Auctioning of CO2 emission allowances as RES sector funding source
Published on 28 May 2020
Latvia
This is the good practice's implementation level. It can be national, regional or local.
About this good practice
Latvia has established and implemented a state budget programme, the Climate Change Financial Instrument (CCFI), within which funding for projects supporting prevention of global climate change, adaptation to the effects of climate change and contributing to the reduction of CO2 emissions is obtained from the sale of state-owned fixed quantity units through the international emissions trading system.
During 2007-2015, ~208 MEUR were granted towards following support areas: energy efficiency, RES technologies, complex solutions, technologies development and informing the public, transport. CCFI’s funding stems from the Proceeds from the Assigned Amount Units (AAU) Purchase Agreements, as in the Kyoto Protocol for the enforcement of obligations Latvia did not need all available AAU.
Currently, the same scheme has been applied through Emission Allowance Auction Instrument (EAAI), providing funding for the same priorities.
As the proceeds from emissions trading are directed towards the development of RES sector, it further increases the savings of its emission allowances, which it can market in auctions and generate more financial resources for future RES development programmes.
The project applicants for this funding are both local municipalities and companies owned by municipalities, state institutions, merchants and private households. To secure total project funding, it is common to combine this funding with loans from banks and/or the State Treasury.
During 2007-2015, ~208 MEUR were granted towards following support areas: energy efficiency, RES technologies, complex solutions, technologies development and informing the public, transport. CCFI’s funding stems from the Proceeds from the Assigned Amount Units (AAU) Purchase Agreements, as in the Kyoto Protocol for the enforcement of obligations Latvia did not need all available AAU.
Currently, the same scheme has been applied through Emission Allowance Auction Instrument (EAAI), providing funding for the same priorities.
As the proceeds from emissions trading are directed towards the development of RES sector, it further increases the savings of its emission allowances, which it can market in auctions and generate more financial resources for future RES development programmes.
The project applicants for this funding are both local municipalities and companies owned by municipalities, state institutions, merchants and private households. To secure total project funding, it is common to combine this funding with loans from banks and/or the State Treasury.
Resources needed
The total CCFI funding available under the tenders was EUR 204.16 MEUR. The necessary funding for administrative costs was ~4 MEUR.
Evidence of success
All of CCFI funding has been invested in projects, incl. appr. half (106.58 MEUR) in supporting complex solutions, i.e., both installation of RES technologies and energy efficiency, and 24.21 MEUR – in supporting transition from fossil energy resources to RES technologies, e.g., solar panels, heat pumps. The overall 3300 concluded agreements on project implementation have contributed significantly to development of the national RES and energy efficiency sector.
Potential for learning or transfer
Good practice example on how to secure additional funding for activities related to prevention of global climate change, adaptation to the effects of climate change and contribution to the reduction of greenhouse gas emissions by exceeding the previously set climate targets.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
Ministry of Environmental Protection and Regional Development of the Republic of
Latvia
Latvija
Contact
Senior expert