Measures to increase enduse energy efficiency in Lithuania D. treimikiene Lithuanian energy institut

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Measures to increase end-use energy efficiency
in LithuaniaD. treimikieneLithuanian energy
institute
Multi-Country Workshop on Best Practice in
Transposing Directive 2006/32/EC INFRA 24097
20 21 September 2007, Ryga

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Content of presentation

• Measures to promote end-use energy efficiency
• Development of energy intensity in Lithuania
• Energy policy priorities and measures to increase
  EE in Lithuania
  
• National programmes
• Financial Measures and use of SF
• Fiscal measures and environmentally favorable
  energy pricing
  
• Market based tools
• Conclusions

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Measures to promote end-use energy efficiency

• Legal and institutional measures (assessment and
  monitoring, energy audits, feasibility studies,
  data bases and indicators, consulting etc.)
  
• Command and control regulation measures
  (technical standards, codes for buildings,
  appliances, vehicles, technologies etc.)
  
• Financial measures and funding mechanisms
  (revolving funds, soft loans and grants, third
  party financing, use of SF and other state
  support funds and programmes)
• Fiscal measures or tax measures (reduced VAT for
  energy appliances, accelerated depreciation,
  Carbon tax, feed-in prices for electricity
  purchase from CHP etc.)
• Flexible market based instruments (ET, WTC, JI)
• Research and development (pilot and demonstration
  projects, research studies etc.)
  
• Information and awareness (energy performance
  labeling, integrated resource planning, training,
  information and experience dissemination and
  sharing, etc.)
• Support mechanisms ( ESCOs, voluntary agreements,
  measures implemented by enterprises on voluntary
  basis)

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Development of energy intensity of GDP
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Trends in Lithuanian energy intensity

• The years 1995, 1997 and 2001 are the turning
  points in energy intensity development in
  Lithuania.
  
• Since 1995 (after step economic decline started
  in 1991) and since 2001 (after Russian crisis in
  1999) the Lithuanian GDP begun to growth. This
  growth was followed by some TPES/GDP increase.
• The year 1997 is also specific for Lithuanian
  economy as since 1997, all energy prices have
  been finally raised to cover all production and
  supply costs. This had significant impact on
  energy consumption and energy intensity
  decrease.

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Energy policy priorities in Lithuania

• New edition of the Law on Energy adopted in 2002
  regulates general activity of energy sector,
  fundamentals of energy development and management
  and efficient usage of energy and energy
  resources.
• According this Law promotion of energy efficiency
  is one of the main subjects of state regulation
  and policy priorities in energy.
  
• Article 20 on Energy Efficiency of the Energy Law
  stipulates that the major guidelines for energy
  efficiency shall be set out in the National
  energy strategy, while measures for the
  implementation of the guidelines shall be defined
  in Energy efficiency programmes.

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Measures to promote EE in Lithuania

• National programmes National energy efficiency
  programme Special Programme for Implementation
  of Energy saving Measures Programme for
  Modernization of Multi-flat buildings
• Financial measures LAIF subsidies and soft
  loans, SF
  
• Fiscal measures tax allowances, Feed-in prices
  Environmentally favorable energy pricing
  
• Support mechanisms ESCO
• Market based measures GHG Emission trading JI

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National programmes

• Several strategies and programmes targeting EE
  increase were implemented in Lithuania. The
  assignment from state budget for the these
  programmes makes about 18 mill Lt per year
• National energy efficiency programme include
  wide range of legal and organizational measures
  research and development information and
  awareness etc. About 2 mill/ Lt/year is allocated
  for soft measures to increase end-use energy
  efficiency
• SP for Implementation of Energy saving Measures
  aims at granting loans to finance programmes and
  projects dealing with energy conservation and
  effectiveness. About 9 mill. Lt/year is allocated
  from state budget and other sources for hard
  measures
• Programme for Modernization of Multi-flat
  buildings aims to modernize multi-flat buildings,
  increase efficiency of energy use, reduce heating
  expenses and ensure favorable conditions for low
  income population. Allocation from state budget
  makes about 7 mill. Lt/year
• In addition for infrastructure projects more 93
  mill Lt were allocated from the EU SF for the
  period 2004 2006 aiming to increase EE in
  public buildings. This makes about 31 mill.
  Lt/year.

