to execute in

large numbers, using standard procedures• emission reductions are easily verifiable (energy certificate

methodology)– house insulation– public lighting modernization– passive house construction– Renewable energy, energy efficiency and energy saving projects

primarily in the domestic and public sector

Project window (will be phased in in late 2009)• large size unique or/and complex GHG reduction projects• operations similar to those of Joint Implementation, with a

streamlined procedure• ISO 14064 based emission reduction verification procedure

Target areas – National CC Policy

• Residential and public sectors– heat insulation of buildings and the change of heating/cooling

systems– renewable energy use– measures to increase the effectiveness of district heating

systems– planning and construction of low energy use buildings – lighting modernization

• Renewable energy use for smaller to larger heating systems

• Biogas production and utilization• Other measures of energy conservation, energy

efficiency and promotion of the use of renewable energy

TargetTarget areas – GIS: areas – GIS: residential sectorresidential sector

• Retrofit of existing buildings– Exchange of windows and doors– Improvement of the thermal envelope– Condensing boilers– Solar protection – Balanced ventilation systems with heat recovery– Sunspaces – additional glazing of existing loggias and

balconies• Applications of renewable energy sources

– Solar thermal collectors– Biomass burners– Heat pumps– Biogas

• Construction of new low energy buildings

Procedural frameworkProcedural framework for greening projectsfor greening projects

GIS contract signature:• Buyer Govt.• Hungarian Min. of Env. and Water (MoEW)

GIS contract signature:• Buyer Govt.• Hungarian Min. of Env. and Water (MoEW)

AAU => BuyerPurchase price => GIS fund

AAU => BuyerPurchase price => GIS fund

Calls for GIS applications approved and published

Calls for GIS applications approved and published

In cooperation with MoEW Climate and Energy Unit

In cooperation with MoEW Climate and Energy Unit

Evaluation and contractingEvaluation and contracting

disbursementdisbursement Implementation (post-completion disbursement)

Implementation (post-completion disbursement)

Implementation (advance payment)

Implementation (advance payment) disbursementdisbursement

verificationverification

monitoringmonitoring

Monitoring & Verification

Verification• 1. Small projects, easy to establish emission reductions:

reporting by the beneficiary of the project with documentation and random verification by the GIS Management Office

• 2. Large, complex projects: third party verification according to ISO 14064 standard

Monitoring• Internationally renowned auditing firm to audit

investments and use of the revenues• Auditor to prepare annual reports and final report• Buyers are presented all reports and will have full and

unrestricted access to all relevant data, information and documentation

Monitoring & VerificationMonitoring & Verification

Greening Activity, Year X

Monitoring: verification and financial control

Audit

Year x

Greening Activity, Year X+1

Monitoring: verification and ...

Feedback by Buyers Schematic framework for

greening, monitoring cycle

Preparation of Annual Report year x

Review of greening framework

Year x+1

Price

PricePrice

• Context is given by market prices and risk factors• Price interlinkages:

• EUA – CER – green AAU – ERU (?)• EUA (2008 dec): 25 euro• CERs (2008 dec): 16.3 euro• green AAUs (delivery before 2008 dec)

• hard greening (CER- 10-20 %), • soft greening (CER- 25-35 %)

Risk factors:• Buyer faces and perceives the following main risks:

• Delivery risk, Greening risk, Political risk•Seller faces and perceives the following main risks:

• Compliance risk, Greening risk, Counter-party risk, Political risk, Porfolio over-exposure

•Other risk considerations:•Market risk, Advance payments and risk management

ConclusionsConclusions

• Strong governmental commitments– Legal system in force, institutional system in place

• High standards of transparency and fiscal credibility– Verification framework– Monitoring framework

• Operational efficiency– Low administrative costs (up to 5%)

• Hard greening– Verification of emission reductions

• Buyer tailored approach– Priorities of buyers are considered and accommodated in the

Greening Framework

Thank you!

Contact:feiler@mail.kvvm.hu

+36306788733klima.kvvm.hu