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3. Development of the National Energy
Planning Models
comprehensive energy systems analysis platform AUTHORITY (DNA) IN ALBANIA AND THE CDM
that can analyze energy, economic and environ- PROJECTS REVIEW AND APPROVAL PROCEDURES
mental issues at the global, national and munici-pal levels, over several decades. It provides aframework for exploring policy options and in-vestment strategies that shape the evolution ofan energy system. It is widely used in over 60countries by more than 200 government, re-search and university institutions. TheMARKAL/TIMES model can evaluate the costsand benefits incurred in the process of achiev- NEWSLETTER
ing various goals. The model does not forecast,but rather examines “what if” scenarios, high-lighting the differences and requirements of eachof the alternative development paths. The model published by the
accepts agriculture, commercial, industrial, resi-dential, and transportation demands for energy “Albania-EU Energy Efficiency
services for the next several decades, and de-termines where the sources of energy will origi- Centre” (EEC)
nate which technologies transform primary en-ergy into final energy, and what end-use deviceswill then meet the demands for energy services.
The components are tied together by means of Address:
THE ENERGY IN a Reference Energy System (RES) which es-
Blvd. “Zhan D’Ark”, No. 2, Tirana, ALBANIA
tablishes the network of energy flows and tech-nology options. The characteristics of each tech- P.O. Box 2426
nology (supply, process, conversion and end-use) Tel: + 355 4 2233 835; Fax: + 355 4 2233 834
include the investment cost, operating and main- Email:
tenance costs, service life, efficiency, availabil- Internet:
4. Capacity Building
ations where there are limitations on system evolution that in- A primary objective of this USAID project has been the de- hibit the selection of ideal economic choices.
velopment of regional capacity to perform national energysystem modeling and analysis. The TWG’s capacity is dem- 6. Future Energy Service Demands
onstrated by their achievement of the following: In the MARKAL/TIMES modelling framework, a distinction • Establishment of a 2003 energy balance, adapted to the is made between the demand for energy services (or usefulmodel needs.
energy) and the end-use consumption of energy (or final en- • Decomposition of the initial energy balance to determine ergy). The demands for useful energy services are the keythe appropriate depiction of resources (including imports), con- input driving the models, which then calculate the resulting con- version technologies, end-use devices and energy service de- sumption of final energy (electricity, gas, coal, etc.), and the mands, which formed the underlying Reference Energy Sys- host of resources and technologies that are utilized to deliver that energy as primary outputs of the model. The starting point • Calibration of the models’ results for the base year (2003), for developing the national projections for future energy ser- including depiction of the capacity and performance of exist- vice demands is establishing the useful energy demand in the • Development of the 2003 to 2027 Reference Scenario, • Preparation and analysis of alternate scenarios.
• Population and number of household growth, and • Industrial production growth, with a distinction between en- The following three policy scenarios were selected because ergy intensive sectors (ferrous & non ferrous metals, chemi- they best demonstrate how the country energy systems might cals, and other energy-intensive industries), and other indus- respond to a set of efficiency-promoting policies or programs.
The selected policy scenarios were designed to model increas-ingly stronger efficiency targets as well as alternative eco- 7. Fuel Price and Availability
nomic mechanisms to provide insight in the costs and benefits Another key input to the models is the cost and availability of the domestic and imported energy resources available to the energy • Promoting Energy Efficiency - accelerating the adoption
system. For the imported fuels, world energy price projections of more energy efficient end-use devices through better are used to compute their price evolution. For domestic mined consumer information, improved standards, market incen- or extracted resources, price trends were established that track tives, and other similar approaches.
the imported fuel prices, expect where local conditions dictate • Reducing Electricity Consumption - achieving a 10% re- otherwise (e.g., cheaper mined coal). Fuel price trajectories
duction in electricity consumption below Reference case
were taken from the EU New Energy Externalities Develop- levels by establishing regional, sectoral or other legal elec- ment for Sustainability (NEEDS) project and adapted for the tricity use targets and implementing market-based mecha- SEE situation. The price trajectories are based upon $60/bar- nisms to facilitate meeting the targets.
rel oil, which will understate the benefits of energy efficiency.
