Reserve for new entrants except for cogeneration 49

Document Sample
Reserve for new entrants except for cogeneration 49 Powered By Docstoc
					                                CONSULTATIVE PAPER

                                                      ON

    THE BULGARIAN NATIONAL ALLOCATION PLAN
   FOR PARTICIPATION IN THE EUROPEAN EMISSION
                TRADING SCHEME




                       for the periods 2007 and 2008-2012




                                          Sofia, March, 2006



Interministerial Working Group on the development of the National Allocation Plan for greenhouse gas emission
trading in compliance with Directive 2003/87/EC of the European Parliament and the Council




                                                                                                                1
TABLE OF CONTENTS:

DEFINITIONS OF USED TERMS .............................................................................................................. 4

LIST OF ABBREVIATIONS ........................................................................................................................ 6

INTRODUCTION .......................................................................................................................................... 8

CATEGORIES OF ACTIVITIES COVERED BY THE DIRECTIVE AND CRITERIA FOR
ALLOCATION OF ALLOWANCES ........................................................................................................ 10

CATEGORIES OF ACTIVITIES, REFERRED TO IN ARTICLES 2(1), 3, 4, 14 (1), 28 AND 30 OF THE DIRECTIVE
..........................................................................................................................................................................10
CRITERIA FOR THE NATIONAL ALLOCATION PLAN, REFERRED TO IN ARTICLES 9, 22 AND 30 OF
DIRECTIVE 2003/87/EC ..................................................................................................................................11

SUMMARY OF MAIN PRINCIPLES ON WHICH BASIS ALLOCATIONS WILL BE MADE ...... 12

1. DETERMINATION OF THE TOTAL QUANTITY OF ALLOWANCES ....................................... 13

1.1 OBLIGATION OF BULGARIA UNDER THE KYOTO PROTOCOL ................................................................13
1.2 PRINCIPLES, ASSUMPTIONS AND DATA APPLIED TO DETERMINE THE CONTRIBUTION OF
INSTALLATIONS COVERED BY THE DIRECTIVE .............................................................................................15
DETERMINATION OF THE TOTAL QUANTITY OF ALLOWANCES TO BE ALLOCATED ...................................15
1.3 DETERMINATION OF THE TOTAL QUANTITY OF ALLOWANCES TO BE ALLOCATED .............................22
CORRECTIONS OF THE MACROECONOMIC PROJECTION “BUSINESS AS USUAL” FOR COMPULSORY MEASURES
THAT INCREASE EMISSIONS AND FOR REPORTING THE AMOUNT OF EMISSION REDUCTIONS UNDER JI
PROJECTS ..........................................................................................................................................................26
1.4. MEASURES TO REDUCE EMISSIONS APPLIED TO SOURCES NOT COVERED BY THE SCHEME, ENERGY
POLICY .............................................................................................................................................................28
ENERGY ............................................................................................................................................................28
INDUSTRY .........................................................................................................................................................29
HOUSEHOLDS AND SERVICES ...........................................................................................................................29
TRANSPORT ......................................................................................................................................................29
KYOTO PROTOCOL MECHANISMS ....................................................................................................................29
1.5 TAKING INTO ACCOUNT THE NATIONAL ENERGY POLICY .....................................................................30
1.6 APPLICATION OF THE CRITERIA OF ANNEX ІІІ TO THE DIRECTIVE ......................................................31
1.7. – 1.9 TAKING INTO ACCOUNT THE POTENTIAL TO REDUCE EMISSIONS AND THE COMMUNITY
LEGISLATION. NO PROVISION TO AUCTION ALLOWANCES. .........................................................................32

2. DETERMINATION OF THE QUANTITY OF ALLOWANCES AT SECTOR LEVEL................ 32

ALLOCATION OF EMISSION ALLOWANCES BY SECTORS ......................................................... 34

“BOTTOM-UP” PROJECTIONS FOR EMISSIONS OF REGISTERED INSTALLATIONS BY SECTORS ..................34
RECONCILIATION OF THE QUANTITY OF EMISSION ALLOWANCES BY SECTORS ........................................37

3. DETERMINATION OF THE QUANTITY OF ALLOWANCES AT INSTALLATION LEVEL . 41

4. TECHNICAL ASPECTS ......................................................................................................................... 43

4.1. POTENTIAL, INCLUDING TECHNOLOGICAL POTENTIAL ........................................................................43
4.2. EARLY ACTION .........................................................................................................................................44
4.3. CLEAN TECHNOLOGY (IF APPLICABLE) .................................................................................................45

5. COMMUNITY LEGISLATION AND POLICIES ............................................................................... 45


                                                                                                                                                                          2
5.1. COMPETITION POLICY .............................................................................................................................45
5.2 INTERNAL MARKET POLICY (ART. 43 OF THE TREATY) .........................................................................46
RESERVE FOR DELAYED INSTALLATIONS ( Vres2003 ) .........................................................................................47
                                                                                   V j RP
CALCULATIVE RESERVE FOR COMPULSORY MEASURES (                                                 ) ...................................................................48
RESERVE FOR NEW ENTRANTS (EXCEPT FOR COGENERATION) ........................................................................49
RESERVES FOR NEW COGENERATION ...............................................................................................................50
ALLOWANCES SET ASIDE FOR COMPENSATION OF ERUS TRANSFERRED TO OTHER COUNTRIES UNDER JI
PROJECTS ..........................................................................................................................................................51
5.3. OTHER LEGISLATION OR POLICY INSTRUMENTS ...................................................................................54

6. PUBLIC CONSULTATIONS ................................................................................................................. 55

7. OTHER CRITERIA THAN THOSE LISTED IN ANNEX ІІІ TO THE DIRECTIVE .................... 56

LIST OF INSTALLATIONS COVERED BY DIRECTIVE 2003/87/ЕС AND PROPOSED
ALLOCATION OF ALLOWANCES TO THEM FOR 2007 .................................................................. 57




                                                                                                                                                                   3
Definitions of used terms
     Allowance - the permission to emit one tonne of carbon dioxide equivalent during a
      specified period, which shall be valid only for the purposes of meeting the requirements of
      the emission trading scheme
     Calculative reserve – allowances set aside to be distributed between installations in the
      process of the development of the Allocation plan. Those reserves are not allocated to
      installations after the notification to the European Commission.
     Certified emission reduction unit is equal to one tonne equivalent of carbon dioxide,
      achieved as a result of a “clean development” project under Art.12 of the Kyoto Protocol.
     Delayed installation – an installation which has been operating for at least one year in the
      period 2002–2004 and for which no sufficient data has been submitted for determination of
      emissions and allocation of allowances before 30 November 2005.
     Early credits –– Emission reductions that have been verified in “Joint Implementation”
      projects before the beginning of the First commitment period (2008). These emission
      reductions should be transferred by Bulgaria to the respective country with which a bilateral
      cooperation agreement on Joint Implementation projects was concluded. The amounts of
      reduction units are transferred ain the form of Emission Reduction Units (ERU) pursuant to
      Article 17 of the Kyoto Protocol in the framework of the First Commitment period (2008-
      2012)..
     Direct double counting may occur when CO2 emissions from one or more installation(s)
      specifically defined and included in the Scheme are reduced or limited as a result of the
      implementation of a “joint implementation” project. The project may be implemented in: a)
      the installation whose emissions are influenced and which participates in the Scheme; b)
      another installation participating in the Scheme, or c) another installation notparticipating in
      the Scheme. Situations when a “joint implementation” project reduces the emissions from
      several clearly distinguishable installations participating in the Scheme is considered an
      example of direct double counting of emission reductions.
     Emissions reduction unit is equal to one tonne carbon dioxide equivalent, achieved as a
      result of a “joint implementation” project under Art.6 of the Kyoto Protocol.
     Final list of installations – a list of the registered installations supplemented with delayed
      installations which have succeeded to submit required data for determination of their
      emissions and allocation of allowances before 28 February 2006.
     Emission trading permit – a permit granted under Art. 131в of the Environmental
      Protection Act.
     Indirect double counting of emissions reductions may appear when a “joint
      implementation” project influences the CO2 emissions from installations covered by the
      Scheme within a specific sector, but it is not possible to determine which installations
      reduce their emissions. In such cases, the joint implementation project could be
      implemented for an installation participating in the Scheme, as well as for a not participting
      installation.
     Installation - a stationary technical unit constructed to perform one or more of the activities
      covered by the Scheme as well as all other activities in a direct relation to them that have a
      technical connection to the activities performed in this unit and may influence the emissions
      or pollution.
     New entrant – any installation carrying out one or more of the activities covered by the
      emission trading scheme which has obtained an emission trading permit or an update of its
      permit due to a change in the nature or functioning or an extension of the installation, after
      January 1st, 2007. New entrant is also an installation constructed before 2004 which has not

                                                                                                    4
    operated with more than 50% of its production capacity for at least one calendar year in the
    period 2002-2004. New entrant is also an installation constructed after January 1st, 2004, or
    where changes have been introduced in the nature or functioning due to an extension of the
    installation after this date. Delayed installations are not considered new entrants. Four
    groups of new entrants are defined:
             installations newly constructed after 1st January 2004;
             installations participating in the scheme, in case of change in nature or functioning
              or an extension of the installation after 1st January 2004;
             installations for which a permit is refused before January 1st, 2007;
             “sleeping” installations – installations constructed before 2004 which have not
              operated with more than 50% of their production capacity for at least one calendar
              year in the period 2002–2004.
   Operator – any person who operates or controls an installation or to whom decisive
    economic power over the technical functioning of the installation has been delegated.
   Preliminary list of installations – a list of registered installations
   Registered installation – an installation for with sufficient data has been submitted for
    determining their emissions and allocation of allowances before 30 November, 2005.
   Reserve – the quantity of allowances to be distributed between the installations during the
    emission trading periods – 2007 or 2008-2012.