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National Energy efficiency programmes

• In 1992 the first National energy efficiency
  programme was approved in Lithuania. This
  programme is being revised every 5 year. 4
  programmes have been developed 1992, 1996,
  2000, 2006.
• The National Energy Efficiency Programme
  20062010 adopted in 2006 foresees the key
  measures for energy efficiency improvement
  
• Drafting of legal acts and regulatory, technical
  documents intended for the implementation of the
  National Energy Efficiency Programme ?
  
• Renovation of buildings, modernization of their
  heat economy
  
• ?Use of renewable, local and waste energy
  sources ?
  
• Efficient energy use in production processes
• promotion of Research and development in energy
  efficiency and use of RES
  
• Information, education and consultation
  activities.
  
• The Programme evaluated annual economical energy
  saving potential in private buildings 5.2 TWh,
  in public buildings 2.5 TWh. Energy saving
  potential in transport -0.92 TWh

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The impact of measures foreseen in National
energy efficiency programme
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SP for Implementation of Energy saving Measures

• Special Programme for Implementation of Energy
  saving Measures was established in 2000. This
  Programme is established for financing programs
  of energy conservation and its effective
  utilization and for implementation, operation and
  development of utilization means of local,
  renewable and by product energy resources. About
  9 million Lt/year is allocated from state budget
  and other sources
• The Programme resources are used for granting
  loans to finance programmes and projects dealing
  with energy conservation and effectiveness, for
  introduction, operation and development of
  utilization means of local, renewable and
  by-products energy resources.
• The Special Programme for Implementation of
  Energy saving Measures carries out the function
  of Energy efficiency Fund which was operating in
  Lithuania from 1996 up to 2000.

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Programme for Modernization of Multi-flat
buildings

• Based on provisions of National energy strategy
  and by implementing Lithuanian housing strategy
  and measures for the implementation of Lithuanian
  housing strategy for 20042006 Government adopted
  The programme for the financing of modernization
  of multi-flat buildings.
• The main aim of the programme is to help owners
  of multi-flat houses to modernize multi-flat
  buildings, increase efficiency of energy use,
  reduce heating expenses and ensure favorable
  conditions for low income population to modernize
  they apartments in multi-flat buildings.
• The main tasks of the programme are to create
  favorable conditions for commercial banks to
  finance modernization of multi-flat buildings
  ensure that credits provided from commercial
  banks would be accessible for communities of
  households in multi-flat buildings to support
  low income population allowing them to
  participate in modernization projects of
  multi-flat buildings to ensure the good quality
  of modernization projects implementation to
  ensure all kind support and financial, technical
  and organizational consultancy for communities of
  households in the field of implementation of
  modernization projects.

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Financial measures

• Since 1996 the Lithuanian Environmental
  Investment fund provides financial support for
  environmentally beneficial investment projects of
  legal bodies duly incorporated in the Republic of
  Lithuania.
• The LEIF supports projects in energy efficiency
  improvements and use of RES.
  
• The project on energy efficiency improvement are
  supported in form of soft loans and investment
  subsidies.
  
• The maximum amount of a loan for financing a
  single investment project shall make up to 1,5
  mln. Litas
  
• The amount of the subsidy to one beneficiary may
  not exceed 350,000 (three hundred fifty thousand)
  Litas in three years and 70 of the total amount
  of investment in environmental protection
  measures

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Use of Structural Funds

• In 2004-2006 EE measures were financed by the OP
  Development of social and economic
  infrastructure and Priority 1.2 Ensuring of
  Energy Supply Stability, Accessibility and
  increased efficiency which include sub-priority
  relevant to EE Priority ID 1-2.4 Increase of
  Energy Efficiency in Public Sector (26.7 mill EUR
  or 8.9 mill EUR/year)
• In 2007-2013 period the EE measures will be
  financed by the OP Cohesion promotion and
  Priority 3 Environment and sustainable
  development which include Measure 3.4 Energy
  efficiency and use of renewable energy sources
  (258 mill EUR or 52 mill. EUR/year)

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Fiscal measures

• Reduced VAT from 18 up to 9 is applied for the
  insulation and modernization of buildings,
  
• Feed-in prices for electricity produced from CHP.
  Every year the Energy Price Commission approves
  feed-in tariffs of electricity generated in
  cogeneration power plants. The average feed-in
  tariff of such electricity in 2005-2006 was
  1.2-1.4 times higher than the average electricity
  generation tariff in the country
• Environmentally favorable heat pricing is
  applied .

