Evaluation of Mitigation / Adaptation policy portfolios ... Estoni… · GHG Greenhouse Gas GIS...

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PROMITHEAS – 4 Knowledge transfer and research needs for preparing mitigation/adaptation policy portfolios (Contract No. 265182) E E v v a a l l u u a a t t i i o o n n o o f f Mitigation / Adaptation policy portfolios for Estonia Author: Dr. Nadežda DEMENTJEVA Tallinn University of Technology Co-authors: Dr. Popi KONIDARI, Anna FLESSA M.Sc. National and Kapodistrian University of Athens - Energy Policy and Development Centre Tallin, 2013

Transcript of Evaluation of Mitigation / Adaptation policy portfolios ... Estoni… · GHG Greenhouse Gas GIS...

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PPRROOMMIITTHHEEAASS –– 44

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((CCoonnttrraacctt NNoo.. 226655118822))

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MMiittiiggaattiioonn // AAddaappttaattiioonn

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EEssttoonniiaa

Author: Dr. Nadežda DEMENTJEVA Tallinn University of Technology

Co-authors: Dr. Popi KONIDARI, Anna FLESSA M.Sc.

National and Kapodistrian University of Athens - Energy Policy and Development Centre

Tallin, 2013

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This document is part of the relevant report prepared for the FP7 funded project

“PROMITHEAS-4: Knowledge transfer and research needs for preparing

mitigation/adaptation policy portfolios”, coordinated by Prof. Dimitrios MAVRAKIS,

Energy Policy and Development Centre (Greece). The whole report contains twelve

(12) documents for each one of the emerging economies that participate in the

project: Albania, Armenia, Azerbaijan, Bulgaria, Estonia, Kazakhstan, Moldova,

Romania, Russia, Serbia, Turkey and Ukraine.

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CCOONNTTEENNTTSS

Contents ____________________________________________________________5

List of Tables ________________________________________________________5

List of Figures _______________________________________________________5

Abbreviations ________________________________________________________7

Assessment of the scenarios for Estonia, through the multi - criteria method AMS 9

General comments _______________________________________________________ 9

Required data ___________________________________________________________ 9

Assignment of grades____________________________________________________ 10

Results ________________________________________________________________ 24

References_____________________________________________________________ 25

Conclusions ________________________________________________________26

LLIISSTT OOFF TTAABBLLEESS

Table 9: Total emissions for the country. ______________________________________________9 Table 10: Emissions per sector for the country. _________________________________________9 Table 11: Other environmental effects for the country under each scenario, ________________10 Table 12: Water use for cooling (Energy sector). _______________________________________10 Table 13: Mean CEI for each sector depending on the policy instruments of the BAU scenario. 12 Table 14: Mean CEI for each sector depending on the selected policy instruments of the OPT

scenario. ___________________________________________________________________14 Table 15: Mean CEI for each sector depending on the selected policy instruments of the PES

scenario. ___________________________________________________________________16 Table 16: Overall cost efficiency for the three scenarios._________________________________18 Table 17: Equity measurement. _____________________________________________________19 Table 18: AMS results for each scenario. _____________________________________________24

LLIISSTT OOFF FFIIGGUURREESS

Figure 41: ClimAMS-2012._________________________________________________________10 Figure 42: Environmental performance of the scenarios. ________________________________11 Figure 43: Political acceptability.____________________________________________________20 Figure 44: Feasibility of implementation. _____________________________________________23 Figure 45: Final grades. ___________________________________________________________24

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AABBBBRREEVVIIAATTIIOONNSS Abbreviation Full name

AAPA Ambient Air Protection Act

AC Auxiliary current

BAU Business As Usual

CFBC Circulating fluidized bed combustion

CFL Compact Fluorescent

CHP Combined Heat and Power

EE Eesti Energia AS

EEA European Environmental Agency

EBRD European Bank of Reconstruction and Development

EEIC The Estonian Environment Information Centre

EEK Estonian crown abbreviation

EMP Electric Mobility Programme

ENHDP Estonian National Housing Development Plan

EPBD Energy Performance of Buildings

EREF European Renewable Energies Federation

ESDP Electricity Sector Development Plan

EU European Union

EU-ETS European Union Emission Trading Scheme

EV Electric Vehicle

EWEA European Wind Energy Association

GHG Greenhouse Gas

GIS Green Investment Scheme

GNI Gross National Income

HELCOM Helsinki Commission

ICZM Integrated Coastal Zone Management

IEA International Energy Agency

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

JI Joint Implementation

JRC Joint Research Centre

KP Kyoto Protocol

LTO Landing/Take-off

MOE Ministry od Environment

MoEAC Ministry of Economic Affairs and Communications

MOIEEP Ministry of Economic Affairs and Communications

MOU Memorandum of Understanding

NAP National Allocation Plan

NDPUOS National Development Plan for the Utilization of Oil Shale

NEEP National Energy Efficiency Plan

NIR National Inventory Report

NREAP National Renewable Energy Action Plan

NRP National Reform Programme

OECD Organization of Economic Cooperation and Development

OPT Optimistic

OWER Official Webpage of the Estonian Republic

PES Pessimistic

R&D Research and Development

RES Renewable Energy Sources

RES-E Electricity produced from RES

RMK Estonian State Forest Management Centre

SP Stability Programme

SUV Sport utility vehicle

TSO Transmission Operator System

TU Tallinn University

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UNFCCC United Nations Framework Convention oc Climate Change

