Executive summary. Final report prepared in November 2014 by Jozef Stefan Institute, Energy Efficiency Centre (JSI-EEC)

Transcription

1 Executive summary of the REPORT on the assessment of monitoring of the implementation and efficiency of measures and the definition of proposals for upgrading of the monitoring system Final report prepared in November 2014 by Jozef Stefan Institute, Energy Efficiency Centre (JSI-EEC) Responsible person: Andreja Urbančič, M.Sc. Authors: Andreja Urbančič, M. Sc. Matjaz Česen Barbara Petelin Visočnik, M. Sc. Polona Lah Stane Merše, M. Sc. Damir Staničić, M. Sc. Marko Đorić, all JSI Ph.D. Jože Verbič, Agricultural Institute Slovenia

2 The climate-energy legislative package of the EU, which was adopted in 2008, defines national legally binding targets for reducing GHG emissions in Slovenia by In order to achieve the targets, the responsible Ministry prepared an Operational Programme of measures to reduce greenhouse gas emissions by 2020 with a view to 2030 (OP GHG 2020). Implementation of the measures foreseen in the OP GHG 2020 will largely depend on the establishment of an effective system for monitoring the implementation and efficiency of measures. With the help of LOCSEE project, its National Working Group on Low-Carbon Policies and involvement of external experts, the paper provides in depth analysis and assessment of current methodologies, indicators, data bases and data flows as well as cost-efficiency of measures in order to support implementation and reach maximum efficiency and effectiveness of the measures, especially those in key sectors of transport, buildings, energy, agriculture. As these measures contribute to a wider goal of green growth, a section on the assessment of ecoinnovation, green jobs, taxes and subsidies has also been a part of the task and explored in depth.

3 Table of Contents 1 Introduction FITNESS REVIEW of the MONITORING SYSTEM TRANSPORT BUILDINGS OVERVIEW AND ANALYSIS of the efficiency of the implementation of selected measures

4 1 Introduction Establishment of a system of monitoring the implementation and evaluation of the efficiency of measures to influence GHG emissions trends (in short: monitoring system) intended to determine the degree of implementation and evaluation of the efficiency of the measures of the OP GHG Operational Programme for Reducing GHG emissions by 2020 with a view to 2030 (OP GHG 2020) is an implementation plan of actions to achieve a legally binding targets for Slovenia to reduce GHG emissions by 2020 from the climate and energy package under Decision 406/2009/EC and, as such, a key part of a programme to transform Slovenia into a resource efficient, greener and a more competitive low-carbon economy. The OP GHG 2020 is limited to the sectors covered by that decision and therefore do not include measures in sectors covered by the emissions trading scheme (EU ETS), and measures to reduce indirect emissions from electricity use. The legal basis for monitoring of the OP GHG 2020 is the Environmental Protection Act. Reporting requirements should be harmonized with instructions for international reporting on policies and measures in the EU according to Regulation (EU) No. 525/2013 and the United Nations Framework Convention on Climate Change, UNFCCC. The starting points for establishing the monitoring system of the implementation and efficiency of the measures OP GHG 2020 are established systems of monitoring the implementation of climate policy in Slovenia and its reporting. These are: - national greenhouse gas emissions inventory prepared by the Slovenian Environment Agency; - reports on the implementation of the previous OP GHG 2012; - reports on the implementation of other programmes with an impact on GHG emissions; - other reports of institutions responsible for the implementation of individual instruments or programmes and their database (such as Eco Fund etc.); - national reports to the UNFCCC Secretariat and to the European Commission; - statistical data, indicators and analysis from the Slovenia s Statistical Office, Slovenian Environment Agency, EUROSTAT, the European Environment Agency (EEA). The practice of other countries in monitoring the implementation of national climate policies and achieving the climate and energy package targets has been checked during the first phase of the project. The final report of the work of external experts includes: thoroughly examined indicators for monitoring implementation of the OP GHG 2020, based on the most recent data for the year 2013, together with an assessment of the relevance of the indicator system; a system of indicators for monitoring of the implementation of the OP GHG 2020 was prepared together with a simple user tool "Indicators OP GHG 2020" to support the calculation of the indicators; an assessment of the current state of implementation of the OP GHG 2020 with the help of the 4