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Environmentally favorable energy pricing

• Energy tariffs regulated by the State are
  determined by the Commission on the basis of
  assessment of the validity of the return on
  investment and activity expenditures.
  Expenditures required for environmental projects
  are included into calculations of the prices
  regulated by the State. The principle of the
  Methodology for Pricing of Centrally Supplied
  Heat and Hot Water approved in 2003 favors more
  environmentally friendly energy generation.
• The period of the base tariffs set observing this
  Methodology is from 3 to 5 years. During this
  period enterprises can convert from imported fuel
  (e.g. heavy fuel oil) to cheaper fuel (in this
  case biofuel) or install more efficient energy
  generation equipment. When doing annual
  calculation during the base tariff period the
  fuel expenditures (composition and consumed
  amount) is not changed, therefore conversion to
  cheaper fuel or energy efficiency improvements
  at the beginning of the tariff price period
  yields profit gained due to the fuel costs
  difference, which facilitates return on
  investments.

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Market based tools

• The implementation of the EU ETS and Flexible
  Kyoto Mechanisms (Joint Implementation) in
  Lithuania stimulates implementation of energy
  efficiency measures.
• The EU ETS in first trading period didnt
  stimulate energy efficiency improvement in energy
  sector as in 2005 just 3 installations from total
  93 installations included in GHG emission trading
  scheme emitted into atmosphere more than emission
  allowances they have been allocated for. Such
  situation created the opinion between Lithuanian
  enterprises that GHG emission trading scheme is
  the form of EU subsidy to Lithuanian enterprises
  instead of obligation to reduce GHG emissions
• However, the incentives provided by the Kyoto
  mechanisms, including the possible use in the EU
  ETS of credits generated through JI or CDM
  project activities are not sufficient to support
  energy efficiency projects in Lithuania because
  for small scale energy efficiency projects the
  transaction costs are too high in developing JI.

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Conclusions

• Energy intensity has decline by 2.25 times during
  1990-2004 in Lithuania however it is still 1.2
  times higher than in EU-15 average The increase
  of energy prices, implementation of National
  energy efficiency and other programmes and EU
  directives targeting EE are the main drivers of
  energy intensity decrease in Lithuania.
• In Lithuania the main measures to increase EE are
  organizational, legal, information, research and
  development measures financed by National energy
  efficiency programmes. These measures are very
  effective. 2 mln. Lt/year spent for soft measures
  provided for about 5 energy intensity decrease
  in 2001-2005 or energy savings of 0,44 Mtoe/year
  (The effectiveness 0,22 toe/Lt).
• Special Programme for Implementation of Energy
  saving Measures allocates about 9 mill Lt/year
  for hard measures to increase EE. It allows to
  save about 0,17 Mtoe energy or decrease energy
  intensity by 2. (The effectiveness - 0,019
  toe/Lt).

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Conclusions

• The main attention in Lithuania is being paid to
  energy savings in building sector in Lithuania
  because of huge energy saving potential in this
  sector, especially in old multi-flat buildings.
  Therefore the Multi-fliat buildings modernization
  programme (7 mln Lt/year) and energy efficiency
  improvement in public sector financed by SF (93
  mill Lt or 31 mill Lt/year) are the main
  investments attracting state support for energy
  efficiency improvements
• Energy saving in industry is not developed in
  Lithuania. ESCO acting in district heat sector as
  well are not active in energy efficiency
  improvement in industry
• Lithuania has just fiscal and financial tools for
  promotion of use of renewable energy sources and
  energy efficiency measures. Participation in EU
  wide GTC and TWC schemes would have positive
  impact on GHG emission reduction and
  implementation of other priorities of Lithuanian
  energy policy
• Voluntary measures to increase EE would also
  need to be promoted in Lithuania based on social
  responsibility development in energy and
  industry.