VOC Volatile Organic Compounds

WHO World Health Organization

WW Water Wikipedia

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AASSSSEESSSSMMEENNTT OOFF TTHHEE SSCCEENNAARRIIOOSS FFOORR EESSTTOONNIIAA,,

TTHHRROOUUGGHH TTHHEE MMUULLTTII -- CCRRIITTEERRIIAA MMEETTHHOODD AAMMSS

GGeenneerraall ccoommmmeennttss The three scenarios have been assessed trough the multi criteria method AMS. This

method is combines three multi-criteria methods: Analytical Hierarchy Process (AHP), Multi-Attribute Utility Theory (MAUT) and Simple Multi-Attribute Ranking Technique (SMART) (Konidari and Mavrakis, 2007; 2006). AMS is developed for evaluating climate policy instruments (PI) or relevant Policy Mixes (PM) and with suitable modification for evaluating their interactions as well.

Three criteria are applied in AMS – environmental performance, political acceptability, and feasibility of implementation. Evaluation results for each criterion are reviewed below.

RReeqquuiirreedd ddaattaa The LEAP model provides the following outcomes for all three scenarios:

Table 1: Total emissions for the country.

Total GHG emissions (in MtCO2eq) Scenario

2000 2020 2050

BAU 17,197 11,360 31,425

OPT 17,197 9,180 27,549

PES 17,197 11,273 29,909

Table 2: Emissions per sector for the country.

Scenario GHG emissions (in MtCO2eq)

2000 2020 2050

Households BAU 1,112 1,561 5,064

OPT 1,112 1,291 4,830

PES 1,112 1,426 4,946

Agriculture BAU 0,084 0,290 0,939

OPT 0,084 0,290 0,939

PES 0,084 0,290 0,939

Other Services BAU 0,031 0,197 0,638

OPT 0,031 0,199 0,646

PES 0,031 0,197 0,638

Industry BAU 0,551 0,662 2,146

OPT 0,551 0,646 2,130

PES 0,551 0,662 2,146

Transport BAU 1,532 3,084 10,001

OPT 1,532 2,428 8,150

PES 1,532 2,632 8,681

Electricity generation

BAU 5,992 4,540 6,859

OPT 5,992 3,810 6,134

PES 5,992 5,192 6,864

Heat generation

BAU 1,332 1,747 6,483

OPT 1,332 1,351 5,553

PES 1,332 1,458 6,275

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Table 3: Other environmental effects for the country under each scenario,

Scenario Million Metric Tonnes CO2 eq

2000 2020 2050

Environmental effects (Carbon Monoxide (CO)- Nitrogen Oxides (NOx)- Non Methane Volatile

Organic Compounds- Sulfur Dioxide)

BAU 0,350 0,648 2,061

OPT 0,350 0,488 1,659

PES 0,350 0,552 1,791

Table 4: Water use for cooling (Energy sector).

Billion cubic meters Scenario

2000 2020 2050

BAU 1,119 1,575 1,829

OPT 1,119 1,224 0,668

PES 1,119 1,355 1,002

AAssssiiggnnmmeenntt ooff ggrraaddeess The software ClimAMS-2012 is used (Fig. 43) for the evaluation of the scenarios.

Figure 1: ClimAMS-2012.

Criterion 1: Environmental performance

Direct contribution to GHG emission reductions: For this sub-criterion, the outcome of LEAP for the total expected GHG emissions in year 2020 are used (Table 9). The scenario with the fewer amounts of emissions has the best performance for this sub-criterion. Negative values are inserted to the software.

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Indirect environmental effects: The total amount of the total environmental effects provided by LEAP (Table 11) is used to assess the sub-criterion. Negative values are inserted to the software.

As a next step, the 2020 data is entered in ClimAMS (with negative value) to calculate respectively the direct effect on GHG emissions and indirect environmental effects.

Figure 2: Environmental performance of the scenarios.

Criterion 2: Political acceptability

Cost efficiency: For the first sub-criterion the mean CEI for each sector was calculated depending on the policy instruments that were under each scenario (tables 13,14 and 15). Each value was multiplied with the respective amount of GHG emission reductions that were estimated by LEAP outcomes. For measures that concern adaptation additional calculations were done.

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Table 5: Mean CEI for each sector depending on the policy instruments of the BAU scenario.

Mitigation Scen. Sector Technological options Policy instrument CEI Mean CEI

Energy management Performance standards (energy audits, energy certification) (Energy Efficient Act – RT I 2003/78-525, Building Act – RT I 2002/47-297, RT I 2002/99-579)

-5,75 Buildings

Energy efficient appliances Energy labeling for appliances (Energy Efficient Act – RT I 2003/78-525)

-2,5

(-5,75-2,5)/2 = -4,125

Energy management Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1,25

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,5

Industry

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-1,25

(-1,25-0,5-1,25)/3 = -3/3 = -1

Promotion of Biofuels Regulatory standards (Liquid Fuel Act – RT I 2003/21-127, RT I 2003/88-591)

0,25

Fuel standards Fuel quality standards (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Transport

Energy efficiency Behavior change (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,25

(0,25-0,5-0,25)/3 = -0,5/3 = -0,167

Energy efficient technologies Regulatory standards (District Heating Act (RT I 2003/25-154, RT I 2007/17-80)

-0,75

Promotion of RES technologies Subsidy (Feed-in-tariffs) (Electricity Market Act – RT I 2003/25-153, RT I 2009/39-262)

-0,25

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,25

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Technologies and practices for GHG emission reductions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,75

BA

U

Energy

Energy efficiency Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25

(-0,75-0,25-0,25-0,5-0,75-0,25)/6 = - 0,458

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Waste management

Capture and storage of GHG emissions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1 -1

Adaptation

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25 Water management

Command and control (Emergency Act – RT I 1996/8-165, RT I 2002/57-354 and Water Act – RT I 1996/40-655, RT I 1998/13-241, RT I 2004/28-190)

-1/6

(-0,25-1/6)/2 = -0,208

Forest management

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

0,25 0,25

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Table 6: Mean CEI for each sector depending on the selected policy instruments of the OPT scenario.