                                                                                                 5
List of Abbreviations
AAU              Assigned Amount Unit
AEAF             Agency for Economic Analysis and Forecasting
BNAP             Bulgaria’s National Allocation Plan
BETS             Bulgarian Emission Trading Scheme
CER              Certified emission reduction units
СО2              Carbon dioxide
CP               Combustion Plant
EC               European Commission
ЕЕ               Energy efficiency
EEA              Executive Environment Agency
EPA              Environmental Protection Act
EPER             European Pollutant Emission Register
ERU              Emission reduction unit
ЕU               European Union
EU ETS           European Union’s Emissions Trading Scheme
First stage      First stage of the implementation of the Directive - 2007.
GVA              Gross Value Added
GDP              Gross Domestic Product
GHG              Greenhouse gases
IPCC             Intergovernmental Panel on Climate Change
IPPC             Integrated Pollution Prevention and Control
JI               Joint Implementation
KP               Kyoto Protocol
KPD              Known planned development of new installations
MEE              Ministry of Economy and Energy
MOEW             Ministry of Environment and Waters
MRDPW            Ministry of Regional Development and Public Works
NAP              National Allocation Plan
NAPCC            National Action Plan on Climate Change
NEK              National Electrical Company
NGO              Non-governmental organization
NIMH             National Institute of Meteorology and Hydrology
NSI              National Statistical Institute
RES              Renewable energy sources
RIEW             Regional Inspectorate of Environment and Water
RNE              Reserve for new entrants
Second stage     Second stage of the implementation of the Directive- from 2008 to 2012.
SEWRC            State Energy and Water Regulatory Commission


                                                                                           6
The Directive     Directive 2003/87/ЕС establishing the European emission trading scheme within
                  the Community
The Scheme        European Scheme for a emission trading scheme
TPP               Thermal Power Plant
UNFCCC            United Nations Framework Convention on Climate Change
WG or IMWGDBNAP   Inter-ministerial working group on the development of Bulgaria’s National
                  Allocation Plan




                                                                                             7
Introduction

        Climate change is a reality that leads to negative consequences all over the world and also in
Bulgaria. Large scale floods, stormsand drought happen worldwide and in Bulgaria. This fact
clearly shows the society’s dependence on extreme natural phenomena and the price it should pay
for human, economic and environmental damages.
      Bulgaria’s concern and willingness to joint the international community’s efforts for climate
change mitigation are demonstrated by the acts of signing and ratifying the United Nations
Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.
        The Emission trading scheme is the main EU instrument for the implementation of the
Community’s commitment under the Kyoto Protocol. Directive 2003/87/ЕС establishes a European
emission trading scheme within the Community. From 1 January 2005, installations in Member
States covered by this Directive reduce their emissions of carbon dioxide (СО2) to certain limits for
the two periods 2005-2007 and 2008-2012. For Bulgaria the implementation of the Directive begins
with the act of accession of the country to the EU on 01 January, 2007. In case of postponed
accession, Bulgaria has the opportunity to joint the emission trading scheme on January 1st, 2007,
by a decision of the Bulgarian Government and after signing a special agreement for this purpose
with the EU. The emission trading provides flexibility to operators owning installations to achieve
targets for reduction of greenhouse gas emissions in the most efficient way, according to their own
development strategies.
The main components of the Scheme are:
     1. Allocation of allowances through the National Allocation Plan;
     2. Issuing an emission trading permit to each installation;
     3. Monitoring, verification and reporting of emissions;
     4. Greenhouse gas emission allowances transaction register;
     5. Compliance control and penalties.
        According to the Directive, from January 1st, 2007, the Bulgarian installations covered by
the Directive under Annex І, will only be allowed to emit carbon dioxide if they hold a valid permit.
Installations holding a permit will monitor their emissions of carbon dioxide and will report on an
annual basis. Provisions in the permit will require that at the end of each calendar year, operators
surrender a quantity of allowances for emissions of carbon dioxide, equal to the quantity of carbon
dioxide emitted during the year.
        Before the start of the Emission trading scheme, the State will determine the allowances for
the installations through the National Allocation Plan. The allocation will be based on objective and
transparent criteria consistent with the criteria listed in Annex ІІІ of the Directive.
       For Bulgaria, the First stage of the European emission trading scheme begins on January 1st,
2007. Before this date, operators of installations listed in Annex І to the Directive and Art. 131b of
the Environmental Protection Act should have obtained a valid permit for emissions of carbon
dioxide. The Government will determine allowances to the operators for participating in the
Scheme. The operators shall fulfil specific monitoring and reporting obligations as part of the
permit, as specified in the guidelines of the EC.
       The development of the National Allocation Plan is coordinated by an inter-ministerial
working group. The members of the working group include representatives of Ministry of
Environment and Waters, Ministry of Economy and Energy, Ministry of Regional Development
and Public Works, Ministry of Finance, National Statistical Institute, and representatives of non-
governmental organizations: Bulgarian Industrial Association and branch organizations of branches
covered by the Scheme – Bulgarian Association of the Cement Industry, Bulgarian Branch

                                                                                                    8
Chamber of Power Engineers, Branch Chamber of Cellulose and Paper Industries, Glass
manufacturers, Branch Chamber of Ferrous and Non-ferrous Industries, Bulgarian Chamber of
Chemical Industry, Bulgarian Union of Ceramists (Order RD-186/06.04.2005). The working group
is assisted by Bulgarian and Dutch consultants through the Programme PSO of the Dutch
Government. The development of the NAP started on 5 January 2005.
       In developing Bulgaria’s NAP the following resources have been used:
       -   Directives, Decisions and Guidelines, and comments of the European Union;
       -   Law on amending the Environmental Protection Act regarding the introduction of the
           Scheme;
       -   Approved and rejected NAPs of EU Member States;
       -   Results of discussing the introduction of the Scheme during seminars and workshops
           with representatives of firms, NGOs, ministries and agencies;
       -   Results from peer review of the EC on the implementation of the EU ETS in Bulgaria;
       -   Experience of countries whose NAPs were approved, including Netherlands, Great
           Britain, Ireland, Czech Republic and Poland.
       In developing the format of this draft, the guidelines of the EC have been taken into account;
therefore the NAP is presented in a tabular format and follows the guidelines to answer specific
questions.
        Each Member State submits its NAP to the European Commission for assessment and
approval. The Commission involves the other Member States in the assessment of the respective
NAP. The Commission may turn down the plan or some parts of it based on noncompliance with
the criteria set in the Directive. This will result in introducing changes in the NAP. Bulgaria should
submit the BNAP for the period 2007 in April 2006, and for the period 2008-2012 – in June 2006.
After the European Commission approves Bulgaria’s NAP, the total quantity of allowances will be
allocated to the individual installations by means of adoption of the NAP by the Council of
Ministers. Each installation will receive its allowances through a National Greenhouse Gas
Emission Allowance Trading Register.
       The Government and the businesses face many challenges regarding the implementation of
the Directive. Important decisions have to be taken before the submission of Bulgaria’s National
Allocation Plan (NAP) to the EC in April 2006.
      The MOEW publishes information for each stage of the development of the draft NAP on its
web-page - www.moew.government.bg
        The current paper represents the Government’s proposed draft NAP. It includes the
methodology for allocation of allowances for the first and the second trading period of the
Directive; macroeconomic forecasts for the two periods and allocation of allowances by sectors and
installations for the First period only, as approved by the WG. The allocation of allowances for the
Second period will be published and presented for comments in May 2006 at the web-page of the
MOEW. All comments will be considered by the WG.
     The publishing of the draft BNAP provides opportunities to all stakeholders to send their
comments until 27 March, 2006, to e-mail: k.gocheva@moew.government.bg




                                                                                                    9
Categories of activities covered by the Directive and criteria for
allocation of allowances
Categories of activities, referred to in Articles 2(1), 3, 4, 14 (1), 28 and 30 of the
Directive
(Annex I)
    1. Installations or parts of installations used for research, development and testing of new
       products and processes are not covered by the Directive.
    2. The threshold values given below generally refer to production capacities or outputs. Where
       one operator carries out several activities falling under the same subheading in the same
       installation or on the same site, the capacities of such activities are added together.
Activity                                                                                                Greenhouse gas
Energy activities
Combustion installations with a rated thermal input exceeding 20 MW (except hazardous or                carbon dioxide
municipal waste installations)
Mineral oil refineries                                                                                  carbon dioxide
Coke ovens                                                                                              carbon dioxide
Production and processing of ferrous metals
Metal ores (including sulphide ore) roasting or sintering installations                                 carbon dioxide
Installations for the production of pig iron or steel (primary or secondary fusion) including
continuous casting, with a capacity exceeding 2.5 tonnes per hour.
                                                                                                        carbon dioxide
Mineral industry
Installations for the production of cement clinker in rotary kilns with a production capacity           carbon dioxide
exceeding 500 tonnes per day or lime in rotary kilns with a production capacity exceeding 50
tonnes per day or in other furnaces with a production capacity exceeding 50 tonnes per day.
Installation for the manufacture of glass including glass fibre with a melting capacity exceeding
20 tonnes per day.                                                                                      carbon dioxide
Installations for the manufacture of ceramic products by firing, in particular roofing tiles, bricks,
refractory bricks, tiles, stoneware or porcelain, with a production capacity exceeding 75 tonnes
                                                                                                        carbon dioxide
per day, and/or with a kiln capacity exceeding 4 m3 and with a setting density per kiln exceeding
300 kg/m3
Other activities
Industrial plants for production of
(а) pulp from timber or other fibrous materials                                                         carbon dioxide
(b) paper and board with a production capacity exceeding 20 tonnes per day.                             carbon dioxide




                                                                                                                         10
Criteria for the national allocation plan, referred to in Articles 9, 22 and 30 of
Directive 2003/87/EC
(Annex ІІІ)
1. The total quantity of allowances to be allocated for the relevant period shall be consistent with the
   Member State's obligation to limit its emissions pursuant to Decision 2002/358/EC and the Kyoto
   Protocol, taking into account, on the one hand, the proportion of overall emissions that these
   allowances represent in comparison with emissions from sources not covered by this Directive and,
   on the other hand, national energy policies, and should be consistent with the national climate
   change programme. The total quantity of allowances to be allocated shall not be more than is likely
   to be needed for the strict application of the criteria of this Annex. Prior to 2008, the quantity shall
   be consistent with a path towards achieving or over-achieving each Member State's target under
   Decision 2002/358/ EC and the Kyoto Protocol.
2. The total quantity of allowances to be allocated shall be consistent with assessments of actual and
   projected progress towards fulfilling the Member States' contributions to the Community's
   commitments made pursuant to Decision 93/389/EEC for a monitoring mechanism of Community
   CO2 and other greenhouse gas emissions.
3. Quantities of allowances to be allocated shall be consistent with the potential, including the
   technological potential, of activities covered by this scheme to reduce emissions. Member States
   may base their distribution of allowances on average emissions of greenhouse gases by product in
   each activity and achievable progress in each activity.
4. The plan shall be consistent with other Community legislative and policy instruments. Account
   should be taken of unavoidable increases in emissions resulting from new legislative requirements.
5. The plan shall not discriminate between companies or sectors in such a way as to unduly favour
   certain undertakings or activities in accordance with the requirements of the Treaty establishing the
   European Community, in particular Articles 87 and 88 thereof.
6. The plan shall contain information on the manner in which new entrants will be able to begin
   participating in the Community scheme in the Member State concerned.
7. The plan may accommodate early action and shall contain information on the manner in which early
   action is taken into account. Benchmarks derived from reference documents concerning the best
   available technologies may be employed by Member States in developing their National Allocation
   Plans, and these benchmarks can incorporate an element of accommodating early action.
8. The plan shall contain information on the manner in which clean technology, including energy
   efficient technologies, are taken into account.
9. The plan shall include provisions for comments to be expressed by the public, and contain
   information on the arrangements by which due account will be taken of these comments before a
   decision on the allocation of allowances is taken.
10. The plan shall contain a list of the installations covered by this Directive with the quantities of
    allowances intended to be allocated to each.
11. The plan may contain information on the manner in which the existence of competition from
    countries or entities outside the Union will be taken into account.
12. The plan specifies the maximum amount of CER and ERU which may be issued by the operators
    participating in the Scheme as a percentage of the allocation of allowances to each installation. The
    percentage corresponds to the additionality obligations of the Member States under the Kyoto
    Protocol and decisions adopted pursuant to the Kyoto Protocol and the UNFCCC.