5 established indicators; an examination of the cost-efficiency of investment measures and the availability of methodologies for assessing the efficiency of other measures; identification of the gaps related to the monitoring of the implementation of OP GHG 2020 and proposals for upgrading the monitoring; identification of the data flows for monitoring of the implementation of the OP GHG 2020; update of the chapter of the OP GHG 2020: "Monitoring of the implementation of the OP GHG 2020 and international reporting"; proposal for workshops needed for the establishment of monitoring the implementation of the OP GHG Executive summary offers an insight into selected chapters of the final report of the expert analysis performed. Monitoring of the efficiency and implementation of measures on the basis of the indicators developed in the OP GHG 2020 is maintained. The indicators are aggregated and show the total effects of a larger set of measures. Results of the analysis show that the previous system of monitoring the achievement of the objectives should be upgraded for the new OP GHG 2020 to allow more prompt monitoring of the achievement of objectives, since the Decision 406/2009/EC defines annual national target value (target trajectory). For this purpose, a specific indicator was developed which will allow the competent ministry monitoring of emissions trends on a monthly basis (Indicator 2 1 ) and in case of significant changes, to propose appropriate actions to be taken and reported. Achieving of targets is going to be monitored on an annual basis (national target and sectoral indicative targets set by the OP GHG 2020). Monitoring of compliance with the targets will be assured based on available statistical data and established inventory of the Environment Agency. List of indicators for monitoring OP GHG 2020 implementation that have been prepared in the report: Indicator 1: Annual GHG emissions under Decision 406/2009/EC (including sectoral break down) Indicator 2: CO2 emissions from the combustion of gasoline and diesel fuel for the current year; Indicator 3: Leverage on subsidies for investment in the public sector; Indicator 4: GHG emission reduction and energy savings in the public sector; Indicator 5: The floor area of buildings renovated in the public sector; Indicator 6: CO2 intensity in the commercial and institutional sectors; Indicator 7: Energy savings and GHG emissions reduction in the residential sector; Indicator 8: Specific GHG emissions in the residential sector; Indicator 9: Share of RES in energy use for heating and cooling in other energy use (residential, commercial and institutional). Indicator 10: CO2 emissions from new passenger cars and all passenger cars; Indicator 11: Share of renewables in motor fuels; 1 The indicator shows the estimated annual trends of CO2 emissions from the combustion of petrol and diesel on the basis of analysis of the available monthly data on the sales of fuels. This provides a rough estimate of trends in emissions largest source of emissions in the non ETS sector and is a basis for rapid action, if trends deviate from the projections provided in the OP GHG

6 Indicator 12: Passenger-kilometers in the public transport; Indicator 13: Sustainable freight transport (share of railways in total transport volume); Indicator 14: Increased efficiency in animal breeding; Indicator 15: Rational fertilisation of agricultural plants with nitrogen; Indicator 16: Improvement of the efficiency of the nitrogen cycle in agriculture gross nitrogen balance surplus; Indicator 17: Improvement of the efficiency of the nitrogen cycle in agriculture surface of agricultural land included in climate and environmental payment measures Indicator 18: Improvement of the efficiency of the nitrogen cycle in agriculture surface of agricultural land included in the measure of ecological farming (holding agri-environmental commitments) Indicator 19: Emissions of F-gases in stationary equipment Indicator 20: Financial incentives for energy efficiency and renewable energy in non-ets industry Indicator 21: Share of heat from renewables in final energy consumption in non-ets industry Indicator 22: Quantity of landfilled biodegradable waste Indicator 23: The carbon productivity Indicator 24: Implicit tax rate on energy Indicator 25: Reduction of environment harmful subsidies Indicator 26: Green jobs Indicator 27: Promotion of eco-innovation for the transition to low carbon society 6

7 2 FITNESS REVIEW of the MONITORING SYSTEM Indicators for monitoring of the implementation and efficiency of the OP GHG 2020 measures were checked using the following criteria: - Sector or subsector share in GHG emissions; - Variability of GHG emissions in each sector; - Decomposition analysis of factors that affect changes of GHG emissions; - Analysis of the effects of measures on reduction of the GHG emissions. Shares of emissions in the non ETS sectors Indicators for monitoring of the OP GHG-2020 are focused on those sectors which contribute more than 2% of emissions in non ETS sectors. These are: - Transport: Road transport: 50.7%; - Agriculture: enteric fermentation 5.7%, manure management 4.7% and 6.1% of agricultural soil; - Fuel combustion in other sectors: 15.3%; - Fuel consumption in industry and construction: 4.6%; - Waste: Solid waste disposal on land: 3.2%; - Fugitive emissions: solid fuels 2.8%; - Consumption of HFCs and SF6: 2.1%. This covers 95.6% of all emissions outside the sector ETS in Among the above-mentioned sectors, special attention was given to those sectors where variability of GHG emissions is the highest. In the period the laregest changes occurred in the following sectors: - Transport: emissions have increased by 1,364 kt CO2 eq. or 30% respectively; only in the three years as much as 1,730 kt CO2 eq. or 39% respectively; - Fuel combustion in other sectors (households, services and agriculture): emissions have been reduced by 853 kt CO2 eq. or 33% respectively; - Fuel consumption in industry and construction sector: emissions were reduced by 341 kt CO2 eq. or 40% respectively; - Waste management: reduction of 219 kt CO2 eq. or 31% respectively, while emissions from solid waste disposal decreased by 127 kt CO2 eq. or 26% respectively; - Consumption of HFCs and SF6: in this sector in the observed period, the relative change in the emissions level was the highest, as much as 55%, in absolute terms, this represents an increase of 84 kt CO2 eq. Emissions from agriculture and fugitive emissions from the energy sector have been relatively stable: - Agriculture: emissions have been reduced by 132 kt CO2 eq. or 7% respectively, while emissions of enteric fermentation decreased by 11 kt CO2 eq. or 2% respectively, emissions from manure management by 65 kt CO2 eq. or 11% respectively, emissions from agricultural soil 56 kt CO2 eq. or 7% respectively; 7