Mitigation Scen. Sector Technological options Policy instrument CEI Mean CEI

Energy management Performance standards (energy audits, energy certification) (Energy Efficient Act – RT I 2003/78-525, Building Act – RT I 2002/47-297, RT I 2002/99-579)

-5,75

Energy management Subsidy (Proposed) -0,75

Energy efficient appliances Energy labeling for appliances (Energy Efficient Act – RT I 2003/78-525)

-2,5

Energy management Energy efficient lighting (Proposed) -2,5

Buildings

Energy management Building isolation requirements (Proposed) -1,5

(-5,75-0,75-2,5-2,5-1,5)/5 = -2,6

Energy management Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1,25

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,5

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-1,25

Industry

Best available technologies Economic policy instrument (Subsidy for most energy consuming industry)(Proposed)

-0,25

(-1,25-0,5-1,25-0,25)/4 = -0,8125

Promotion of Biofuels Regulatory standards (Liquid Fuel Act – RT I 2003/21-127, RT I 2003/88-591)

0,25

Fuel standards Fuel quality standards (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Energy efficiency Behavior change (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375 and Proposed)

-0,25

Energy efficiency Performance standards (Transport management) (Planned) 0,5

Subsidy – Grant (Planned) -0,25

Transport

Energy efficient vehicles

Support of research (Planned) +2

(0,25-0,5-0,25+0,5-0,25+2)/6 = 1,75/6 =+0,292

Energy efficient technologies Regulatory standards (District Heating Act (RT I 2003/25-154, RT I 2007/17-80)

-0,75

Promotion of RES technologies Subsidy (Feed-in-tariffs) (Electricity Market Act – RT I 2003/25-153, RT I 2009/39-262)

-0,25

OP

T

Energy

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I -0,25

(-0,75-0,25-0,25-0,5-0,75-0,25)/6 = - 0,458

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2004/43-298, RT I 2010/44-261)

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Technologies and practices for GHG emission reductions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,75

Energy efficiency Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25

Capture and storage of GHG emissions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1

Waste management

Behavior change (Recycling) (Proposed) -1,25

(-1-1,25)/2 = - 1,125

Energy efficient technologies Economic instruments (Subsidy) (Proposed) -0,25 Agriculture

Dissemination policy instruments (Awareness – training)(Planned /Proposed)

-1/6

(-0,25-1/6)/2 = -0.208

Adaptation

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25 Water management

Command and control (Emergency Act – RT I 1996/8-165, RT I 2002/57-354 and Water Act – RT I 1996/40-655, RT I 1998/13-241, RT I 2004/28-190)

-1/6

(-0,25-1/6)/2 = -0,208

Forest management

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

0,25 0,25

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Table 7: Mean CEI for each sector depending on the selected policy instruments of the PES scenario.

Mitigation Scen. Sector Technological options Policy instrument CEI Mean CEI

Energy management Performance standards (energy audits, energy certification) (Energy Efficient Act – RT I 2003/78-525, Building Act – RT I 2002/47-297, RT I 2002/99-579)

-5,75 Buildings

Energy efficient appliances Energy labeling for appliances (Energy Efficient Act – RT I 2003/78-525)

-2,5

(-5,75-2,5)/2 = -4,125

Energy management Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1,25

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,5

Industry

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-1,25

(-1,25-0,5-1,25)/3 = -3/3 = -1

Promotion of Biofuels Regulatory standards (Liquid Fuel Act – RT I 2003/21-127, RT I 2003/88-591)

0,25

Fuel standards Fuel quality standards (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Transport

Energy efficiency Behavior change (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375 and Proposed)

-0,25

(0,25-0,5-0,25)/3 = -0,5/3 = -0,167

Energy efficient technologies Regulatory standards (District Heating Act (RT I 2003/25-154, RT I 2007/17-80)

-0,75

Promotion of RES technologies Subsidy (Feed-in-tariffs) (Electricity Market Act – RT I 2003/25-153, RT I 2009/39-262)

-0,25

Energy efficiency Tradable permits (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,25

Best available technologies Regulatory standards (combined type) (Integrated Pollution Prevention and Control Act – RT I 2001/85-512, RT I 2002/61-375)

-0,5

Technologies and practices for GHG emission reductions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-0,75

PE

S

Energy

Energy efficiency Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25

(-0,75-0,25-0,25-0,5-0,75-0,25)/6 = - 0,458

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Waste management

Capture and storage of GHG emissions

Regulatory standards (Ambient Air Protection Act – RT I 2004/43-298, RT I 2010/44-261)

-1 -1

Adaptation

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

-0,25 Water management

Command and control (Emergency Act – RT I 1996/8-165, RT I 2002/57-354 and Water Act – RT I 1996/40-655, RT I 1998/13-241, RT I 2004/28-190)

-1/6

(-0,25-1/6)/2 = -0,208

Forest management

Economic instruments (Charge) (Environmental charges Act – RT I 2005/67-512, RT I 2006/29-220)

0,25 0,25

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Table 8: Overall cost efficiency for the three scenarios.