                                                                                                        11
Summary of main principles on which basis allocations will be
made

  1.    The Bulgarian Government determines that 49 651 606 allowances for СО2 emissions
        will be allocated in the Scheme for the First period.
  2.    Allocation of allowances will be carried out in two stages: first, allowances will be
        allocated by sectors and subsequently to installations within each sector.
  3.    Allocation of allowances at sector level will be based on average historical emissions
        during the base year. “Base year” comprises of the average emissions from the
        installations in the two years of 2002, 2003 and 2004 with highest emissions. For
        installations which have not functioned during two years of this period, the year in
        which they were functioning is applied as a base year.
  4.    Allocation of allowances at installation level will be made on the basis of an allocation
        methodology approved by the WG, based on the historical emissions from
        installations and sectors and the forecasts for production volume and emission
        projections by sectors.
        The sum of the allowances for all installations in one sector can not exceed the
        allowances determined for the respective sector.
  5.    Allocation of allowances for unknown new entrants, defined in accordance with the
        Directive, will be made free of charge from a general reserve that was allocated for
        new entrants for the period 2008-2012 in an increasing amount of 1 to 5 million
        allowances by years, in accordance with the macroeconomic forecast for the
        development of the country.
  6.    The reserve for planned and unknown new efficient co-generation installations is
        calculated on the basis of the indicative objective for the country for introduction of a
        new highly effective co-generation.
  7.    Allowances to new entrants will be issued based on:
        а) submission of an application to the competent authority;
        b) holding a valid emission trading permit;
        c) projected emissions are calculated on the basis of the lowest emission level in the
        sector.
  8.    The calculative reserve equalling 5% of the emissions of registered installations and is
        intended for operators of installations which have delay in registering and submitting
        data before 30 November, 2005 (delayed installations). Those who submit data before
        28 February 2006 receive allowances until the submission of the BNAP to the EC.
  9.    Allowances to sleeping installations will be issued based on:
        а) submission of an application to the competent authority;
        b) holding a valid emission trading permit;
        c) projected emissions are calculated on the basis of the average emission factor
        (emissions of CO2 by production unit) for the sector.




                                                                                               12
1. Determination of the total quantity of allowances
1.1 Obligation of Bulgaria under the Kyoto Protocol
1.1 What is the Member State’s greenhouse gas emission limitation or reduction obligation under
the Kyoto Protocol?
Bulgaria has committed to limit greenhouse gas emissions by 8 % in the period 2008-2012
compared to the base year 1988 (as a transition economy – Art.3.6. of KP). The base year for
carbon dioxide (СО2) and methane (СН4) is 1988, and the base year for perfluorocarbons,
hydrofluorocarbons and sulphur hexafluoride is 1995.
The latest calculation of greenhouse gas emissions for Bulgaria (2003) is 69167 Gg of CO2
equivalent, and the estimate of net emissions after taking into account the removals from the land-
use change and forestry sector - 62 111 Gg. This is more than 50 % below the obligation under the
Kyoto Protocol.
Assessment of the fulfilment of the obligation under the Kyoto Protocol and determination of
the total quantity of emissions
For the purposes of assessing the level of fulfilment of the obligations under the Kyoto Protocol, the
estimated aggregated emissions at macroeconomic level (row 1 of Table 11) are compared to the
Kyoto Protocol commitment corrected by emission reductions within approved and supported JI
projects, and assessment is carried out:
   -   On the extent to which the obligation is fulfilled;
   -   If the obligation is not fulfilled, the quantity of the necessary total emission reduction is
       determined.
The results are presented in Table 1:




                                                                                                       13
                   Table1. Planned anthropogenic emissions of greenhouse gases, Gg


Year                                           2007        2008        2009        2010        2011         2012
Overall anthropogenic GHG emissions in
                                             80 135,78   84 305,74   89 382,27   98 268,94   102 274,72   103 826,91
the country, Gg CO2 eqv.
Overall GHG emissions from sectors, not
                                             24 815,00   26 501,00   27 424,00   28 523,00   29 181,00    29 778,00
covered by the Scheme, Gg CO2 eqv
Overall GHG emissions from sectors,
                                             55 320,78   57 804,74   61 958,27   69 745,94   73 093,72    74 048,91
covered by the Scheme, Gg CO2 eqv
Overall CO2 emissions from sectors
                                             50 743,95   53 020,62   56 814,08   63 927,82   66 935,58    67 834,47
covered by the Scheme, Gg CO2
     Energy activities, including:
-electric power                              22 326,04   22 415,13   24 028,10   27 580,62   30 252,25    29 086,36
-combined production of heat and
                                             9 123,85    9 210,26    9 299,67    9 494,08     7 884,58     8 002,88
electric power
-heating – public sector                      905,77      953,17     1 000,57    1 047,97     1 095,37     1 142,77
-heating for industrial purposes and other
CP, incl.:
     Production of chemical products
                                              432,05      452,96      473,37      493,35      512,98       532,31
     and rubber
     Production of food and beverages         601,31      630,16      658,91      687,39      715,96       744,34
     Production of wood material and
     wood articles (expect wood               208,52      225,68      242,84      260,00      277,15       294,31
     furniture)
     Production of textile and textile
                                              188,31      201,05      213,80      226,55      239,30       252,04
     articles (except for apparel)
     Production and casting of non-
                                              156,68      160,29      163,63      166,74      169,65       172,39
     ferrous metals
     Production of machines, equipment
                                              105,21      108,86      112,28      115,51      118,56       121,46
     and household appliances
     Healthcare and social activities         353,20      371,68      390,17      408,65      427,13       445,62
     Agriculture and hunting and related
                                              219,18      230,65      242,12      253,59      265,06       276,53
     to them services
     Distribution of natural gas              219,00      219,00      219,00      219,00      219,00       219,00
Refineries and oil products                  2 389,74    2 533,13    2 685,11    2 846,22     3 017,00     3 198,01
Cement production                            4 588,08    4 933,63    5 376,48    7 139,70     7 359,82     7 579,94
Lime production                              1 596,71    1 692,56    1 779,31    1 866,07     1 952,82     2 039,57
Cellulose and paper production                530,72      582,32      663,69      706,58      748,70       788,49
Glass production                              371,94      375,68      379,81      383,57      387,04       388,42
Ceramics production                           199,20      202,96      206,90      210,12      213,12       215,95
Ferrous metallurgy                           5 897,92    6 045,62    6 166,23    6 261,12     6 350,20     6 434,28
Unknown new entrants                           0,00      1 000,00    2 000,00    3 000,00     4 000,00     5 000,00
Correction compulsory measures                330,53      475,82      512,08      560,99      729,91       899,81
Correction JI                                            3 200,87    3 200,87    3 200,87     3 200,87     3 200,87




                                                                                                                   14
1.2 Principles, assumptions and data applied to determine the contribution of
installations covered by the Directive
1.2 What principles, assumptions and data have been applied to determine the contribution of the
installations covered by the emissions trading Directive (total and sector historical emissions, total
and sector forecast emissions, least-cost approach)? If forecast emissions were used, please
describe the methodology and assumptions used to develop the forecasts.


Determination of the total quantity of allowances to be allocated
        Figures in row “Overall CO2 emissions from sectors covered by the Scheme” in Table 1 and
the next rows represent basic information for determination of emission allowances. Those
emissions are allocated to participant and not participating installations, and from them allowances
are set aside for both a part of necessary calculative reserves and reserves of emission allowances
for later allocation, and the allowances to be allocated under the current allocation plan. In
accordance with the requirements of the EU, the NAP plans for equal effort, equal right and equal
obligation to changes (increase or reduction) in emission levels for the two groups of emission
sources (participants and not participants) and preservation of the correlation of their emissions.
        In determining the emissions from sectors covered by the Scheme and installations
participating and not participating in the Scheme, the proportion of emissions from installations
                                           2003
covered by the Scheme for each sector V Sg to the total quantity of emissions from all installations
                            2003
in the respective sectors V Sg 0 for the country in 2003 is determined. This proportion is defined as
 Share2003 (share) of participants in the scheme for 2003 from total sector emissions. By
       Sg
                                                                                             2003
multiplying emissions planned for the period 2007–2012 (Table 1) by the shares ShareSg by
sectors, the volume of emissions by sectors and total for the county are determined that could be
covered by the Scheme from a macroeconomic viewpoint (Table 2). The table shows the two
corrections – for early credits and compulsory measures – by which the quantity of allocated
allowances is reduced.




