Financing opportunities of eco-transport through Special Programme for Climate Change

1. Financing opportunities of eco-transport through Special Programme for Climate Change

2. Outline • Transport and Climate Change • EU Roadmap 2050 to low carbon economy • Special Programme for Climate Change • Tenders for acquisition of eco-transport under the Special Programme for Climate Change

4. Lithuania’s GHG emissions, 2008

5. Various transport vehicles used in Lithuania

6. EU Roadmap 2050 • The mission of Roadmap 2050 is to provide a practical, independent and objective analysis of pathways to achieve a low-carbon economy in Europe, in line with the energy security, environmental and economic goals of the European Union. • A new European transport plan aims to increase mobility and further integrate the EU's transport networks - while reducing greenhouse gas emissions and the bloc's dependence on imported oil. • Measures to encourage major infrastructure investments, change the way freight moves and people travel will boost economic competitiveness and create jobs. • The plan - with goals to be met by 2050 - focuses on travel within cities and between cities, and on long distance journeys. It includes calls for: • cities to completely phase out petrol cars • shifting to rail or water 50% of all passenger and freight road transport currently making intercity journeys of more than 300km • airlines to increase their use of sustainable low-carbon fuels to 40% • shipping to cut 40% off its carbon emissions • Reaching these targets would help the EU achieve a 60% cut in greenhouse gases from all modes of transport by 2050.

7. United Nations Framework Conventionon Climate Change In 1997 in Kyoto, Japan, Conference of the Parties of the United Nations Framework Convention on Climate Change made an agreement to reduce global carbon emissions between the period from2008-2012, compared to 1990 levels. The developed countries had a target of a minimum of 5,2 proc., while no requirement for GHG reductions was put on the developing countries. Lithuania has a target of reducing its GHG emissions by an average of 8%compaired to 1990 levels, and actual reductions are more than 50%. The surplus of emision allowances, which belong to the country (so called AAUs) may be traded according to the Article 17 of the Kyoto Protocol

8. What is a Green Investment Scheme (GIS)? General definition- it is part of the Kyoto flexible mechanisms, which ensures that the money used for the sale of AAUs is invested in projects that reduce GHG emissions Lithuania’s Green Investment Scheme is a set of norms and regulations, which creates a financial mechanism where all money generated from AAUs, EUAs, ERUs or any other emission reduction units sales are used solely for greening activities that minimize greenhouse gasses in the atmophere Its is put in the form of a Special Programme for Climate Change, established by Financial Mechanisms for Climate Change Management Act on 7th of July, 2009

9. Green Investment Scheme LT Reports on GHG reductions AAUs Buyers Government of Lithuania AAUs Sales AAUs $ $ Auctioning of EUAs Reports on GHG reductions $ Climate Change Special Programme Other emissions $ Administration Ministry of Environment (MoE) LEIF Grants Soft Loans Capital Investment Fines $ Co-financing Co-financing: Investment fund Other funds $ Verification on Emissions reductions Use of finances under CCSP $ $ $ 2012.....2020. CCSP Investment funds Energy efficiency 40% Renewable energy 40% “Soft Greening”* *Soft greening- various projects where there are no actual measurable shor term GHG reductions Ministry of Environment

10. Investment areas under Lithuania’s Special Programme for Climate Change • At least 40 % of funds must be allocated to projects which increase energy efficiency; • At least 40% of funds must be allocated to projects which promote use of renewable energy and environmentally friendly technologies; • The rest of the proceeds may be used for various projects, which can not achieve quantifiable emission reductions, such as various climate change measures that promote awarness, education, aid to developing countries, etc.

11. Special Programme for Climate Change Ministry of Environment- Climate change division Potencial of GHG reductions Governmental policy priority areas Requirements of the Buyers Types of projects and mainstream directions selected Annual Estimates- Greening Plans Environmental Commitee of the Parliament National Climate change committee Annual estimates approved Reports to both of institutions Administration of CCSP Ministry of Environment and LEIF banks Investment holding company Grants Soft loans Capital investment Disburstment of finances Ministry of Environment

12. Financial model of CCSP Grants Soft loans Capital investment Type Operators not engaged in any commercial acvitities Operators, engaged in commercial activities Operators, engaged in commercial activities Business entities and companies Applicant Max 5 mln. Lt. Max 80% total amount Min GHG reductions – 2kg CO2 per 1 Lt. Max 1,5 mln. Lt Max 80% of total amount Min GHG reductions – 2kg CO2 per 1 Lt. unlimited Max 50% of shares Min GHG reductions – 2kg CO2 per 1 Lt. Size Project implementation period Investment period 2.-5 years. Fund operation period- 7.+2 years. 12/18/36 months Delivery- 3+years - max 3% administrative bank fee max 3% investment holding company fee Additional costs Implementation of governmental policy priorities and financial aid to non-comercial sector Financial injection to the soft loan system of environmental projects Higher risks Biggest financial return Other considerations Ministry of Environment

13. Annual Estimate for 2011 • 80 mln. Lt for financing the acquisition of environmentally friendly public transport, mainly buses • Greening Plan is currently being drafted, which sets out the requirements for participants in the tender and technical specifications of vehicles

14. CNG benefits in transportation - In the urban environment it is possible to achieve maximum reduction of GHG emissions and air pollution by introducing new advanced buses that operate on alternative fuels. - In many cities compressed natural gas (CNG) powered buses have proven themselves as reliable and environmentally friendly technology which has lower CO2 emission rates compared to conventional diesel fuel powered buses (around 7% less), specially considering the complete fuel cycle from well-to-wheel. - CNG buses generate much less other air pollutant residues such as carbon monoxide and solid particles or NOx. If an Internal Combustion Engine running on CNG is combined with a regenerative braking system and an electrical motor together (EV BUS) with a plug-in system to connect it to the grid (EV Plug-in BUS), the bus can achieve fuel consumption reductions up to 35% with equivalent CO2 emission reductions.

15. Hybrids Under the Greening Plan with the AAUs buyer, it is specified to also purchase a number of hybrid buses, using compressed natural gas and electricity, to promote the use of such vehicles in the country. The Expert Group on Transport Fuels, which provides expert advice to the European Commission, has notified: “Liquid natural gas, or compressed natural gas offers great advantage because of its liquid nature, providing much higher energy density as well as lower price” . Furthermore, according to the Future Transport Fuels report, provided by the expert group on January 2011, it is said that such support schemes as the economic purchase incentives should be encouraged. And both CNG and especially electricity powered vehicles and their infrastructure should become substitution for oil in road transport.

16. Thank you  Julija KuklytėChief desk officer of Climate Change and Hidrometeorology Division at the Ministry of Environmentj.kuklyte@am.lttel.: +37052663504