Mitigation/Adaptation Cost (pseudo-monetary units)

Buildings Agriculture Industry Transport Energy Total

Scen.

M A M A M A M A M A

BAU 0 0 0 0 0 0 0 0 0 0 0

OPT -0,702 0 0 0 -0,013 0 0,192 0 -0,508 0 -1,032

PES -0.557 0 0 0 -0,008 0 -0,075 0 -0,125 0 -0,765

For dynamic cost efficiency, there are no available data from LEAP so the SMART procedure is used. RES technologies according to the potential that the country has (described in a previous session) are promoted mostly in the OPT scenario compared to the other two.

The renewable subsidy program allows the development of research projects related to the investigation of RES potential and other innovative technologies in Estonia. In BAU scenario the support of subsidiaries remains as it is today and the penetration of RES will reach the target that is set for Estonia (see session about BAU scenario). If this policy instrument remains as it is then the target set for Estonia is attainable and it is likely that there is enough potential to achieve the higher objective as well (NRP, 2012). There are also financial incentives for the promotion of energy efficiency technologies in buildings under the BAU scenario. However, the local electricity generation from RES in buildings is not cost-optimal right now (MOIEEP, 2011). Additionally, the country has no targets for developing or constructing low-energy or nearly zero-energy buildings (MOIEEP, 2011). Investments in the energy sector for technological improvements that will result to energy savings continue to be large, and their preparation requires expert knowledge, research and development for drawing up the necessary development plans for the energy sector (MOIEEP, 2011). The current policy portfolio does not support them fully but partially. The obligation for the share of biofuels in the transport sector supports the penetration of RES in this sector.

The Ministry of Education and Research and the Estonian Research Council have financed under the BAU policy portfolio climate change related research projects on atmospheric circulation processes, sea and terrestrial climatic observing systems, ionization, analyses of satellite images, climate modelling and climate monitoring (UNFCCC, 2011). The Ministry of the Environment and the Ministry of Agriculture have financed climate change related research projects that have expanded substantially in recent years (UNFCCC, 2011).

OPT scenario concerns also the high penetration of wind farms, but the cutting of the subsidies is taken into account in this scenario. In this scenario RES are not supported at the same level as in BAU, but due to the gained momentum it is assumed that their penetration will continue without reaching the maximum possible national potential. The additional policies concerning the promotion of biofuels in agriculture and transport sectors will be implemented by 2050 in OPT scenario.

In PES scenario the additional policies concerning the cutting of feed-in-tariffs for supporting RES-E and biofuels in energy and agricultural sector are taken into account. Due to the different orientation of the national priorities (see session for the PES scenario) this policy portfolio does not support to the same extent as BAU and OPT innovative technologies. The assigned grades are: BAU – 9, OPT – 7, PES – 5.

For competitiveness there are no available results from LEAP, therefore the SMART procedure is used. The Estonian economic sectors that will be influenced by the national climate change policy and the climate change impacts will be the industrial sector, the agricultural sector and the energy sector. The competitiveness of industry and small enterprises is expected to increase if they increase their energy efficiency (MOIEEP, 2011). Under the BAU and the OPT scenarios enterprises were and are offered several development

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opportunities (through the “Enterprise Estonia” and the National Reform Programme ‘Estonia 2020’1) (MOIEEP, 2011).

Climate change impacts (increased temperature and precipitation) will favor the agricultural sector and the wood industry of the country. Their activities are expected to grow and have a larger share in the national GDP.

The policy instruments of the OPT scenario for the transport sector will allow the country to reinforce its international competitiveness since there will be improvements in the main transport modes (road and rail) that will facilitate the transfer of goods within and outside the country. Additionally, investments in infrastructure and transport network will support important EU cohesion and convergence objectives (Davies S. and Holmes I., 2011).

The priorities of the budget ensure the Estonian competitiveness with more funds being allocated to education and investment, while no budget cuts were announced for energy and climate issues (Ecofys, 2011). The European Investment bank (EIB) has also part-financed major investments in the power grid and electricity generation (Davies S. and Holmes I., 2011). Opportunities for investments in RES and energy efficient technologies by foreign investors exist, but are not so attractive compared to other countries (Ernest & Young, 2012).

The assigned grades are: BAU – 7, OPT – 9, PES-5.

For equity the ratio GHG emission reductions in MtCO2eq to capita is used. It is considered that the larger the ratio is the fairer is the scenario in sharing the burden among the sectors.

Table 9: Equity measurement.

Scenario Total amount of 2020 GHG emissions (MtCO2eq)

Reductions compared to BAU

Population in 2020 (in million)

Ratio reductions tCO2eq per capita

BAU 11,360 0 1,328 0

OPT 9,180 2,180 1,328 1,642

PES 11,273 0,087 1,328 0,066

For flexibility the scenarios are compared towards the incentives and the options that they offer to target groups. For the household sector the apartment building renovation support programmes are considered to be financed generously facilitating owners to achieve energy savings and benefit in the long-term (MOIEEP, 2011). Therefore for BAU and OPT scenarios since the subsidies for the household remain, their performance under flexibility is almost equal. For the transport sector, owners of old technology cars have the opportunity to purchase electric vehicles using subsidies under OPT scenario.