                                                                                                    15
Table 2. Quantity of emissions by sectors total for the country, which could be covered by the
                       Scheme from a macroeconomic viewpoint, Gg
 Year                                       2007        2008        2009        2010        2011        2012
Total emissions of GHG from sectors
                                          50 743,95   53 020,62   56 814,08   63 927,82   66 935,58   67 834,47
covered by the scheme, Gg CO2
Total CO2 emissions from
installations participating in the        49 470,56   51 669,22   55 486,21   62 616,48   65 755,27   66 596,14
scheme, Gg CO2
     Energy activities, including:
-electric power                           22 326,04   22 415,13   24 028,10   27 580,62   30 252,25   29 086,36
-combined production of heat and
                                          8 061,03    8 161,78    8 240,50    8 411,68    6 994,50    7 097,19
electric power
-thermal energy – public sector            828,19      871,53      914,87      958,21     1 001,55    1 044,89
-thermal energy for industrial
purposes and other CP, incl.:
      Production of chemical products
                                           324,65      340,37      355,70      370,72      385,47      399,99
      and rubber
      Production of food and
                                           39,74       41,79       43,87       45,80       47,90       49,91
      beverages
      Production of wood material and
      articles thereof (except for         92,31       99,90       107,50      115,10      122,69      130,29
      wooden furniture)
      Production of textile and textile
                                           23,87       25,48       27,10       28,71       30,33       31,95
      articles (except for apparel)
      Production and casting of non-
                                           129,87      132,86      135,63      138,20      140,62      142,89
      ferrous metals
      Production of machines,
      equipment and household              28,83       29,84       30,77       31,66       32,49       33,29
      appliances
      Healthcare and social activities      3,77        3,96        4,16        4,36        4,55        4,75
      Agriculture, hunting and related
                                            7,18        7,56        7,94        8,31        8,69        9,06
      services
      Distribution of natural gas          182,49      182,49      182,49      182,49      182,49      182,49
Refineries and oil products               6 752,93    7 158,11    7 587,59    8 042,85    8 525,42    9 036,94
Cement production                         4 236,39    4 559,84    4 980,58    6 721,71    6 919,72    7 117,74
Lime production                            562,87      593,75      615,53      637,31      659,09      680,88
Production of cellulose and paper          375,46      412,98      480,26      509,05      537,08      562,77
Glass production                           354,05      357,45      361,26      364,73      367,93      369,07
Ceramics production                        154,33      157,21      160,34      162,80      165,11      167,27
Ferrous metallurgy                        4 986,56    5 117,20    5 222,02    5 302,16    5 377,39    5 448,42
Unknown new entrants                        0,00      1 000,00    2 000,00    3 000,00    4 000,00    5 000,00
Correction JI                                         3 200,87    3 200,87    3 200,87    3 200,87    3 200,87
Correction compulsory measures             330,53      475,82      512,08      560,99      729,91      899,81


        In accordance with the requirements of the EU, the NAP plans for equal effort, which means
equal right and equal obligation to changes (increase or reduction) in emission levels for the two
groups of emission sources (participants and non participants) and preservation of the correlation of
their emissions (Table 2, p.1.1.). After the determination of the various types of reserves for later
allocation and the calculative reserves, a table is structured that contains the overall quantity of
emission allowances by sectors and reserves for the country, which could be allocated within the
Scheme from a macroeconomic viewpoint.
        The overall volume of allowances to be allocated to registered participants is determined by
recalculating the projected and corrected quantity of sectors emissions (Table 2) is re-calculated
through setting aside out of the allowances of electric power sub-sector the quantity of emission
reductions for cancellation of allowances for indirect double counting of emission reductions as a
result of JI projects that were not accounted for in the macroeconomic forecast.



                                                                                                               16
       As a result of the "top-down” emission projections, after forming the respective reserves of
emission units and their subtraction from V Gj , the overall amount of emissions which, from a
macroeconomic viewpoint can be allocated between participants in the Scheme for the period
2007–2012 – V j (j=2007 - 2012) and the various types of reserves are determined. In Table 3, the
preliminary allocation of those allowances among sectors is determined (from a macroeconomic
viewpoint).




                                                                                                17
        Table3. Volumes of allowance by sectors and total reserves for the country, which could be allocated in the Scheme from a macroeconomic
                                                                      viewpoint, Gg
№         Year                                                                                 2007                   2008                 2009                 2010                  2011                    2012
1         Total allowances for registered installations                                     49 470 560             50 161 260           52 583 634           58 304 621            60 343 473              59 864 886
2.1            Energy activities, including:
2.1.1     -electric power                                                                   22 326 044             21 907 164           23 125 522           26 268 762            28 840 447              27 355 107
2.1.2     -combined production of heat and electric power                                    8 061 028              8 161 776            8 240 503            8 411 681             6 994 499               7 097 189
2.1.3     -thermal energy – public sector                                                     828 190                871 531              914 871              958 212              1 001 552               1 044 893
2.1.4     -thermal energy for industrial purposes and other CP, incl.:                           0                      0                    0                    0                     0                       0
                Production of chemical products and rubber                                    324 655                340 368              355 702              370 719               385 469                 399 989
                Production of food and beverages                                               39 739                 41 792               43 872               45 801                47 903                  49 909
                Production of wood material and wood articles thereof
                                                                                               92 309                 99 905              107 500              115 095               122 691                    130 286
                (except for wooden furniture)
                Production of textile and textile articles (except for
                                                                                               23 867                 25 483               27 098               28 714                30 330                    31 945
                apparel)
                Production and casting of non-ferrous metals                                  129 870                132 863              135 629              138 204               140 617                    142 888
                Production of machines, equipment and household
                                                                                               28 835                 29 836               30 773               31 657                32 493                    33 289
                appliances
                Healthcare and social activities                                               3 765                  3 962                4 159                4 356                 4 553                   4 750
                Agriculture, hunting and related services                                      7 185                  7 561                7 937                8 313                 8 689                   9 065
                Distribution of natural gas                                                   182 488                182 488              182 488              182 488               182 488                 182 488
3.        Refineries and oil products                                                        6 752 931              7 158 107            7 587 593            8 042 849             8 525 420               9 036 945
4.        Cement production                                                                  4 236 386              4 559 839            4 980 585            6 721 709             6 919 724               7 117 740
5.        Lime production                                                                     562 869                593 746              615 529              637 312               659 094                 680 877
6.        Cellulose and paper production                                                      375 463                412 976              480 258              509 054               537 076                 562 773
7.        Glass production                                                                    354 053                357 450              361 257              364 733               367 930                 369 065
8.        Ceramics production                                                                 154 328                157 212              160 342              162 805               165 106                 167 268
9.        Ferrous metallurgy                                                                 4 986 555              5 117 201            5 222 016            5 302 157             5 377 393               5 448 420
10.       Reserve of allowances for delayed installations                                    2 473 528              2 583 461            2 774 311            3 130 824             3 287 764               3 329 807
11.       Reserve of allowances for unknown new entrants                                         0                  1 000 000            2 000 000            3 000 000             4 000 000               5 000 000
12.       Reserve of allowances for new cogeneration                                           73 957                178 057              334 975              481 172               573 420                 932 252
13.       Calculative reserve for standardization of degrees/day                              148 686                148 686              148 686              148 686               148 686                 148 686
14.       Calculative reserve for compulsory measures                                         330 530                475 820              512 080              560 990               729 910                 899 810
          Allowances set aside for cancellation of allowances for
15.                                                                                               0                 3 022 740            3 654 029            4 321 929             4 494 430               4 881 861
          indirect double counting as a result of JI projects




Inter-ministerial Working Group for the development of the National Allocation Plan for greenhouse gas emission allowance trading in compliance with the requirements of Directive 2003/87/ЕС of the European             18
Parliament and the Council.                                                                                                                                                                                               18
       If the draft Decision of the European Commission regarding avoidance of double
counting of GHG emission reductions is approved, then, in compliance with the requirements
laid down in the Decision, the respective quantity of allowances will be set aside for JI projects
with a direct double counting effect.
       In determining the total quantity of allowances for allocation to installations, Bulgaria
applies a combination of two approaches – the “historical emissions level” approach and the
“forecast” approach.
        Historical emissions level – under this approach, the total number of allowances is
determined as the share of emissions emitted to the ambient air from installations covered by the
Scheme in the respective country. For Bulgaria, the historical emissions level approach is used to
define the base year.
        The determination of the quantity of allowances and their relation to the emissions of the
sources outside the Scheme is based on the following sources of information:
       -   National GHG Inventory for the year 2003;
       -   Company data based on a questionnaire, filled in by the operators of the installations;
       -   Data on sectors and installations from the National Statistical Institute;
       -   Data from the EEA on issued integrated permits and submitted requests for issuing an
           integrated permit.
        The National GHG Inventory for the year 2003 is an official document and the operators
sign a Declaration on the accuracy of data. Those data is compared to data from the National
Statistical Institute, the integrated permits and other available documents.
       Data about installations is collected pursuant to the EPA (SJ 75/27.09.2005). The
MOEW, in cooperation with the EEA, the RIEWs, other ministries and stakeholders, has
compiled a list of potential participants on the basis of available information. Announcements
have been published in the mass-media and at the MOEW web-page.
        The questionnaire used to collect data about installations has been developed by the
consultants and approved by members of the Working Group. Gathered information has been
used by the consultants from the Energy Institute, PLC to calculate the CO2 emissions of
installations covered by the Scheme based on data on fuel and raw materials consumption and
production outputs.
        Installations whose operators have provided sufficient and correct data in the
questionnaire are included in a list of participants and receive allowances in the current plan. The
total volume of emissions of registered installations for 2003 V R2003 is calculated as a sum of
the volumes V i of emissions from registered individual installations for 2003 (as provided in
the questionnaire and corrected during the verification process).
        V R2003= ∑ V i 2003 ,
       where “i” is the serial number of the installation in the Scheme.
       The volume of the reserve for not registered (delayed) installations V res 2003 is defined as
5% of emissions from registered installations:
        V res2003= 0 .05∗ V R2003


       Such a reserve is included for each year of the period 2007-2012, in order to allocate
emission allowances to installations, which will register after 30 November 2005.