8 - Fugitive emissions: emissions have been reduced only to 17 kt CO2 eq. or 5% respectively. 1.B.1. Fugitive emission Solid fuels; 2,8% 6.A. Solid waste Disposal on landl; 3,2% 1.A.2. Industry and construction; 4,6% 2.F. Cons. of HFC and SF6; 2,1% Remaining emissions; 4,3% 4.B. Manure 4,7% management 4.A. Enteric fermentation; 5,7% 1.A.3.Transport; 4.D. Agricultural soil 6,1% 15,3% 1.A.4. Fuel combustion in other sectors 51,1% Figure 1: Structure of GHG emissions by sector in All IPCC sectors, with a share of more than 2% of total emissions in non ETS sector, are shown in the Figure. 2.1 TRANSPORT Monitoring of GHG emissions from transport sector requires special attention, since the sector contributes more than half of the emissions in the non ETS sector and because emissions in the period increased by as much as 1,346 kt CO2 eq. or 30% respectively. This increase virtually eliminates the emission reductions in other sectors (total decrease over the same period in GHG emissions from non ETS sectors except transport amounted to 1,641 kt CO2 eq. or 23% respectively). The share of transport in the total non ETS emissions was 51.1% in 2012, road transport accounts for 50.7%, while the share of emissions from the use of diesel fuel in the road transport equals 35.9% and share of gasoline 14.5%. The remaining GHG emissions from transport together account for only 0.4 percent of total non ETS emissions. Therefore the indicators for monitoring implementation of measures and policies focus on the road transport, while other modes of transport are monitored, in particular, to the extent to which they represent road transport alternatives. Decomposition analysis of factors that affect GHG emissions in the transport sector 8

9 The influence of various factors on GHG emissions from transport were assessed separately for passenger and freight transport. Emissions in passenger traffic have been analyzed through a selected set of factors. With decomposition analysis the impact of these factors on GHG emissions in the period was assessed. We observed the effect of the following factors: - activity in the transport sector affected by economic activity in the country and neighboring countries, economic cooperation between the countries, spatial development, transport infrastructure and other factors; - structure of transport modes ("modal split"); - energy intensity of the sector (efficiency of vehicles, driving and occupancy rate of vehicles); - the share of fossil fuels share of renewable and alternatve energy sources; changes in the structure of fossil fuels; - fuel purchased in Slovenia and consumed outside Slovenia, mostly by vehicles in transit; The share of fuel to be exported in the tanks is heavily dependent on the relationship between oil prices and the neighboring countries of Slovenia and economic growth in countries that generate transit through Slovenia. For each year from 2006 to 2012, changes in emissions were broken down by the above factors. It has been calculated how much each factor contributes to the increase or reduction in emissions each year. The results of the decomposition analysis show that changes in GHG emissions from transport (from freight transport as well as passenger traffic) are mostly affected by two factors: activity in the sector of transport (which coincide with the movement of gross domestic product for freight transport) and the export of fuel in the tanks related to transit traffic. Other analyzed factors have less influence. The relationship between measures of OP GHG 2020, emission reduction factors, the effects of measures and indicators Measures of transport and climate policy in the OP GHG2020 are designed so that they are aimed in particular at the following factors within the transport sector, which have an impact on GHG emissions: - increase the use of public transport; - increasing the share of freight transport by rail; - improve vehicle efficiency, more efficient driving, increase occupancy vehicles; - increase the share of non-motorized forms of transport; - increasing the share of biofuels; - increase the share of other fuels with low CO2 emissions. These detailed factors are in the following areas, which were presented in the decomposition analysis: the structure of modes of transport, energy and intensity, energy efficiency and occupancy, the share of fossil fuels and the structure of fossil fuels. The greatest reductions of GHG emissions are expected from improved efficiency of vehicles and driving and occupancy of vehicles, 450 kt 9