Reducing Energy Intensity - achieving overall energy sys-
tem intensity improvements within the same lifetime ener-
8. Technology Characterizations.
gy system cost as in the Reference case, most likely through During model calibration, the stock and base year operation of a combination of the above measures.
the existing power plants (electric, coupled heat and power, heat-ing) and end-use demand devices (furnaces, air conditioners, 5. Reference Scenario Highlights
industrial process heat, lighting, etc.) was established within the The Reference scenario describes how the energy systems models. The set of options was cross-checked against the pub- will evolve absent any major changes in system direction (e.g., lished GIS information, and where needed the characterizations energy efficiency improvements, energy diversity), and as such were adjusted to bring them in-line with what was used for the it represents a continuation of the current situation scenario.
GIS. Each TWG then selected from this suite an appropriate set The Reference scenario serves as the comparison point for of new technologies for inclusion into their models.
the analysis of scenarios designed to model specific policies,programs and future energy system options. Each country 9. Model Constraints
Reference scenario has been established by: A MARKAL model is driven by its least-cost paradigm, which • Developing demand service drivers (e.g., GDP, population) can sometimes lead to rates of change that are not reasonable and associating them with each of the sectors to establish an within a real energy system. Therefore, limits on the rate and initial projection of future useful energy services (e.g., space degree to which fuel switching may occur have been incorporated into the country models. In addition, there is a different set of • Adopting forecasts of energy supply prices from the EU constraints that limits the rate and degree to which the models canNew Energy Externalities Development for Sustainability introduce new technology options. These constraint mechanisms (NEEDS) project trends, adapted for each of the country situ- are adjustable and can be relaxed or tightened as needed to model a particular alternate scenario. In the Reference scenario the • Establishing an appropriate sets of future power plants, penetration of advanced technologies (available from 2009 orcoupled heat and power, and heating plants as well as demand after) was limited between 5 and 10 % depending on the country.
devices based upon IEA/ETSAP technology characterizations,adapted to the SEE situation, and 10. Final Energy Consumption
• Establishing mechanisms for “guiding” model choices in situ- The aggregate Reference Scenario energy consumption grows by 57 % during the course of the planning horizon. The results each country with primary energy sources in general and with show that the greatest increase in end-use energy consump- oil in particular is declining quickly. These factors will have a tion will occur in the industrial and commercial sectors, with large effect on the energy trade balance, and consequently, onthe residential sector consumption shrinking in percentage the country’s general trade balance if the energy sector con- terms. Romania requires nearly half of all the energy con- tinues to be developed according to Reference Scenario. The sumed, followed by Serbia, Bulgaria and Croatia.
need to import more fuels will increase the trade deficit beyondlevels that the country economy could afford and those are the 11. Electricity Generation
main reasons why introduction of energy efficiency and renew- In aggregate, electricity generation in the Reference scenario able energy sources is a must for all countries.
increases from 157 GWh in 2006 to 288 GWh by 2027, an 84% increase. This is consistent with the results if the WorldBank Generation Investment Study (GIS), which projected 180-275 GWh of electricity generation in 2027, depending upon thescenario. In the current individual country models, imports Dr. Eng. Besim ISLAMI
and exports are capped at 2003 levels, and the benefits of Regional Coordinator
greater regional integration cannot be assessed until the mod- IRG Regional Consultant
els are linked. The results show that the following changes inelectricity generation by 2027: • Coal/lignite remains the dominant fuel, providing 42 % of the total generation, ESTABLISHMENT OF THE DESIGNATED
• Nuclear has the biggest increase, moving up to 20.6 % of NATIONAL AUTHORITY (DNA) IN ALBANIA
• Hydro & gas-fired plants drop respectively to 21.9 % and AND THE CDM PROJECTS REVIEW AND
• Renewables and other plants move from nearly 0 % to 5 %, comprised of biomass, combined heat and power and wind.