                                                                                                 19
          Apart from determining the overall volume of emissions of the installations in 2003, data
   from the registered installations is also used to determine the volumes of emissions by sectors,
   according to the classification of the International Panel on Climate Change in order to compare
   those volumes with the volumes received during the inventory of GHG emission for 2003.
   Emissions from the following groups of sources have been determined:
       - Condensing TPP;
       - District Heating Cogeneration Plants;
       - District Heating Boilers
       - Auto-generation;
       - Refineries;
       - Ferrous metallurgy (fuels);
       - Production of cellulose and paper (fuels);
       - Other productions (fuels);
       - Production of ferrous metals (process emissions);
       - Cement production (process emissions);
       - Lime production (process emissions);
       - Glass production (process emissions);
       - Ceramics production (process emissions);
       - Cellulose and paper production (process emissions).
   The emissions calculated in this manner by groups of sources, are compared with the emissions
   in the 2003 inventory (Table 4).
       Table 4. Emissions of participating sectors and participating installations for 2003, kt CO2
                                                                                     Registered
                                                                All installations                   Share
Sector                                                                              installations
-electric power                                                    19 986,32          19 986,32     1,000
-combined production of heat and electric power                     9 048,00          7 966,831     0,881
-heating – public sector                                             736,00            672,96       0,914
-heating for industrial purposes and other CP, incl.:               2 022,11           699,39       0,346
      Production of chemical products and rubber                     328,32            246,71       0,751
      Production of food and beverages                               485,00             31,43       0,065
      Production of wood material and wood articles thereof
                                                                     152,60            67,55        0,443
      (except for wooden furniture)
      Production of textile and textile articles (except for
                                                                     138,80            17,59        0,127
      apparel)
      Production and casting of non-ferrous metals                   145,60            120,69       0,829
      Production of machines, equipment and household
                                                                        87,69          24,03        0,274
      appliances
      Healthcare and social activities                               287,00             3,06        0,011
      Agriculture, hunting and related services                      178,10             5,84        0,033
      Distribution of natural gas                                    219,00           182,49        0,833
Refineries and oil products                                         1 892,90         5 348,952      2,826
Cement production                                                   2 622,10         2 358,82       0,900
Lime production                                                     1 033,44          259,48        0,251
Cellulose and paper production                                       279,20           180,32        0,646
Glass production                                                     206,73           190,81        0,923
Ceramics production                                                  173,01           132,48        0,766
Ferrous metallurgy                                                  5 344,20         4 513,031      0,844

          The discrepancies in the aggregated overall volumes of emissions by groups of sources
   compared to the 2003 inventory have been assessed and, where necessary and possible, the
   reasons for such discrepancies were eliminated. Examples of such reasons include:
                 Considerable number of not registered installations;

   1
           Heating plants of Loukoil and Kremikovtsi are not included
   2
           The heating plant of Loukoil included
   3
           The heating plant Kremikovtsi included
                                                                                                      20
             Unconformity of emission factors;
             Incorrect data on production volumes;
             Incorrect data on fuels volumes.
            both in the inventory and in the installation data.
       Therefore, some operators of installations were invited to correct submitted data.
       As a result, the total volume of emissions from installations registered in the Scheme for
2003 ( V R2003 ) and the volume of the reserve for delayed installations ( V res 2003 ) have been
determined.
       It is expected that the total volume of emissions covered by the Scheme for 2003 V S 2003
is equal to the sum of the volume of emissions from registered installations ( V R2003 ) and the
reserve ( V res 2003 ).
       “Forecast” approach, where the total volume of emissions of installations is determined
on the basis of their share of projected development based on “business as usual”.
        In applying the forecast approach, the “top-down” and “bottom-up” principles are
applied. “Top-down” forecasts include official data on the expected GDP and GVA growth by
sectors. Based on those data an assessment is carried out of the relation between the growth of
the GVA and the change in the production volumes in the sectors, covered by the Scheme.
Another important component of the forecasting approach is the projection of the fuel and
energy balance of the country (final consumption of fuels and energy by sectors, least costs
development of the energy sector, primary gross consumption of fuels and energy). The
described forecasts are developed using the “business as usual” scenario.
         Projections take into account important policies with impact on climate change, such as
policies laid down in the Second National Plan on Climate Change 2005-2008, the Strategy on
Energy of Bulgaria, the National Long-term Programme on Energy Efficiency until 2015, the
National Long-term Programme on Promotion of Renewable Energy Sources 2005-2015 (in a
process of development), approved and supported joint implementation projects. Applicable
Directives 2003/96/ЕС, 96/61/ЕС, 2003/17/ЕС, 2002/91/ЕС, 2001/80/ЕС, 1999/13/ЕС,
2001/77/ЕС are taken into account, with the respective implementation timeframes and agreed
transition periods.
        The projection of the trends in emissions of carbon dioxide and other greenhouse gases has
been taken into consideration in the process of developing the NAP, as shown in Figure 1 below:
                                                                                            Figure 1




                                                                                                 21
                        Corrected forecast of aggregated GHG emissions until 2020,
                       and Kyoto target, based on the inventory for 2003, Gg CO2 eq.

                   160 000
                                                                                                                         127 283
                   140 000

                   120 000

                   100 000
         CO2-eq.




                    80 000

                    60 000

                    40 000

                    20 000

                        0
                             1988
                                    1989
                                           1990
                                                  1991
                                                         1992
                                                                1993
                                                                       1994
                                                                              1995
                                                                                     1996
                                                                                            1997
                                                                                                   1998
                                                                                                          1999
                                                                                                                 2000
                                                                                                                        2001
                                                                                                                               2002
                                                                                                                                      2003
                                                                                                                                             2004
                                                                                                                                                    2005
                                                                                                                                                           2006
                                                                                                                                                                  2007
                                                                                                                                                                         2008
                                                                                                                                                                                2009
                                                                                                                                                                                       2010
                                                                                                                                                                                              2011
                                                                                                                                                                                                     2012
                                                                                                                                                                                                 year



1.3 Determination of the total quantity of allowances to be allocated
1.3 What is the total quantity of allowances to be allocated (for free and by auctioning), and
what is the proportion of overall emissions that these allowances represent in comparison with
emissions from sources not covered by the emissions trading Directive? Does this proportion
deviate from the current proportion of emissions from covered installations? If so, please give
reasons for this deviation with reference to one or more criteria in Annex III to the Directive
and/or to one or more other objective and transparent criteria.

        The total quantity of allowances to be allocated in 2007 is 49,651 million tonnes СО2.
Total national greenhouse gas emissions in 2007 are projected to be 80,763 million tonnes СО2
eqv with existing measures and policies. The allocation of allowances represents 61.5% of the
overall emissions for 2007. It is expected that allowances for delayed installations, which
succeed to register before the submission of BNAP to the EU, and allowances for installations,
which will register later and for new entrants will be added to that quantity. Thus, the percentage
could increase to 64-65%. In 2003, the emissions from installations covered by the Directive
were 61% of overall national emissions. The increase in emissions will be a result of the
restoration of the construction materials industry that started in 2003 and is constantly increasing
by over 10% per year. As a result, a trend has been observed toward increase in emissions and
carbon intensity of the GDP. In 2005, this trend continued because of the implementation of a
range of infrastructure projects postponed for more than 15 years during the transition period. A
two-figure growth of the production volume of cement, lime and other construction materials
took place. Unsurprisingly, this growth has an impact on the volume of GHG emissions covered
by the Scheme. In addition, at the end of 2006, under an agreement between the Bulgarian
Government and the European Union, two nuclear power generation units with 880 MW total
capacity and producing over 12% of the production of electric energy in the country, will be
closed. The energy compensation will be on the account of combustion of lignite coals. An
increase of GHG emissions is expected of 5 million tonnes (6%). In reality, the increase in
emissions will be smaller, because in 2007 a rehabilitation of some capacities in the thermal
power stations will be carried out and therefore, their specific emissions will be reduced. Also,
after the closure of nuclear power capacities, the export of electric energy will considerably
decrease.
        The total quantity of allowances to be allocated to participants in the Scheme is
calculated as the volumes of emissions at national and sector level determined through
                                                                                                                                                                                                            22
macroeconomic forecast and corrected with the calculative reserves, namely: at a national level –
a new entrants, and a delayed installations reserve; in the “Energy activities” sector – a reserve
for new co-generation, a reserve for compulsory measures, a reserve for standardisation of
degrees/day of heating companies to compensate reduced consumption due to the higher than
average temperature during the base years, and a reserve for cancellation of allowances for early
credits and avoidance of indirect double counting.
Macroeconomic forecast for GHG emissions in the period 2005-2012 based on “business as
usual” scenario
        In determining the threshold emission limits/annum from participating installations, the
projection for overall national GHG emissions comprising all anthropogenic sources of
emissions plays a central role. In order to prepare a representative estimate, considerable amount
of work was performed within the short deadlines set for developing the NAP. As of 23 January
2006, the team had in place a projection for GHG emissions, based on the forecast
macroeconomic indicators of the country.
         The methodology used for the forecast includes the following steps:
1.      Macroeconomic forecast for the growth rate of GDP and GVA for the country and by
sectors for both covered and non-covered by the Scheme economic sectors, including the
following groups of industries:
       - Ferrous metallurgy
       - Cement production
       - Lime production
       - Glass production
       - Ceramics production
       - Cellulose and paper production.
2.    Elaboration of a macroeconomic assessment of the relation of the GVA growth with the
changes in the production volume in above groups of industries.
3.       Preparation of a forecast for the combustion energy balance of the country, including:
     -   A forecast for the final consumption of fuels and energy by sectors for both covered and
         non covered sectors, also by groups;
     -   A plan for least cost development of the electric power industry;
     -   A forecast for primary gross consumption of fuels and energy.
4.     Preparation of a detailed projection for the GHG emissions with a level of detail
corresponding to the level of detail in the forecasts under the above three points.
5.     Assessment of the effect of adopted policies and measures to reduce CO2 emissions in not
covered sectors.
        The approach applied to the preparation of the above mentioned forecasts is “business as
usual”. This approach does not take into account new measures, which are still not adopted as
official state policy and are especially directed to the reduction of emissions, particularly when
the purpose of this reduction is emission trading. This means, for example, that the assumption is
that energy efficiency, renewable energy sources and co-generation will develop on the basis of
the usual market mechanisms. The reduction of emissions will be stimulated through emission
trading and the reserve for new entrants determined in the NAP.
       At the various stages of the preparation of the forecast, the work has been performed by
the AEAF, NSI and MEE, with the assistance of Bulgarian and Dutch consultants. Information
from other ministries and agencies has been used as well, in order to cover all sectors of the
industry, agriculture and forestry, transport, services, households, public sector and waste.