10 CO2 eq, followed by an increase in the share of biofuels, 258 kt CO2 eq. Regarding the share of public transport it is expected that the current negative trends will be reversed and emissions reduced by 155 kt CO2 by As it is evident from the decomposition analysis, the impacts of climate policy are limited to factors within the transport sector, which have a relatively little impact on the movement of GHG emissions. For quality monitoring of GHG emissions from transport, in addition to monitoring the implementation of measures OP GHG 2020, also monitoring of external factors that affect GHG emissions in the transport sector will be required, namely: transport work (activity) and the export of fuel by transit transport. These two factors need further improvement in the data. The proposed indicators for monitoring the implementation of the OP GHG 2020 focused on the changes in the factors within the transport sector, which may be affected by the climate policy. Individual indicator monitors the implementation of several instruments aimed at a specific factor to reduce GHG emissions, and provides a first indication of the efficiency of the policy in a given area. Implementation of measures and achievement of the objectives of OP GHG 2020 in the transport sector are to be monitored by the following indicators: Indicator 1: Annual GHG emissions under Decision 406/2009/EC. This indicator monitors the annual sectoral emissions in transport and progress towards sectoral indicative target set by OP GHG Indicator 2: CO2 emissions from the combustion of petrol and diesel fuel for the current year (approximation of the current year emissions based on monthly statistics); Indicator 10: CO2 emissions from new passenger cars and all cars; Indicator 11: Share of renewables in the motor fuel; Indicator 12: Passenger-kilometers in the public transport; Indicator 13: Sustainable freight transport. This indicator monitors the proportion of freight carried by rail in the freight transport in Slovenia. As mentioned above, the proposed indicators do not capture the so-called external factors, where influence of climate policy is very limited. These are in particular: - road work in the country, which depends on the economic activity in the country and in the wider region, economic co-operation in the region, development of transport links, the number and age structure of the population, settlement pattern/level of urbanisation, the number of jobs and their distribution; - purchases of fuel in Slovenia, which is not consumed in Slovenia, but exported in the tanks of vehicles. The amount depends on the relationship between fuel prices in neighboring countries, which may affect fiscal policy, and on the economic situation in the country, creating transit and the transport links. An upgrade to the data system to increase quality of monitoring the above mentioned external factors is necessary. 10

11 2.2 BUILDINGS In the sector of buildings, emissions from fuel consumption in households are included, contrubuting a 9.6 share in total GHG emissions in the non-ets sector, and emissions from fuel consumption in commercial and institutional sector with a 3.7 share in total GHG emissions in the non-ets sector (both data for 2012). Trends in the reduction of GHG emissions in buildings are encouraging. Emissions from the use of petroleum products in the period in households decreased by almost half (48%) and in service sector by 41%. Together GHG emissions in buildings decreased by 33%. GHG emissions from the use of gaseous fuels and biomass increased, but they account for a smaller share in buildings sector GHG emissions. Decomposition analysis of factors that affect GHG emissions in buildings Emissions in the building sector are affected by a number of factors. With decomposition analysis, the impact of various factors on GHG emissions in the period was assessed. Impacts of the following factors were observed: (i) activities in the building (residential area of buildings), (ii) energy efficiency of buildings, (iii) influence of climatic conditions (heating degree days impact), the impact of the share of fossil fuels and the impact of the structure of fossil fuels. The results show that changes in GHG emissions in buildings sector are most affected by the process of replacement of fossil fuels with other energy sources and energy efficiency improvements of buildings (specific energy consumption per unit of floor area, which is due to technical improvements and changes in the behavior of consumers). Lesser influence was found in: changes in activity (residential area of buildings), climatic conditions (temperature deficit) and the structure of fossil fuels (the relationship between the use of heating oil and natural gas). The relationship between measures of OP GHG 2020, emission reduction factors, the effects of measures and indicators Climate policy measures in the area of buildings in the OP GHG 2020 are aimed in particular at the following factors in the buildings that affect GHG emissions: a. increase in energy efficiency of buildings: the expected reduction in GHG emissions by 2020 has been estimated at 68 kt CO2 eq; b. increase in energy efficiency of heating systems and increase of the share of RES: the expected reduction in emissions by 2020 is 327 kt CO2 eq; c. changes in users' behavior: the expected reduction in emissions by 2020 is estimated at 45 kt CO2 eq. The indicators monitor in particular the effects of measures in the field of residential buildings and in the buildings of the service sector. Given the importance of the exemplary role of public buildings and the impact of measures on public finances measures in the public sector, measures in the public sector are particularly emphasized and monitored, notwithstanding the fact that the total annual GHG emissions of buildings in the public sector are estimated at around 200 kt CO2 eq. 11