The OPT scenario offers more options – compared to the other two scenarios - such as subsidies, grants, tax exemptions for buildings, transport, industry, energy and agriculture. So, the target groups have enough flexibility in complying with their obligation in reducing GHG emissions in this scenario.

While PES scenario has the same main components of existing policy instruments, the cutting of RES subsidies and the increasing of environmental charges compared to the OPT scenario are taking into account for final grades. The assigned grades are: BAU - 7, OPT - 8, PES - 4.

For stringency for non-compliance, the level of stringency is determined by sanctions, penalties and other rules-influencing mechanisms for transgressors. Estonia as an EU member State implements the penalty rules under the EU-ETS. All three scenarios foresee the penalties for exceeding of GHG emissions2.

No other information is available for the performance of the three policy portfolios under this sub-criterion. So, all are assigned with 5.

1 Published in 2011 - http://www.climatepolicytracker.eu/sites/all/files/Estonia2011.pdf 2 Ambient Air Protection Act RT I 2004, 43, 298

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Figure 3: Political acceptability.

Criterion 3: Feasibility of implementation

The scenarios were evaluated against 3 sub-criteria.

For implementation network capacity - The existing implementation network does not provide the necessary information – at least in English - for the full range of climate change policy issues in the country. There is limited number of official reports regarding national climate change policy issues for Estonia.

Another identified problem of the proper performance of the implementation network is the lack of data. The proper analysis of the energy efficiency in the transport sector cannot be carried out due to lack or problems with the reliability of several data, while there are significant gaps and uncertainties with the available data (Tallinn University of Technology, 2012). Inconsistencies in the reporting of emission projections regarding the energy sector are identified in the 5th National Communication of Estonia to UNFCCC (UNFCCC, 2011). There is also lack of clarity whether the transport emissions are included in the energy sector (UNFCCC, 2011). Furthermore, Estonia has not provided any information on identified adaptation measures in the vulnerable sectors, as it has not yet conducted an adaptation assessment study and nor has it collected data (UNFCCC, 2011).

On the other hand Estonia has reported that the public opinion towards a sustainable lifestyle has changed during the past decade due to increased public awareness for energy savings and RES (UNFCCC, 2011). This change is attributed to the wider dissemination of information to the public through the media and the internet that has occurred the last years (UNFCCC, 2011). The access to environmental information in Estonia is regulated mainly by the Public Information Act (UNFCCC, 2011). Information regarding all the implemented policy instruments is publicized to the media (MOIEEP, 2011). Press releases, project or programme website are used. Examples of coverage on public sector measures are: i) the website of the State Real Estate Ltd (Riigi Kinnisvara AS) that provides information on its energy conservation investments (http://www.rkas.ee/co2); ii) the website of the Ministry of the Environment on sustainable public procurement (http://www.envir.ee/KHRH). Openness

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and motivation have been constant communication objectives of the government (MOIEEP, 2011) and iii) for subsidies in purchasing electric vehicles (http://elmo.ee/incentives/). Also, compared to previous eras, the availability of energy efficiency information has very much improved (Egger C. et al., 2012).

The entities that form the Estonian implementation network are:

- The Ministry of the Environment3. The climate change issue is under “Departments &

Activities”4, but with general information. No relevant official documents could be spotted on the website.

- The Ministry of Economic Affairs and Communications5. Under the “Issues” branch, the visitor can find information about two sectors (Energy and Transport). For the Energy sector6 the last available report is of 2007.

- The Ministry of Agriculture7. No apparent branch for climate change issues.

- Elering is the TSO that pays out the subsidies according to the Electricity Market Act8 as well as manages the Estonian electricity system in real time. Its web-site has more information compared to the previous ones on relevant issues (for the renewable energy subsidy9, reports and analyses10) and is kept updated.

- KredEx - Estonian Credit and Guarantee Fund11, was established in 2001 by the Ministry of Economic Affairs and Communications with the main aim to improve the financing of enterprises in Estonia, and to decrease export-related credit risks (Tallinn University of Technology, 2012). In Estonia, there is no energy agency or any institution with similar tasks. KredEx provides information on implementation of en-ergy efficiency measures in apartment buildings, manages information pertaining to energy conservation in apartment buildings and arranges meetings between various parties involved in the further development of energy use in buildings in Estonia. (Tallinn University of Technology, 2012). The Energy Efficiency Consulting Centre (ESK, in local language - Energiasäästu Kompetentsi-keskus) is a specific programme of its’ kind, which has been created in 2006 inside of KredEx with the aim to help housing associations to improve their energy efficiency performance (UNFCCC, 2011).

This implementation network has already been working for the implementation of the BAU policy portfolio with good outcomes (see session for BAU scenario). It can be improved. Its lack of capacity in the public sectors is perceived by experts, due to the absence of a national energy agency to support policy development, implementation and analysis (Christiane Egger et al., 2012). Also municipalities suffer from the lack of staff and financial resources (Christiane Egger et al., 2012).