                                                                                               23
      The forecast is based on the Government’s Programme for ensuring a rate of 5.5% GDP
growth. The main macroeconomic indicators are presented in the Table below.
            Table 5. Forecast for the GDP growth and production volume, billion leva
Year                                          2005   2006   2007   2008   2009   2010   2011   2012
GDP, prices as of 2003                        38,511 40,629 43,026 45,565 48,117 50,643 53,302 56,020
Actual GDP growth, %                             5,6    5,5    5,9    5,9    5,6   5,25   5,25    5,1
GVA, prices as of 2003                        33,595 35,443 37,570 39,899 42,213 44,450 46,984 49,615
   Including:
   services                                   19,993 21,093 22,358 23,744 25,121 26,453 27,961 29,527
   industry                                    9,904 10,448 11,075 11,762 12,444 13,104 13,850 14,626
   agriculture and forestry                    3,699 3,902 4,136 4,393 4,648 4,894 5,173 5,463
Production volume, current prices
   Industrial enterprises                     32,356 36,322 40,311 44,437 49,239 53,852 59,127 64,760
   Construction enterprises                    5,081 5,653 6,141 6,627 7,191 7,702 8,283 8,889
   Primary energy                              4,499 4,924 5,312 5,687 6,114 6,482 6,891 7,300



       The National Electrical Company (NEK), pursuant to the Energy Act, has prepared a
forecast for the consumption and production of electric energy until 2012. The expected average
annual growth of gross energy consumption is about two times lower than the GDP growth
(2.9% and 5.5%, respectively). Data is summarised in Table 6.
                                        Table 6. Forecasted energy balance
Year                                 2002     2003      2004     2005    2006       2007      2008    2009     2010       2011    2012
Production of electric energy, GWh   42 701   42 546   41 620   44 259   40 770    40 400    40 980   42 680   46 090   48 630   47 310
Consumption in the country, GWh      36 406   37 057   35 741   36 617   36 770    37 410    38 310   39 130   40 530   42 060   43 140
Maximum load, MW                     6 768    6 717    6 394     6 502   6 930     7 100      7 240   7 380    7 540    7 770     7 950
Export, GWh                          6 295    5 489    5 879     7 642   4 000     2 990      2 670   3 550    5 560    6 570     4 170



        NEK prepared also a plan for the functioning and development of the electric energy
system. The plan envisages closing some of existing capacities and opening new capacities. The
least cost plan allows determining the consumption of fuels for production of electric energy in
the thermal power plants and co-generation plants. Projections for GHG emissions from TPP and
co-generation have been prepared, based on the forecast for used fuels for production of
electricity and heating:
                 Table 7. Projection for GHG emissions from TPP and cogeneration
Year                                                 2007       2008       2009             2010      2011        2012
Condensing plants                    Gg.          22 326        22 415     24 028          27 580     30 252     29 086
Co-generation plants                 Gg            9 123        9 210      9 299           9 494      7 884       8 002
        The statistical analysis of production volumes by sectors is used to determine the
following forecast changes in production volumes until 2012 of functioning plants in the sub-
sectors with installations covered by the emission trading scheme:




                                                                                                                                 24
         Table 8. Index of production volumes of sectors participants in the scheme (except new
                              entrants and sleeping installations), 2003 =1
Sector                                                     2004    2005    2006    2007    2008    2009    2010    2011    2012
-heating – public sector                                   1,037   1,102   1,166   1,231   1,295   1,359   1,424   1,488   1,553
-heating for industrial purposes and other CP, incl.:      0,000   0,000   0,000   0,000   0,000   0,000   0,000   0,000   0,000
  Production of chemical products and rubber               1,111   1,182   1,250   1,316   1,380   1,442   1,503   1,562   1,621
  Production of food and beverages                         1,058   1,119   1,179   1,238   1,297   1,356   1,415   1,473   1,531
  Production of wood material and wood articles
                                                           1,029   1,142   1,254   1,366   1,479   1,591   1,704   1,816   1,929
  thereof (except for wooden furniture)
  Production of textile and textile articles (except for
                                                           1,081   1,173   1,265   1,357   1,449   1,540   1,632   1,724   1,816
  apparel)
  Production and casting of non-ferrous metals             0,986   1,019   1,049   1,076   1,101   1,124   1,145   1,165   1,184
  Production of machines, equipment and household
                                                           1,053   1,106   1,155   1,200   1,241   1,281   1,317   1,352   1,385
  appliances
  Healthcare and social activities                         1,037   1,102   1,166   1,231   1,295   1,359   1,424   1,488   1,553
  Agriculture, hunting and related services                1,037   1,102   1,166   1,231   1,295   1,359   1,424   1,488   1,553
  Distribution of natural gas                              1,000   1,000   1,000   1,000   1,000   1,000   1,000   1,000   1,000
Refineries and oil products                                1,060   1,124   1,191   1,262   1,338   1,419   1,504   1,594   1,689
Cement production                                          1,084   1,168   1,252   1,336   1,420   1,504   1,588   1,672   1,756
Lime production                                            1,084   1,168   1,252   1,336   1,420   1,504   1,588   1,672   1,756
Cellulose and paper production                             1,143   1,285   1,428   1,570   1,713   1,855   1,998   2,140   2,283
Glass production                                           1,038   1,070   1,098   1,123   1,145   1,165   1,183   1,200   1,216
Ceramics production                                        1,027   1,057   1,083   1,107   1,129   1,149   1,167   1,185   1,201
Ferrous metallurgy                                         1,022   1,050   1,074   1,096   1,117   1,136   1,154   1,170   1,186

         Based on those forecast indices and emissions from sectors covered by the Scheme for 2003,
         the projected emissions have been determined.




                                                                                                                           25
 Table 9. Macroeconomic projection “business as usual” for anthropogenic GHG emissions,
                                          Gg.
 Year                                          2007        2008        2009        2010        2011         2012
Obligation under the Kyoto Protocol,
Gg CO2 eqv.                                      -       127 283     127 283     127 283      127 283      127 283
Overall anthropogenic GHG emissions in
the country, Gg CO2 eqv.                     79 805,25   83 829,92   88 870,19   97 707,95   101 544,81   102 927,10
Overall GHG emissions of sectors not
covered by the Scheme, Gg CO2 eqv            24 815,00   26 501,00   27 424,00   28 523,00   29 181,00    29 778,00
Overall GHG emissions of sectors
covered by the Scheme, Gg CO2 eqv            54 990,25   57 328,92   61 446,19   69 184,95   72 363,81    73 149,10
Overall CO2 emissions of sectors covered
by the Scheme, Gg CO2                        50 413,42   52 544,80   56 302,00   63 366,83   66 205,67    66 934,66
Energy activities, including
-electric power                              22 326,04   22 415,13   24 028,10   27 580,62   30 252,25    29 086,36
-combined production of heat and
electric power                               9 123,85    9 210,26    9 299,67    9 494,08     7 884,58     8 002,88
-heating – public sector                      905,77      953,17     1 000,57    1 047,97     1 095,37     1 142,77
-heating for industrial purposes and other
CP, incl.:
      Production of chemical products
      and rubber                              432,05      452,96      473,37      493,35      512,98       532,31
      Production of food and beverages        601,31      630,16      658,91      687,39      715,96       744,34
      Production of wood material and
      wood articles thereof (except for
      wooden furniture)                       208,52      225,68      242,84      260,00      277,15       294,31
      Production of textile and textile
      articles (except for apparel)           188,31      201,05      213,80      226,55      239,30       252,04
      Production and casting of non-
      ferrous metals                          156,68      160,29      163,63      166,74      169,65       172,39
      Production of machines, equipment
      and household appliances                105,21      108,86      112,28      115,51      118,56       121,46
      Healthcare and social activities        353,20      371,68      390,17      408,65      427,13       445,62
      Agriculture, hunting and related
      services                                219,18      230,65      242,12      253,59       265,06       276,53
      Distribution of natural gas             219,00      219,00      219,00      219,00       219,00       219,00
Refineries and oil products                  2 389,74    2 533,13    2 685,11    2 846,22     3 017,00     3 198,01
Cement production                            4 588,08    4 933,63    5 376,48    7 139,70     7 359,82     7 579,94
Lime production                              1 596,71    1 692,56    1 779,31    1 866,07     1 952,82     2 039,57
Cellulose and paper production                530,72      582,32      663,69      706,58       748,70       788,49
Glass production                              371,94      375,68      379,81      383,57       387,04       388,42
Ceramics production                           199,20      202,96      206,90      210,12       213,12       215,95
Ferrous metallurgy                           5 897,92    6 045,62    6 166,23    6 261,12     6 350,20     6 434,28
Unknown new entrants                             0,00     1 000,00    2 000,00    3 000,00     4 000,00     5 000,00



Corrections of the macroeconomic projection “business as usual” for
compulsory measures that increase emissions and for reporting the amount of
emission reductions under JI projects
        The macroeconomic forecast “business as usual” does not take into account the impact of
non economic factors on GHG emissions. Those factors results from the official Government
policy and have a direct effect on covered installations. The factors are considered through
corrections of the forecast.
        The correction for compulsory measures which increase emissions is applied with the
purpose to issue additional allowances to installations which for the period 2007–2012 will
introduce compulsory measures that will increase emissions – for example, desulphurization
installations that use lime or limestone.