The Clean Development Mechanism was established underArticle 12 of the Kyoto Protocol adopted by the Third Confer- 12. Primary Energy Supply
ence of the Parties to the UN Framework Convention on Cli- The total domestic and imported energy required to meet the mate Change. It is a project-based mechanism aiming at thedemand for energy services in the Reference scenario in- reduction or sequestration of greenhouse gases in the develop- creases by 39 % in 2027 over all the region. Composition of ing countries by attracting foreign investments towards sus- primary energy use in the Reference scenario indicates that: tainable development goals. The legal framework defining the • Nuclear energy’s contribution increases the most, from 8.9 mechanism comprises of the United Nations Framework Con- % to 14 %.
vention on Climate Change, the Kyoto Protocol and the • The roles of coal, oil, and biomass drop modestly; and Marrakech Accords (FCCC/KP/CMP/2005/8/Add.1 and • Natural gas use holds fairly steady, with a slight increase in FCCC/KP/CMP/2005/8/Add.2 dated 30 March 2006). These LPG use.
international treaties together with the decisions adopted bythe CDM EB define the international guidance for implement- 13. Energy System Costs
ing CDM projects. The CDM has three main objectives: The total energy system cost encompasses all costs associ- 1. To assist the developing countries in achieving sustainable ated with the energy system, including expenditure on fuel, investments in new power plants and demand devices, and 2. To contribute to the climate change mitigation, and technology operation costs (other than fuel) over the 26 years 3. To assist the industrialised countries in achieving com pliance of planning horizon. The results show that the eight countries fall into three clusters based upon the size of their energy sys-tem: (i) Romania, (ii) Bulgaria, Croatia and Serbia, and (iii) During the last years the clean development mechanism ma- Albania, Bosnia and Herzegovina, Macedonia and UNMIK.
tured significantly and gained great popularity amongst thebuyers as well as the host countries. Up to now more than The total annual energy system cost reaches nearly • 40 bil- 1000 CDM projects have been registered by the CDM EB lion per year in 2027. Fuel expenditures increase to • 25 bil- and more than 100 million Certified Emission Reductions (CERs) lion per year by 2027, 80 % higher than 2006, and dominate issued. The boost of this mechanism was triggered mainly by the annual energy system cost. Annualized investments in the decisions (all the decisions of the EB can be found on: technology reach almost • 15 billion in 2027, with power plants taken by the CDM Ex- comprising • 3 billion and investment in demand devices re- ecutive board, which created the necessary prerequisites for quiring almost • 12 billion, nearly four times the capital needed the smooth implementation of CDM projects, including approved methodologies, designated operational entities, procedures forregistration of projects, issuance of CERs, etc. On the part of As a conclusion, the scenario provides a quantitative assess- the host countries interested in implementing CDM projects ment of the necessity to avoid the energy sector development the governments should take the necessary actions to create according to the Reference Scenario. The main characteris- favourable conditions for implementing CDM projects. These tic of the energy situation is the fact that self-sufficiency of include fulfilment of the participation requirements for CDM (e.g. appointment of a Designated National Authority), and adoption of national review and approval procedures.
• Make sure that the requests of the national legislation withregards to the environmental impact assessment are fully taken Albania is a non-Annex I party to the United Nations Frame- into consideration from the project developers, work Convention on Climate Change (UNFCCC) and to the • Integration of the suggestions/comments from the line min- Kyoto Protocol and as such is eligible to host greenhouse gas istries in the procedure of the CDM projects review/approval, (GHG) mitigation projects under the Clean Development • Make sure the compliance of the CDM project proposals Mechanism of the Kyoto Protocol. In Albania the responsibil- with the national sustainable development criteria, ity of the Designated National Authority (DNA) falls upon the • Preparing draft letters of no-objection and approval on the Ministry of Environment, Forests and Water Administration basis of approved format for issuance from the DNA.