12 For monitoring of the implementation of the measures and achievement of the objectives the following indicators have been proposed: - Indicator 1: Annual GHG emissions under Decision 406/2009/EC. This indicator monitors annual sectoral emissions in other use (residential sector, institutional and commercial sector) and progress toward indicative sectoral target set by OP GHG 2020; - Indicatior 3: Leverage on subsidies for investment in the public sector; - Indicator 4: GHG emission reduction and energy savings in the public sector; - Indicator 5: The floor area of buildings renovated in the public sector; - Indicator 6: CO2 intensity in the commercial and institutional sectors; - Indicator 7: Energy savings and of GHG emissions reduction in the residential sector; - Indicator 8: Specific GHG emissions in the residential sector; - Indicator 9: Share of RES in energy use for heating and cooling in other energy use (residential, commercial and institutional). The proposed indicators monitor changes in the factors mentioned above (a) to (c) affected by climate policy within the scope of the buildings sector. These indicators do not capture the factors that are external to the climate policy as defined in the OP TGP-2020, but affect emissions in the building sector. These are in particular: residential area; economic activity and the associated usable floor area of buildings in the service sector (public and commercial). With decomposition analysis, it has been shown that the factor of activity significantly less impacts the change in GHG emissions in the building sector, than in the transport sector. Therefore, this factor has smaller impact on the achievement of the national GHG target. The reason is that changes in activity are slower and relative changes in activity are small (residential area has increased by an average 1.3% annually in the period). In addition, there are larger changes in other factors affecting GHG emissions in buildings. As previously stated, these are: fuel switching and improving the energy efficiency of buildings. Therefore, for monitoring the GHG emissions trends and progress toward targets, further indicators for monitoring activities are not necessary. 12

13 3 OVERVIEW AND ANALYSIS of the efficiency of the implementation of selected measures Economic efficiency of the implementation of measures is monitored by tailored methodologies that differ depending on the nature of the action. Methodology for monitoring investment incentives is prepared. Related methodology is used for operating incentives, but has not yet used, since no such measure is in place for the non ETS sectors. To monitor the efficiency of investment incentives, the following indicators were used: specific cost of the measure for public finances: the amount of subsidy required to reduce CO2 emissions by 1 tonne ( sub /t CO2); specific cost / revenue of the measure: o cost-efficiency, taking into account the life span of the measure, describes the amount of the net cost of the action needed to reduce CO2 emissions by 1 tonne, while the investment costs are distributed over the life cycle of the measure ( /t CO2); o the economic cost efficiency describes the amount of the net cost of the measure, needed to reduce CO2 emissions by 1 ton, while the cost of investments are distributed along the economic life span of the measure, which is 10 years ( / t CO2); leverage on investment subsidies: the leverage on subsidies that describes the amount of subsidy required for 1 Euro of investment (EUR/EUR). Knowledge gaps observed already in the calculation of the indicators for monitoring implementation and effects of measures, are only even more pronounced in the calculation of indicators for monitoring the efficiency of the financial incentives for GHG reduction. The biggest problems arise in the calculation of cost-efficiency, as not all data captured allow for monitoring by technologies and sectors. Further gaps occur in the assessment of the investment cost of the investment, because especially building renovation emission reduction can not be easily separated from other benefits of the project that the implementation of such a measure entails (better working and living conditions, longer life span of the facility, higher value of etc.). The methodology for the assessment of the effects of measures on the reduction of GHG emissions is based on the Regulation on methods for determining energy savings by end-users adopted in Measures for RES and EE implemented in period were analyzed regarding their cost-efficiency. The possibility of evaluating the impact and effectiveness of the following was assessed: incentives for eco-innovation; measures of fiscal policy (taxes and fees, and subsidies for fossil fuels in the context of pricing and taxation policies). Starting points have been thus prepared for evaluating the impact and efficiency in these areas for action. For these two sets of measures, primarily further work is needed on the establishement of methodologies that would allow the assessment of the effects of measures on GHG reductions, which is a prerequisite for the introduction of assessment of the cost-efficiency of measures. 13