                                                                                                              26
                                           j
       The volume of the correction V RP for each year “j” is defined on the basis of planned
reduction of emissions of pollutants (mainly SO2) under the international obligations of the
country and is equal to the volume of emissions that will be generated as a result of the
application of the measures. These emissions increase the emissions in rows 1, 3 and 4 in Table
11.
       Correction for reporting the volume of emission reductions (including early credits)
under approved and supported JI projects Vcr (credits)
        The assigned amount units for the country reflect the admissible emissions of the country
under the Kyoto Protocol. “Joint Implementation” projects, within which early credits have been
approved, should be considered in the determination of the change in admissible emissions for
the country. Emission reductions which have been approved or supported for transfer to other
countries in the framework of JI projects as early credits, reduce the volume of AAUs for the
period 2008-2012. Emission reduction units as a result of already approved and supported JI
projects are accounted in the projections for GHG emissions, therefore, they also should be
considered here as a reduction of assigned amount units, following the guidelines of the
European Commission according to which those allowances should not be reallocated for a
second time.
The annual correction is equal to one fifth of the sum of already approved and planned for
approval early credits of all JI projects. It is accepted that the correction for early credits will be
expressed as a correction of the obligation under the Kyoto Protocol.
                     Table 10. Correction of the macroeconomic projection
№    Year                              2007       2008        2009        2010        2011        2012
     Compulsory measures, Gg
1.                                     330,53    475,82      512,08      560,99      729,91      899,81
     CO2 eqv.
     Approved early credits JI, Gg
2.                                               624,50      624,50      624,50      624,50      624,50
     CO2 eqv
     Supported early credits JI, Gg
3.                                               256,19      256,19      256,19      256,19      256,19
     CO2 eqv
     Approved emission reductions
4.                                              1 616,57    1 616,57    1 616,57    1 616,57    1 616,57
     JI, Gg CO2 eqv
     Supported emission
5.                                               703,60      703,60      703,60      703,60      703,60
     reductions JI, Gg CO2 eqv
     Total correction credits JI, Gg
6.                                              3 200,87    3 200,87    3 200,87    3 200,87    3 200,87
     CO2 eqv


       The correction for compulsory measures (Table 3, p.1.2) affects figures in Table 9 as an
increase in emissions for the period 2007 – 2012, and the correction for approved JI projects – as
a reduction of the obligations under the Kyoto Protocol. Thus, the corrected projection for GHG
emissions is calculated (Table 11):




                                                                                                    27
Table 11. Corrected macroeconomic projections for anthropogenic emissions of greenhouse
              gases with accounting compulsory measures and early credits
№           Year                                     2007        2008        2009        2010         2011        2012
            Corrected obligation under the                *
                                                      -        124 082     124 082      124 082     124 082     124 082
            Kyoto Protocol, Gg CO2 eqv.
            Overall anthropogenic GHG
1           emissions in the country, Gg CO2        80 136      84 306      89 382      98 269      102 275     103 827
            eqv.
            Overall GHG emissions from sectors
2           not covered by the Scheme, Gg CO2       24 815      26 501      27 424      28 523       29 181      29 778
            eqv
            Overall GHG emissions from sectors
3                                                   55 321      57 805      61 958      69 746       73 094      74 049
            covered by the Scheme, Gg CO2 eqv
            Overall emissions of CO2 from
4           sectors, covered by the Scheme, Gg      50 744      53 021      56 814      63 928       66 936      67 834
            CO2
            Free quantity of emission rights, Gg
5                                                               39 776      34 700      25 813       21 807      20 255
            CO2
        *
          In 2007, the country does not have obligation under the Kyoto Protocol, because the
First period of fulfilment of obligations starts in 2008.

1.4. Measures to reduce emissions applied to sources not covered by the Scheme,
energy policy
1.4 What policies and measures will be applied to the sources not covered by the emissions
trading Directive? Will use be made of the flexible mechanisms of the Kyoto Protocol? If so, to
what extent and what steps have been taken so far (e.g. advancement of relevant legislation,
budgetary resources foreseen)?
       The MOEW as a national coordinator of the implementation of the Second National
Action Plan on Climate Change cooperates with ministries and institutions responsible for the
implementation of the national measures. Their projections have been taken into account during
the development of the current Plan. The following measures to reduce emissions have been
planned for the various sectors:
Energy
         Energy Efficiency
        Due to the high energy consumption in the economy and the households, the energy
efficiency (EE) is a priority at national, sector and regional level. The Energy Efficiency Act and
four regulations on EE4 form the legal framework for its introduction in sites with considerable
energy consumption in industry, transport, services, households and agriculture.
        The National long-term programme on energy efficiency contains prognoses for
unfavourable trends in the development of the primary and final energy consumption until 2015
as a result of the economic development and the substitution of consumption of energy by solid,
liquid and gas fuels, for whose compensation a range of legal, financial and organizational
measures have been developed.
       Funding projects in the EE field is a task of the Energy Efficiency Fund. Other credit
lines and programmes also are used to finance the implementation of EE measures and the
combination of EE with renewable energy sources.

4
  Regulation on energy characteristics of sites (SJ 108/2004), Regulation on preservation of heat and savings of
energy in buildings (SJ 5/2005), Regulation on certification of buildings for energy efficiency (SJ 108/2004),
Regulation on energy efficiency auditing (SJ 112/2005), Regulation on circumstances and procedures on registering
the persons who carry out certification of buildings and energy efficiency audits, and provision of information (SJ
5/2005)
                                                                                                                    28
       Renewable energy sources
       The promotion of renewable energy sources (RES) as part of the harmonization of the
Bulgarian legislation with the Community legislation is regulated in the Law on the Energy.
Mechanisms to promote the use of RES comprise preferential prices for purchase of energy
generated from RES and using combined technologies.
        An important element of the policy of Bulgaria regarding the promotion of RES is the
promotion of increased use of biomass and liquid bio-fuels. Other areas of interest include the
construction of hydroelectric power plants and the use of wind and geothermal energy. It is
envisaged that the percentage of hydroelectric power stations in the overall energy consumption
will reach indicatively 10-11% in 2010. A National Long-term Programme on Promotion of
Renewable Energy Sources 2005-2015 is in a process of development whose aspects and
forecasts related to climate change have been considered in the development of the NAP.
Industry
        In relation to the restructuring of the industry toward higher energy efficiency and
application of measures to reduce energy consumption by the new owners after the privatization,
a reduction of about 52% in the sum of process and combustion emissions in this sector was
registered in 2003, compared to the base year 1988.
       Measures applied in this sector include reduction of thermal losses, promotion of the use
of natural gas in the industry, monitoring of energy consumption in the industry, modernisation
of steam and condensed air installations and introduction of highly efficient construction
equipment. In the cement industry a portion of the fuel will be substituted for car tyres and other
combustible waste.
Households and services
        In this sector the measures include: gasification of households and ensuring finances
(through various projects, including “Joint Implementation”) for the introduction of solar
collectors, hybrid installations for hot water and other measures to reduce energy consumption.
Transport
       Measures to reduce energy consumption in this sector include establishment of dispatcher
systems for the control of cargo and railway transport, modernization of the railways and the
urban public transport, improvement of the infrastructure and use of bio-fuels.
Kyoto Protocol Mechanisms
        Bulgaria assists the implementation of the mechanisms under the Kyoto Protocol and will
continue to do so. The mechanism “joint implementation” (Art. 6 of KP) is considered an
important initiative to attract investments in energy efficiency, renewable energy sources, co-
generation and new low carbon and carbon free technologies. Bulgaria has developed and is
implementing rules and criteria for assessment of “joint implementation” projects. Twelve
projects have been approved and some of them have already started.
       Directive 2004/101/ЕС, amending the Emission trading Directive 2003/87/ЕС, also known
as “Linking Directive”, establishes a link between the Community Emission trading scheme and
the mechanisms under the Kyoto Protocol. This is a result of the efforts to investigate
economically efficient measures for companies with the purpose to reduce GHG emissions. The
emission reduction units from the “joint implementation” projects and the certified emission
reductions from “clean development” projects (Art. 12 of Kyoto Protocol) are allowed to
contribute up to a certain limit to the fulfilment of the obligations of operators under the
European Emission trading scheme, i.e. they are considered as equal units to the allowances.
      However, the Linking Directive reduces the scope and opportunities for implementation
of such projects, especially for new Member States which also are hosting “joint
                                                                                                29
implementation” projects. This occurs as a result of the requirement of the European Union to
avoid the so-called direct and indirect double counting of reduced GHG emissions (i.e. emissions
reduced under “Joint Implementation” project can not be allocated to installations within the EU
ETS).
        In order to avoid double counting of reduced emission as a result of projects with direct
effects, the same quantity of allowances is cancelled from the installation where the reduction is
achieved as is the quantity of emission reduction units transferred to another country under the
“joint implementation” project.
       Indirect effect of the double counting occurs in such JI projects which lead to reduction in
the energy consumption in the network and to the production of electricity (energy efficiency or
renewable energy sources). Such projects are implemented for installations outside the scope of
the Scheme but have an effect on the installations participating in the Scheme.
        In order to avoid the double counting of JI projects, allowances are set aside. For the
direct double counting this quantity is taken from the allowances of the specific installation
where the reduction has been achieved. For the indirect double counting allowances are taken
from the allowances of the production of electric energy sector.
        During the Second period (2008-2012), the maximum share of ERUs and CER for
fulfilment of the obligations of operators is limited to 20% of the allowances allocated to them.


1.5 Taking into account the national energy policy
1.5 How has national energy policy been taken into account when establishing the total quantity of
allowances to be allocated? How is it ensured that the total quantity of allowances intended to be
allocated is consistent with the Member State’s target under Decision 2002/358/EC or under the
Kyoto Protocol?
        The objectives for climate change are harmonized with the main strategic objective
“rational use of energy sources” laid down in the National Energy Strategy adopted in 2002, and
with the objectives of the National Long-term Programme on Promotion of Renewable Energy
Sources (in process of development). In addition to the direct effect on reduction in emissions,
the policies and measures presented in p.1.4 to promote energy efficiency and the use of
renewable energy sources, contribute to the reduction of the import energy dependence of the
country and represent structural measures of the national energy policy. Considerable potential to
reduce energy consumption and therefore to limit the production of energy and the quantity of
allowances for the energy production exists in sectors which are not directly covered by
Directive 2003/87/ЕС (e.g. households, transport).
      The National Energy Strategy and the National Long-term Programme on Promotion of
Renewable Energy Sources contain the following measures:
Production of heat and electricity:
   Maintain the share of nuclear power in the total energy balance of the country through the
    construction of new nuclear capacities;
   Increase the share in the national energy balance of power generation plants using natural
    gas;
   Priority construction of plants for combined production of thermal and electric power;
   Increase the share of the production of energy from renewable sources in the national energy
    balance by applying preferential policies for their development;
   Performing the rehabilitation of production capacities in large thermal power plants whose
    generating capacity will exceed 20,000 hours after 2008.

                                                                                                     30
Distribution of electricity and heating:
 Reduce losses in the electricity distribution lines, heating and gas systems;
 Gasification of households to replace consumption of electrical energy and heavy fuel oil
Use of renewable energy sources
 Use of biomass for heating and production of electrical and heat energy
 Construction of hydroelectric power plants
 Use of geothermal resources
 Increase of energy produced by wind generators
 Solar thermal and photovoltaic panels
        For most of those measures the mechanisms of the Kyoto Protocol may be used for
attraction of investments and they could be performed through “joint implementation” projects.
1.6 Application of the criteria of Annex ІІІ to the Directive
1.6 How is it ensured that the total quantity of allowances to be allocated is not more than is likely to
be needed for the strict application of the criteria of Annex III to the Directive? How is consistency
with the assessment of actual and projected emissions pursuant to Decision 93/389/EEC ensured?