For the OPT scenario due to a larger number of policy instruments there is a need of a more experienced and extended implementation network. Compared to that of BAU it is slightly improved since in the 2011 annual submission, Estonia has reported two changes. Firstly, the establishment of a new institution called the Climate and Radiation Department that replaced the Climate and Ozone Bureau at the EEIC, and secondly, the nomination of the Department of the National Forest Inventory at the EEIC responsible for the inventory of the LULUCF sector and for reporting on activities under Article 3, paragraphs 3 and 4, of the Kyoto Protocol instead of Tallinn University of Technology (UNFCCC, 2011). For the PES

3 http://www.envir.ee/67244 4 http://www.envir.ee/1116057 5 http://www.mkm.ee/ 6 http://www.mkm.ee/overview/ 7 http://www.agri.ee/home-2 8 http://elering.ee/renewable-energy-3/ 9 http://elering.ee/renewable-energy-3/ 10 http://elering.ee/reports-and-analyses/ 11 http://www.kredex.ee/en/

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scenario an improved implementation network compared to the BAU scenario is needed, but not at the same level of that for the OPT. The assigned grades are: BAU -7, OPT -7 and PES -7.

For administrative feasibility—there were no delays with the implementation of the policy instruments, while the preparation and participation of target groups were in proper time. Regarding awareness-raising programmes that the Estonia undertook in the recent years, there is no information on how these programmes are monitored (UNFCCC, 2011). The problems with the availability and credibility of data mentioned in the previous sub-criterion can be also linked with administration issues. So, improvement of the completeness of its reporting in its next national communication information will indicate with administrative feasibility has improved in Estonia (UNFCCC, 2011). The lack of competent institutions for climate change issues in Estonia shows that all the work is concentrated at the relevant Ministries increasing the administrative burden.

One more thing that could be mentioned here is that Estonia has applied for a transition period for solving oil shale-based energy sector development and issues for the opening of the electricity market that were set during the European Union accession negotiation. According to the agreement achieved, Estonia was going to open up to 35% its electricity market by the end of 2008 (Treaty, 2003). Estonia was granted a transition period until 31 December 2015 regarding also the implementation of the EU Directive on reduction of emissions into air from large combustion plants (2001/80/EC) like the oil shale-fired power plants. The latter means that Estonia was granted this transition period so as to manage successfully the reduction of

air pollution from oil shale-fired power plants (Laur, Soosar, 2002). The Ministry of Economic Affairs and Communications, Elering and other ministries need to coordinate the implementation of the policy instrument. Taking into consideration all the above the grade is good (7) for all scenarios.

For financial feasibility - Estonia has a major financing problem, according to the opinion of experts, since, the general economic conditions are not conducive and the government has little funding of its own for energy efficiency investments (Egger C. et al., 2012). On the other hand, these investments are characterized as necessary. One-third of Estonian families live in small houses with poor energy efficiency based on data for the final energy consumption of households (MOIEEP, 2011). Billions of additional euros must be invested so as to ensure that the owners of the apartment buildings comply with modern energy performance and indoor climate requirements (MOIEEP, 2011). The income tax refund on reconstruction loan interest applied so far is failing to motivate owners to insulate their buildings, so the financial cover to the support programme for reconstructing small houses needs to be found (MOIEEP, 2011).

Two financial resources have been and will be used:

- EU Structural Funds: For the period 2007−2013 Estonia was allocated 3,4 billion € via EU Structural Funds which is almost double compared to the received amount in the previous EU budget period (Davies S. and Holmes I., 2012). These funds will be allocated to: environment (1,2 billion €); transport infrastructure; research and development (R&D) and innovation (0, 822 billion €); and training and education. Estonia has used part of these Structural Funds for energy efficiency investments in households (Davies S. and Holmes I., 2011).

- Revenues from the sale of emission rights (AAUs) under the Kyoto Protocol (starting mainly from 2013) (MOIEEP, 2011). The selling of AAUs under the GIS provided already the means to develop successful grant schemes for the buildings sector (refurbishment of residential buildings but recently also for the public sector) (Egger C. et al., 2012). In August 2010 the Minister of MoEAC issued a regulation providing terms and procedures for the Green Investment Scheme Apartment Building Renovation Grants. In September 2010 KredEx started to issue renovation grants in the amount of 15–35% of the total cost of the renovation project. Investments are

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applied for in a competitive way and applications are evaluated usually taking into account the environmental impact of the projects as well (MOIEEP, 2011). The total budget for renovation grants is 28 million € (Tallinn University of Technology, 2012).

Due to the availability of funds, experts see significant progress in financial instruments. (Egger C. et al., 2012). Also, through the GIS new buses were rented to a public transport service provider12 (Tallinn University of Technology, 2012).

In BAU scenario the limitation in financing of energy efficiency in buildings promotion is recognized. OPT scenario needs more subsidies, grants for promotion RES, waste recycling and biofuel usage in agriculture sector compared to the other scenarios. The negative impact of cutting of the RES subsidies and KredEx support for households in OPT and PES scenarios could be mentioned here and are taking into account for final grades. Another positive fact is that the volume of the subsidy is directly linked to the price of CO2 quota. If the CO2 quota price is below 10 EUR per tonne, then the subsidy is not paid (Estonian Competition Authority, 2010).

All scenarios are graded with 7.

Figure 4: Feasibility of implementation.

The overall final score for each policy portfolio is presented in the below figure:

12 In 2010–2011 21 M€ were invested in energy efficient and environment friendly buses (105 buses) for public

transport system. The Estonian Road Administration purchased these new buses that were given to the public transport service providers’ possession only for the duration of the public service contract. The new buses can use gas (including biogas) as fuel (Tallinn University of Technology, 2012).

