Polish Green Investment Scheme Setting the benchmark for good practice?

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1 Polish Green Investment Scheme Setting the benchmark for good practice? Grzegorz Peszko Senior Energy/Environmental Economist European Bank for Reconstruction and Development

2 GIS: Why EBRD? GIS hosts = EBRD countries of operation Developing missing carbon markets Leverage climate change investments and commercial finance Environmental integrity of AAU trading MCCF managed jointly with EIB tool to facilitate pilot AAU transactions

3 AAUPA: Legal provisions for environmental integrity Key milestones specified as conditions precedent Definition of greening default Proceeds not Disbursed in accordance with the Greening Plan Greening Activities not implemented according to the Greening Plan, Greening Effects not achieved, Use or misuse of Proceeds Exceeding agreed ratios or thresholds (e.g. for TC or administration)

4 What if greening default is called? Seller fully liable for greening defaults Remedies Greening default notice seller proposes cure Unused Proceeds: reallocation of any to other Greening Activities Misused Proceeds: Seller reimburses to GIS account and finances replacement greening projects that would lead to equivalent Greening Effects Repayment of any unused or misused Proceeds to Buyer (reciprocal return of AAUs)

5 Greening Plan integral part of AAUPA Greening Programmes and Projects Fund Flows and Governance Methods, procedures: Baseline, Monitoring, Reporting and Verification Fiches of eligible greening programmes Implementation provisions (conditions precedence, covenants)

6 Implementation provisions (CPs) Detailed Terms Sheets for each Greening Programme (with definition of system boundaries, detailed criteria for eligible projects and beneficiaries, etc.) Call for Proposals Documents for each Greening Programme Method for assessing the Greening Effect for each Greening Programme based on applicable JI/CDM methodologies as appropriate Estimates of total Greening Effect for each Greening Programme: impact, result and output indicators, and greening ratios. Monitoring, Reporting and Verification Instructions Terms of References for the Verifier Templates of Annual Greening Performance Report and the Final Greening Performance Report

7 MRV rules Beneficiaries monitor, collect and report data according to the Instruction GIS Operator collects and files project performance reports GIS Operator calculates/estimates/evaluates Greening Effects of each project and aggregates them in publicly available database GIS operator conducts mandatory on-site inspections of sample projects. Members of MC can request additional inspections anytime or do it themselves GIS Operator prepares annual and final reports: Greening Performance Report Financial Report Financial report audited by internationally renowned Auditor Greening Performance Report verified by independent Verifier

8 Governance Ministry of Environment responsible on behalf of Poland National Fund for Environmental Protection and Water Management: GIS Operator Law established advisory Consultative Council, but no seats for buyers or NGOs Therefore Monitoring Commission established under AAUPA. Function: access to information; first instance of disputes resolution. Specific rules scheduled to AAUPA Buyers DO NOT select individual Greening Activities Buyers have full access to all information about selection processes and reasons for selecting Greening Activities by the GIS Operator Right to raise issues and provide comments through Monitoring Commission Last resort notice of greening default

9 Selection of greening programmes Priority for Polish climate policy GHG emission reduction potential that can be measured and monitored Where public funds needed to remove major bottlenecks to sustainable investments Where effective demand for investments exists to achievable quick mitigation effects Proposed by GIS Operator, but selected and structured jointly with buyers and advice from EBRD/EIB

10 Upgrading electricity grid for connecting renewable energy sources from wind Output indicator Result indicator Impact indicator Greening ratio Proceeds Funding structure Implementation timeline XX MWe of connected wind capacity XX MWh electricity supplied annually XX t CO2e emissions avoided annually XX Increased green certificate generation from wind power from the area where the network upgrade took place XX AAUS: XX t CO2e emissions avoided XX PLN total available budget per program GIS proceeds (XX PLN for 1MW of actually connected wind capacity, but not more than XX% of eligible costs) External finance (e.g. commercial, EBRD, EIB loans) Commitment by Disbursement by Completion by Monitoring by Crediting by Reports due:

11 Upgrading electricity grid for connecting renewable energy sources from wind (2) Eligible applicants Eligible project types Eligible costs Applicable state aid rules Detailed eligibility criteria Selection criteria Electricity distribution companies Construction, expansion and/or modernization of electricity networks to enable wind power plants to be connected to the National Electricity Grid including, specified types of power lines, interconnections, substations, buildings, tasks, etc. E.g. Fixed assets, installation, construction works, materials, necessary intangible assets, services necessary to achieve Greening Effect Polish, EU regulations: Min/Max CAPEX size Legal, technical, environmental Exclusion list Projects in areas with low density of the 110kv grid Otherwise, the date of testifying that all eligibility criteria have been fulfilled

12 Polish GIS design - conclusions Additional, measurable, monitorable emissions reductions Robust, precise but not over-regulated regulated High greening ratios Implementable, achievable Financeable: Financial structures proven and transparent High leverage of GIS funds (low grant intensity) Open to private beneficiaries and co-financiers (some programmes)

13 Possible scenarios for GIS development Pilot transactions Good practices, benchmarks Greening standards in post FMs Pilot transactions Greening defaults AAU trading discredited