(MEFWA). This is initially formalized through a letter dated ofJuly 2005 of the MEFWA and followed latter by a specific The main participants in the CDM Project cycle are: the project article of the amended “Law on forests and forests services” developer, the DNA, the Designated Operational Entity (DOE), of July 2007. Despite of that, there was a need to formalize and the CDM Executive Board (EB). Their responsibilities are the functioning of the DNA in Albania and to set up formal distributed along the project cycle and differ in time. While the rules and procedures for the CDM projects approval, which DNA’s main responsibility is to confirm that the host country has was finally fulfilled with the approval on 27 November 2008 by ratified the Kyoto Protocol, that the proposed CDM projectthe Council of Ministers of the Republic of Albania of the Gov- meets the national sustainable development criteria and otherernmental Decree “On the establishment of DNA in Albania relevant legislation, and that the project is undertaken on a vol- as part of the obligations of the country to Kyoto Protocol”.
untary basis, the DOEs are responsible for verifying the techni-cal and legal aspects of the proposed CDM project, including The above achievement is a very important step on the way to the project’s additionality, the GHG emissions baseline, and the access carbon finance in Albania and to its prepa-ration, the Gov- monitoring plan. The main role of the CDM EB is to register ernment of Albania has been technically supported in the frame and approve the projects according to the adopted international of the project “Building capacities to access carbon financing in procedures, and to issue CERs. With regards to the project Albania” jointly funded by the Austrian Government through the cycle, the Albanian Governmental Decree sets the procedures Austrian Develop-ment Agency (ADA) and UNDP-Albania and and the deadlines for the review and approval of the CDM as well as part of the assistance given from the Italian Govern- projects proposals from the day of their submission to the ment through the Italian Ministry for the Environment, Land and Sea with regards to the implementation of Kyoto Protocol in Al- • Screening and endorsement of the project idea (PIN), a bania. Other experiences of the countries with a similar status process which takes no more then 25 working days, time with Albania with regards to UNFCCC have also been con- by when the project developer is provided with a Letter ofsulted. According to this legal act, the DNA is established within the MEFWA, which is the responsible body for the UNFCCC • In-depth assessment and approval (PDD), a process which and the Kyoto Protocol implementation, and consists of a Steer- takes no more then 30 working days, time by when the pro- ing Committee (SC) and a Secretariat to perform supportive ject developer is provided with a Letter of Approval.
functions. The DNA responsibilities and functions are related todefinition and implementation of the CDM policy of the country As a follow up of the mentioned Governmental Decree, and and evaluation and/or approval of the CDM project documents.
in order to make it operational, the MEFWA is authorised to Within the DNA the SC and the Secretariat perform differential issue the rules on how to review, approve and facilitate thebut interrelated functions. The main functions of the SC are re- implementation of the CDM projects. The draft set of those lated to the approval of CDM projects and include: rules is already prepared and is under discussion within the • Coordinates at the international and national level the re- interested stakeholders within the country. The approval of quired actions for the implementation of the Kyoto Protocol, the Decision of the Council of Ministers “On the establish- • Ensures the compliance of the CDM project proposals with ment of DNA in Albania as part of the obligations of the coun- the requirements of national legislation and in line with the try to Kyoto Protocol”, is a very important step that Albania international regime, has taken towards creating national institutional and legal • Authorize, when necessary, the involvement within the DNA, framework to access carbon financing in Albania. The most of other experts from the line ministries, important sector to profit from the Kyoto Protocol’s flexible mechanism, with a great potential with regards to the CDM • Signs Letters of no Objection and Letters of Approval, projects is the Energy Sector, with both Energy Efficiency • Provides guidance to the Secretariat.
Projects and Renewable Energy related ones.
The main functions of the Secretariat include: • Facilitation of the process of submission, evaluation andapproval of the CDM project documents, • Assisting the project developers in providing information on Mirela KAMBERI, M. Sc.
national and international guidance, formats, and other relevant National Projects Coordinator
Climate Change Program
• Reviewing officially submitted project documents (e.g. PIN, Ministry of EFWA
PDD) and preparing evaluation reports,subject to decision


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