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Figure 5: Final grades.

RReessuullttss The results for each scenario are presented in Table 18.

Table 10: AMS results for each scenario.

Scenarios Criteria

BAU OPT PES

Direct contribution to GHG emission reductions (0,833) 0,000 83,300 3,324

Indirect environmental effects (0,167) 0,000 16,700 10,020

Environmental performance (0,675) - A 0,000 100,00 13,344

Cost efficiency (0,390) 0,000 47,300 35,063

Dynamic cost efficiency (0,227) 11,688 4,656 1,855

Competitiveness (0,103) 2,175 5,459 0,866

Equity (0,188) 0,000 17,500 0,703

Flexibility (0,056) 1,764 2,795 0,440

Stringency for non-compliance (0,036) 1,133 1,133 1,133

Political acceptability (0,259) - B 16,761 78,844 40,061

Implementation network capacity (0,228) 10,300 10,300 10,300

Administrative feasibility (0,685) 19,367 19,367 19,367

Financial feasibility (0,088) 3,667 3,667 3,667

Feasibility of implementation (0,065) - C 33,333 33,333 33,333

Total (A+B+C) 15,503 78,120 34,940

The calculations show that the policy portfolio in OPT is the best one in terms of overall performance. The policy portfolio in BAU is the worst one.

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RReeffeerreenncceess Christiane Egger, Reinhold Priewasser, Michaela Kloiber , Lucia Bezáková, Nils Borg , Dominique Bourges, Peter Schilken, 2012. SURVEY REPORT-Progress in energy efficiency policies in the EU Member States - the experts perspective, Findings from the Energy Efficiency Watch Project. Available at: http://www.energy-efficiency-watch.org/fileadmin/eew_documents/EEW2/EEW_Survey_Report.pdf Davies Susan and Holmes Ingrid, 2011. European Perspectives on the Challenges of Financing Low Carbon Investment: Estonia - September 2011. Available at: http://www.e3g.org/images/uploads/E3G_European_Perspectives_on_the_Challenges_of_Financing_Low_Carbon_Investment_Estonia.pdf

Ecofys, 2011. http://www.climatepolicytracker.eu/sites/all/files/Estonia2011.pdf

Ernest & Young, 2012. Renewable energy country attractiveness indices. Issue 34, August 2012. Available at: http://www.ey.com/Publication/vwLUAssets/Renewable_energy_country_attractiveness_indices_-_August_2012/$FILE/Renewable_energy_country_attractiveness_indices_Aug_2012.pdf

Konidari P. and Mavrakis D., 2006. Multi-criteria evaluation of climate policy interactions. Journal of Multi-Criteria Decision Analysis 14, pp 35 – 53.

Konidari P. and Mavrakis D., 2007. A multi-criteria evaluation method for climate change mitigation policy instruments. Energy Policy 35, pp 6235-6257.

Laur A., Soosar S., Tenno K. Development of Electricity Markets – Options for Estonia, 2002. http://pdc.ceu.hu/archive/00001561/01/electricity.PDF MOIEEP, 2011. Ministry of Economic Affairs and Communications, 2011. Mid-term overview of implementation of Energy Efficiency Plan 2007–2013 and further implementation. The second energy efficiency action plan of Estonia. Available at: http://ec.europa.eu/energy/demand/legislation/doc/neeap/estonia_en.pdf

Tallinn University of Technology, 2012. Energy Efficiency Policies and Measures in Estonia ODYSSEE - MURE 2010, Monitoring of EU and national energy efficiency targets. Available at: http://www.odyssee-indicators.org/publications/PDF/estonia_nr.pdf

Treaty of Accession. 2003. Negotiations on Accession by the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia to the European Union. Legislative Acts and Other Instruments. AA 2003 Final. Brussels, 3 April 2003. http://www.eipa.eu/files/repository/product/20070816125607_2003w03.pdf

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CCOONNCCLLUUSSIIOONNSS This report concerns the development and assessment of three (3) climate change

mitigation and adaptation policy scenarios for Estonia. Each of them is characterized by a different policy portfolio and is named after it as Business As Usual (BAU), Optimistic (OPT) and Pessimistic (PES).

All scenarios take into consideration the following national objectives: i) 8% reduction by 2012 of its GHG emissions compared to those of base year 199013; ii) 25% share of RES in the gross final energy consumption by 2020 (RES share of 17,6 % in electricity production, 38,4% in heating and cooling; and 9,9% in fuel used in transport (UNFCCC, 2011)) and iii) 9% reduction of final energy consumption by 2016 in comparison to the average final energy consumption of the period 2001–2005.

The country has already decreased by 59% its GHG emissions – excluding net emissions or removals from LULUCF - between 1990 and 2009, while total GHG emissions, including net emissions or removals from LULUCF, decreased by 68% (UNFCCC, 2011).

BAU scenario

The BAU scenario concerns the time evolution of the already implemented mitigation and adaptation policy instruments (set into force before 31 December 2010) in Estonia until the year 2050 and serves as the reference against which the outcomes of the other scenarios are compared.

The currently implemented Estonian mitigation policy has four main components: i) penetration of RES in the gross final energy consumption, ii) support to increase energy efficiency; iii) GHG emission reductions through JI and EU-ETS and iv) selling of AAUs though the GIS. Concerning the adaptation policy, there are implemented policy instruments oriented towards water and forest management.

