Green Investment Scheme in Bulgaria

Christo Christov, Energy Institute, Bulgaria

Workshop

Facilitation Green Investment Scheme:

first lessons learnt and the way forwardApril 24-25, 2008, Budapest, Hungary

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Opportunities for Bulgaria

Surplus of AAUs

Potential for Bulgaria to trade AAUs: Approximately 30 mill t CO2 e / year

Potential for Greening AAUs in Bulgaria could be 75 million tons of CO2e Emission Reductions for 5 years period

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Potential of Bulgaria to realize ER

District heating & cogeneration – 50 mill t CO2

Energy efficiency – 11 mill t Renewable energy – 7 mill t CO2

Waste management – 3 mill t CO2

Fuel switch – 3 mill t CO2

Forestry – 2 mill t CO2

Total – about 75 mill t CO2

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Benefits for Bulgaria

Additional financing sources – compliance with commitments and real projects

Additional flexibility compared to JI projects Avoidance of EU ETS Double accounting of the

Emission Reductions Achievement of emission reductions in the most

efficient manner

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WB Study for Bulgaria on GIS, 2004

confirmed the feasibility of a GIS recommended various options for

establishing and implementing a GIS received favorably across the various sectors

and Ministries - seminars, comments recommended a multi-sectoral investment

program under the GIS

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In early 2005 the BG Government was committed to moving forward with a GIS as quickly as possible

The Government promised: to take all necessary measures to implement

GIS to work with multilaterals, bilateral agencies,

private sector and local stakeholders in this regard

to design the GIS to use flexible financial instruments to provide support for eligible projects – soft, hard, JI

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AAU-based Green Investment Scheme understanding in Bulgaria (2004 -2005)

Long term financing facility which links transfer of AAUs through 2012 with emission mitigation activities and projects through and beyond 2012

Selling country to assure buyers that proceeds from sale of AAUs would be used to finance agreed Green Investment Scheme (GIS) and adopt suitable monitoring and verification measures

Buying country(ies) to provide financing for GIS per the terms of contract

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Bulgaria GIS Study, 2004 - Findings Bulgaria is well positioned to establish a GIS GIS can be implemented without requiring new

law(s) Establishment of a GIS can proceed without delay Central heating, waste management, energy

efficiency, have potential for producing emission reductions of 50-60m tones between 2005-2020

Forestry can also produce large benefits Bulgaria can offer an attractive GIS (with an initial

consideration for sale of AAUs around 25 million tons in first tranche)

See full report at www.moew.government.bg

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Generic Structure of a AAU Green Fund

Buyer(s)(EU, Japan, Canada etc.)

Government of Bulgaria

Investment Committee

GIS Fund*

AAUs

Private co-investors/Bond holders

Window 1Hard Greening

Window 2Soft Greening

Window 3Early/Late

Credit

Window 4Capacity Building,

Outreach & Training

Investments Projects Investments Programs

* GIS Fund is a Bulgarian institution / company, wholly owned by GOB, with or without private participation.** Fund Manager is a professional manager with financial and fund management experience

Euro/ $

Commercial Bank Bilateral/

Multilateral funding

Fund Manager**

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Alternate Structure – GIS Implementation Unit

Buyer(s)(EU, Japan, Canada etc.)

Ministry ofFinance

GIS Implementation

Unit*

AAUs

Window 1Hard Greening

Window 2Soft Greening

Window 3Early/Late

Credit

Window 4Capacity Building,

Outreach & Training

Investments Projects Investments Programs

* GIS Implementation Unit is under a ministry or an independent agency (e.g. EcoFund).

Euro/ $

Euro/ $Annual Allocation

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GIS Considerations for Bulgaria 2005 GIS structure should cover all management costs without

depending on government budgetary resources

GIS should be flexible to ensure financing of public/private sector projects and PPP initiatives using market friendly instruments

GIS should be flexible to accommodate bilateral and multilateral negotiations and preferences in implementation

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GIS Recommendations, 2005 Bulgaria is the most attractive JI Country and is

the pioneer in formulating a GIS backed AAUs (Point Carbon)

Establishment of a GIS with an initial size of euro 250 to 350 million is feasible

Existing ECO Trust Fund with good track record is an attractive option to set-up and manage GIS

Additional “Fund Management” support to ECO Trust Fund through experienced commercial banks which can raise new financing and also provide own financing

Establishment of an AAU Management Function which coordinates all activities involving AAUs

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Proposal of WB Group for Assistance

Facilitating discussions and negotiations between the government & buyer(s)

Assist with the establishment and launching of a complete GIS framework that meets buyer(s) requirements and Bulgaria’s needs

Financial assistance to GIS in the form of loans and/or guarantees

Technical Advisory services for GIS Capacity building for Art.17 eligibility

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Closing The Compliance Gap

EU countries, Canada and Japan have expressed interest in AAUs only as long as the investments are linked to emission reduction activities (“Greening AAUs”)

The requirement for Greening of AAUs would reduce the amount of AAUs that can be offered substantially - by as much as 50% or more

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Bulgaria 2005 - 2008

Nothing was done for establishment of GISWHY?

The current Government considers AAUs trading applicable without greening

GIS would just limit the freedom of the Government to utilize the proceeds from AAUs sale for other than emission reduction purposes

AAUs banking for the next (2013 – 2020) period is considered as well.

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THAK YOU FOR THE ATTENTION !!!