The Hungarian Green Investment Scheme

1. The Hungarian Green Investment Scheme Gyorgy Lazi THE WORLD BANK Energy and Infrastructure Unit, Europe and Central Asia Region

2. GIS context Eligibility Criteria National CC Policy Legal Framework AAU Availability

3. GIS architecture (Greening Framework) Priority Areas Monitoring Verification Procedures

4. GIS – eligibility criteria • Party to the Kyoto Protocol; • AAUs calculated and recorded in accordance with relevant guidelines and decisions; • National system for the estimation of emissions and removals of all greenhouse gases in place; • National registry; • Most recent required inventory submitted annually; • Supplementary information concerning adjustments and recalculations as required submitted.

5. Hungary’s AAU potential • Total assigned amount units: 542 million • Commitment period reserve: 395 million • Emission trends (low): 432 million • Emission trends (high): 443 million • JI reserve: 10 million • Available AAU: 89 million • GIS pilot phase: 10 million • GIS 2nd phase: 30-40 million Source: Feiler, MoEW, Hungary

6. National Climate Change Policy • National Climate Strategy: determines the objectives, priorities, tasks and instruments related to research and measures about domestic impacts, mitigation and adaptation • National Climate Programme (NCP): • main measures to implement Hungary’s commitments under the UNFCCC and the Kyoto Protocol • necessary adaptation measures to domestic impacts • research priorities connected to domestic impacts and to the cost-efficient reduction of emissions • NCP priority areas on GHG emission reductions: • Energy efficiency in the domestic sector • Energy efficiency in the public sector • Renewable energy use in micro, small and medium scale • Emission reduction in the transport sector

7. Legal framework • Act LX of 2007 on the implementation framework of the UNFCCC and the Kyoto Protocol • defines the crucial elements of the treasury asset management of Kyoto units; • The Kyoto units can be used: • to offset GHG emissions occurring in Hungary; • to generate ERUs for JI projects implemented in Hungary; • to trade under International Emission Trading. • Government Decree 323/2007. (XII. 11.) Korm. on the implementation of Act LX of 2007 • Objecives of the GIS • Conditions for the sale of AAUs • Contract regarding the sale of AAUs • Support conditions and types in the GIS • Conditions for & decisions over applications • Aid contracts • Monitoring and verification

8. Project selection • Hard greening: all activities supported by the Scheme should result in emission reduction • Focus on areas with the highest cost-benefit ratio • Focus on areas where support can create enabling environment • Climate additionality and legal additionality • Carbon effectiveness calculation considers post-Kyoto period

9. CO2 emissions CO2 emissions by final energy end-users in Hungary, 2004 Source: Novikova, Dr. Ürge-Vorsatz, based on ODYSSEE (2007)

10. Mitigation potential Estimated potential for CO2 mitigation in EITs at a sectoral level in different cost categories in 2030 Cost categories (US$/tCO2eq) Source: Novikova, Dr. Ürge-Vorsatz, based on IPCC (2007)

11. Proposed areas – National CC Policy • residential and public sectors • renewable energy use for smaller to larger heating systems; • Other measures of energy conservation, energy efficiency and promotion of the use of renewable energy; • Biogas production and its utilization for transport; • Activities for reductions of non-CO2 emissions; • Development and utilization of environmental technologies that promote energy efficiency improvements, energy conservation and enhanced use of renewable energy resources.

12. Proposed areas – GIS: residential sector • Retrofit of existing buildings • Exchange of windows and doors • Improvement of the thermal envelope • Condensing boilers • Solar protection • Balanced ventilation systems with heat recovery • Sunspaces – additional glazing of existing loggias and balconies • Applications of renewable energy sources • Solar thermal collectors • Biomass burners • Heat pumps • Construction of new low energy buildings

13. GIS windows Program window • emission reduction activities which are easy to execute in large numbers, using standard procedures • emission reductions are easily verifiable • house insulation • public lighting modernization • passive house construction • Renewable energy, energy efficiency and energy saving projects primarily in the domestic and public sector Project window • large size unique or/and complex GHG reduction projects • operations similar to those of Joint Implementation, with a streamlined procedure • ISO 14064 based emission reduction verification procedure

14. Procedural framework • GIS contract signature: • Buyer Govt. • Hungarian Min. of Env. and Water (MoEW) AAU => Buyer Purchase price => GIS fund In cooperation with MoEW Climate and Energy Unit Calls for GIS applications approved and published Evaluation and contracting Implementation (post-completion disbursement) disbursement monitoring Implementation (advance payment) disbursement verification

15. Monitoring & Verification Verification • 1. Small projects, easy to establish emission reductions: reporting by the beneficiary of the project with documentation and random verification by the GIS Management Office • 2. Large, complex projects: third party verification according to ISO 14064 standard Monitoring • Internationally renowned auditing firm to audit investments and use of the revenues • Auditor to prepare annual reports and final report • Buyers will have full and unrestricted access to all relevant data, information and documentation

16. Summary • Strong governmental commitments • Advanced status of legislation • High standards of transparency and fiscal credibility • Monitoring framework • Operational efficiency • Low administrative costs (up to 5%) • Hard greening • Verification of emission reductions • Buyer tailored approach • Priorities of buyers are considered and accomodated

17. Thank you very much for your attention!