According to the outcomes of the model Long range Enregy Alternatives Planning System (LEAP) for the BAU scenario in 2020 the GHG14 emissions are increased compared to those of year 200515 by almost 90%, but reduced by 35% compared to those of year 2000.

The RES share in the transport sector for year 2020 is 0% (due to the absence of supportive mechanisms) and in electricity generation 20,6%.

OPT scenario

The Optimistic scenario concerns the time evolution of an enhanced mitigation/adaptation policy portfolio that Estonia will implement during the time interval 2011 - 2050. This enhanced policy portfolio takes into account the policy instruments adopted after 1st January 2011 as well as plans of the country and supports: i) the introduction of efficient technologies in almost all sectors targeting to the maximum reduction of GHG emissions through the maximum exploitation of the potential of the country in energy efficiency and renewable energy sources and ii) the necessary infrastructure for the adaptation of the country towards the minimum – in size and extent - expected climate change impacts.

The policy portfolio of this scenario includes a wider range of policy instruments compared to those that synthesize the BAU scenario. Performance standards, financial policy instruments (subsidies and grants), dissemination policy instruments (awareness campaigns

13 According to the EU effort-sharing decision, Estonia is allowed to increase its total GHG emissions by 11% by 2020 compared with the 2005 level (UNFCCC, 2011). 14 For biofuels the amount of air pollutant were not available in LEAP for all branches. 15 GHG emission sources which are taken into consideration in this study do not include the “Oil transformation” sector due to missing data. Due to this lack of data there is difference between the official historical data for GHG emissions and those calculated by the LEAP model.

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and seminars) are proposed for the main economic national sectors. Adaptation policy instruments are foreseen for the agricultural sector.

Based on the outcomes of the LEAP model for the OPT scenario, GHG emissions in Estonia will increase by 54% in 2020 compared to those of year 2005, but will be reduced by 46% compared to those of year 2000. The share of RES in the transport sector in 2020 will be 11,25%, and 32% in electricity production. The final energy consumption in 2020 will be reduced by 9% compared to that of BAU for the same year.

PES scenario

The Pessimistic scenario concerns the time evolution of a mitigation/adaptation policy portfolio that the country will implement up to 2050 without exploiting fully the national potential in energy efficiency and renewable energy sources and by facing the worse expected impacts of climate change, taking into account the policy instruments adopted after 1st January 2011.

This scenario assumes less ambitious mitigation policy by limiting the possible technological options only to a selected number of sectors with the highest energy efficiency potential and the most promising for the country types of RES. The scenario considers the implementation of all policies approved (existing or planned) policies, but no additional policies apart from in line with the EU climate change policy and the country priorities.

According to the outcomes of the LEAP model for the PES scenario, GHG emissions in Estonia will increase by 65% compared to those of year 2005, but will decrease by 34% in 2020 compared to those of year 2000. The share of RES in the transport sector in 2020 will be 5,6% and in the electricity generation it will be 25,5%. The final energy consumption in 2016 will reduced by 4% compared to compared to that of BAU for the same year.

Assessment outcomes16

Using the multicriteria method AMS, the three (3) policy portfolios were assessed against their environmental performance (amount of GHG emissions and secondary environmental effects), political acceptability (attitude of the involved entities (target groups) towards the relevant policy portfolio) and feasibility of implementation (applicability of the policy portfolio from the point of the governmental and national pertinent entities).

The BAU scenario has the largest amount of GHG emissions, followed very closely by the PES scenario.

The policy portfolio of the OPT scenario has the best performance in political acceptability since it is the most cost effective for the target groups (residential, industrial, energy and transport sectors) compared to the other two policy portfolios. It offers a fair distribution of the “climate change” burden among the respective sectors and allows the economic sectors to be more competitive. It offers more flexibility for the target groups in complying with their obligations under the specific policy portfolio.

The performance of the three scenarios under the third criterion is equal. The country has established an implementation network that is able to adjust properly its activities under a more strict policy portfolio like that of OPT compared to the BAU one. The country has managed to allocate the necessary funds for the implementation of its supportive policy instruments for RES and energy efficiency.

Given the above, the mitigation/adaptation policy portfolio which characterizes the Optimistic scenario is the one that allows the achievement of most goals of the climate change policy of Estonia. Nevertheless, the success of this policy portfolio requires the encouragement of business investments in RES and energy efficiency projects, the

16 The assessment outcomes depend on the level of expertise of the person who makes the assessment as well as the degree of justification concerning the sub-criteria.

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continuation of the demonstated effectiveness of the implementation network and a more stringent frame for non-compliance.

In this report, the component of adaptation in climate change policy is not fully developed since the country hasn’t set an adequate framework to reduce its vulnerability to climate change. Moreover, the design and assessment of relevant policy instruments require data related to the frequency of extreme events, water resources and use, low-income groups, biodiversity, the health sector, etc., which are not available at the moment.

Concluding, the scenarios of this report were developed under the same assumptions for the evolution of GDP and population for the period 2011-2050. In order to perceive the performance and applicability of the three (3) policy portfolios, the report should include six (6) more scenarios with the combinations “low population growth – high GDP growth” and “high population growth-low GDP growth”, according to the socioeconomic frameworks presented in the IPCC pathways (new generation of IPCC scenarios).