Future Climate Change Policy in the Baltic States: Looking beyond 2012 (Workshop in Riga/Jurmala)

On 25 and 26 April 2006, representatives from the Baltic States and the European Commission met in Jurmala for a two-day international workshop on future EU climate change policies. Workshop was attended by about 40 and organized by consortium, led by Ecologic – Institute for International and Environmental Policy (Berlin).

Future of Flexible Mechanisms in Baltic States

At present of the three Kyoto mechanisms, the Baltic States are looking mostly at international emissions trading. A transparent and increasingly liquid emissions market is expected to evolve. The state owned energy companies do not have a special interest in JI or CDM. Participation in these mechanisms is associated with considerable effort and risks. Businesses in general do not show much interest in JI as the ERU price is low compared to the price of allowances they could sell under EU emission trading system. Investment in CDM projects may, however, become an issue for the Baltic States after the 1st commitment period – this remains to be seen.

JI prospects in the electricity sector depend on baseline CO2 intensity of electricity generation, which is highest in Estonia and lowest for Latvia (due to the relatively high share of imported electricity and considerable hydro resources). Concerning JI projects in the district heating sector, municipalities show little interest. At present, they usually wait for financial aid from EU structural and cohesion funds. However, it could be explored if a combination with JI opens up opportunities for additional benefits, still taking into account the double accounting problem with EU ETS.

Apart from energy, waste/landfill is another sector with potential for JI. However, also in this sector the ‘additionality question’ is crucial, in view of compliance with EU legislation. Furthermore, the Testing Ground Facility under the Baltic Sea Region Energy Co-operation (BASREC) is a valuable instrument for exploring JI potentials and achieving economies of scale.

Overall, participants agreed that, even for the first commitment period, there are many uncertainties associated with JI. Hence, it is very difficult to make any predictions on the role of JI in future commitment periods. Further work is needed in all Baltic States in order to become eligible for the Track 1 JI procedure. Regarding the exact procedures to make JI operational, little guidance is available at present from the JI Supervisory Committee or the European Commission. The Baltic States will be able to process JI projects if they are available, but another question is whether there will actually be any.