         Bulgaria’s NAP has been developed completely in compliance with the criteria of Annex
ІІІ to the Directive. Historical data on emissions and projections is official for the country and
are performed independently of the development of the NAP. Incorrect data is not expected.
       The total quantity of allowances to be allocated for the year 2007 is determined in the
range of projected emissions with the application of existing measures. All assessments of
emissions, both actual and projected, are consistent with Decision 93/398/ЕЕС.
                                                                                                         Figure 2
        Projected top-down emissions and allocation during the period 2007-2012

  100 000

   90 000
   80 000

   70 000

   60 000

   50 000
   40 000

   30 000

   20 000

   10 000

        0
         2007               2008                  2009                   2010                  2011                 2012

                           Total anthropogenic GHG emissions in the country, Gg CO 2 eqv.
                           Total GHG emissions of sectors participating in the Scheme, Gg CO 2 eqv
                           Total allowances of installations participating in the Scheme, allowances * 1000




                                                                                                              31
1.7. – 1.9 Taking into account the potential to reduce emissions and the
Community legislation. No provision to auction allowances.
1.7 Please explain in Section 4.1 below how the potential, including the technological potential,
of activities to reduce emissions was taken into account in determining the total quantity of
allowances.
       See Section 4.1 below.
1.8 Please list in Section 5.3 below the Community legislative and policy instruments that were
considered in determining the total quantity of allowances.
       See Section 5.3 below.
1.9 If the Member State intends to auction allowances, please state the percentage of the total
quantity of allowances that will be auctioned, and how the auction will be implemented.
        Bulgaria does not intend to auction allowances at the first allocation. During initial
allocation to installations, all allowances within the National Allocation Plan for 2007 and the
National Allocation Plan for 2008-2012 will be allocated free of charge.
2. Determination of the quantity of allowances at sector level
2.1 By what methodology has the allocation been determined at sector level? Has the same
methodology been used for all activities? If not, explain why a differentiation depending on
activity was considered necessary, how the differentiation was done, in detail, and why this is
considered not to unduly favour certain sectors within the Member State.
        The allocation is made first at sector level, and then – at installation level within the
sectors.
        At sector level, the quantity of allowances to be allocated to the installations in the sector
is calculated as a ratio of the sum of verified projected emissions of the installations covered by
the Scheme to the projection for the sector calculated according to the approaches described in
section 1.2. The data received from the application of the two approaches – “top-down” and
“bottom-up” is compared to clarify any inconsistency. Received data is compared also with the
data of the National greenhouse gas inventory for 2003, ensuring the compatibility of calculated
quantity of allowances with the obligation of the country under the Kyoto Protocol. This process
is described in more details in the current section:
       The following sectors, listed in Annex І to the Directive, are included in Bulgaria’s NAP:
        Energy activities (except hazardous or municipal waste incinerators)
        Production and processing of ferrous metals
        Mineral industry
        Cellulose and paper production.
       A uniform allocation methodology is used for all sectors.
       The allocation at sector level is based on historical emissions for the period 2002-2004, as
a base year is selected. The base year is the average of the emissions in the two years with
highest emissions from the years 2002, 2003 и 2004. For installations which have not functioned
in two of those years, the base year is the last year of operations.
        Based on submitted and verified data on the production activity of each installation,
historical emissions of installations were calculated and data is determined for the “base year”
for each installation. The application of the concept “base year” is necessary in order to avoid the
effect of accidental reduction of emissions of installations due to incidental crises or long repairs
and modernization. The base year is the average of the emissions in the two years with highest
emissions from the years 2002, 2003 и 2004.
                                                                                                   32
       The calculated volume of the emissions from the installations for the “base year” is
               bg
expressed as E i (i – serial number of the installation, g – number of the sector)
                                        bg
       Emissions in the base year E for each sector “g” are calculated as a sum of the
                                                                                                 bg
emissions of all installations in the respective sector in the base year for each installation E i :
        E bg = ∑ E bg
                   i
               i      .
       The determination of the quantity of allowances to be allocated in each sector and their
proportion to the emissions from sources outside the scheme is based on two sources of
information:
           National GHG Inventory for the year 2003;
           Company data based on a questionnaire, filled in by the operators of the
              installations.
       The total quantity of emissions from registered installations is determined as a sum of the
emissions of the individual registered installations (submitted in the questionnaires and corrected
during the verification with official data from the NSI, the integrated permits and other sources).
This quantity is compared to the data from the inventory.
        In addition to calculating the total quantity of emission volumes from participating
installations, the data for registered installations is used for calculating emissions by sectors
according to the IPCC classification in a way that the quantity of emissions is comparable to
those from the inventory of the GHG emissions for 2003.
Emissions from the following groups of sources have been determined:
    1 Condensing TPP;
    2 District Heating Cogeneration Plants;
    3 District Heating Boilers
    4 Auto-generation;
    5 Refineries;
    6 Ferrous metallurgy (fuels);
    7 Production of cellulose and paper (fuels);
    8 Other productions (fuels);
    9 Production of ferrous metals (process emissions);
    10 Cement production (process emissions);
    11 Lime production (process emissions);
    12 Glass production (process emissions);
    13 Ceramics production (process emissions);
    14 Cellulose and paper production (process emissions).
        The quantity of allowance allocated to a given sector is corrected with calculative
reserves and is distributed between installations. The quantity of allowances allocated to each
installation each year is proportional to the product of emissions from the installations during the
base year corrected with the projected increase in emissions in the sector compared to the base
year.
        The calculated quantity of allowances for each installation is limited by the installation
capacity. The surplus of allowances over the production capacity of the installation shall be re-
allocated to the other installations in the sector proportionally to the volume of their emissions
during the base year. Installation capacity means the maximum annual production output defined
in the integrated permit, and when no permit is issued, 90 % of the annual projected capacity or
of the reached maximum production in the period 1988–2004.
        This method ensures equality between installations in the respective sector, and
installations are provided equal opportunities (percentage equal to the average percentage of

                                                                                                 33
increase in emissions in their sector) to increase their production volume compared to the “base
year” until reaching full production capacity.
        At the second stage of allocation, the quantity of allowances of installations is corrected
with the quantity of the reserves of emission allowances necessary for the implementation of
compulsory measures, for standardisation of the degrees/day, for new entrants and delayed
installations and for new cogeneration.

Allocation of emission allowances by sectors
“Bottom-up” projections for emissions of registered installations by sectors
        The allocation of the determined overall volumes of emissions to participants in the
scheme is based both on projected emissions as developed in p.2.3 using the “top-down”
approach applied to calculate projected emissions, and the “bottom-up” approach from the
installations. The “bottom-up” projection is based on development forecasts carried out by the
operators of the installations. They are collected through the questionnaires and are part of the
registration of each installation.
        The sectors defined are the same as in p. 2.3.1. Based on data received from operators of
installations, the overall emissions by sectors and sub-sectors are determined – total seven
sectors and four sub-sectors for each year j of the period. In this case, sub-sectors are treated as
sectors.
For a sector “g”:
V Sg = ∑ V ig
  j         j
       i         ,
        j
where V Sg - projected emissions from a sector “g” for a year “j” – approach “bottom-up”
              j
           V ig - projected emissions from an installation “i” of a sector “g” for a year “j” –
                         approach “bottom-up”
Total for participants in the Scheme for year “j” using the “bottom-up” approach:
V S = ∑ V Sg
  j       j
                          j
      g         , where V S – projected emission for one year “j” – “bottom-up” approach
       Thus, projections for emissions are calculated for each sector (sub-sector) and overall
emissions of all sectors – functioning installations (Table 12), known new entrants (Table 13),
sleeping installations (Table 14) and known new cogeneration (Table 15) – “bottom-up”




                                                                                                  34
       Table 12. Projected CO2 emissions by sectors (bottom-up), kt – functioning installations
Year                                       2007        2008        2009        2010        2011        2012
Overall CO2 emissions from
installations covered by the Scheme,     48 370,40   52 330,52   54 128,25   55 789,17   56 208,07   55 861,47
Gg CO2
Energy activities, including
-electric power                          19 957,35   23 822,18   25 347,53   26 824,33   27 129,13   27 765,81
-combined production of heat and
                                         8 751,07    8 682,87    8 871,03    8 964,31    8 999,31    7 962,76
electric power
-heating – public sector                  660,19      671,67      686,87      695,12      706,54      717,66
-heating for industrial purposes and
other CP, incl.:
     Production of chemical products
                                          365,14      397,02      397,02      397,02      397,02      397,02
     and rubber
     Production of food and
                                          72,71       76,51       79,37       86,82       89,78       90,65
     beverages
     Production of wood material and
     wood articles thereof (except for    84,83       85,80       86,78       87,75       88,72       89,70
     wooden furniture)
     Production of textile and textile
                                          27,82       28,84       29,85       30,86       31,88       32,89
     articles (except for apparel)
     Production and casting of non-
                                          187,92      174,10      178,99      184,14      187,36      190,90
     ferrous metals
     Production of machines,
     equipment and household              47,01       94,38       96,61       98,13       99,53       100,96
     appliances
     Healthcare and social activities      3,68        4,09        4,09        4,09        4,09        4,09
     Agriculture, hunting and related
                                           9,79       10,31       10,60       10,60       10,60       10,60
     services
     Distribution of natural gas          181,09      181,09      181,09      181,09      181,09      181,09
Refineries and oil products              7 410,01    7 418,02    7 426,03    7 434,04    7 442,06    7 442,06
Cement production                        3 309,55    3 309,55    3 309,55    3 309,55    3 309,55    3 309,55
Lime production                           338,06      369,53      377,53      394,62      395,01      395,66
Cellulose and paper production            213,35      215,84      217,47      219,84      222,59      224,94
Glass production                          300,41      300,41      300,41      300,41      300,41      303,10
Ceramics production                       228,53      233,21      250,52      257,72      261,63      267,43
Ferrous metallurgy                       6 221,87    6 255,10    6 276,91    6 308,72    6 351,77    6 374,61

         Table 13. Projected CO2 emissions by sectors (bottom-up) – known new entrants, kt
Year                                       2007        2008        2009        2010        2011        2012
Ceramics production                        2,03        2,03         2,51        2,51        2,51        2,51
Glass production                          121,22      120,41      120,41      120,41      120,41      118,58
Cement production                         373,02      373,02      435,19     2 389,74    2 389,74    2 389,74
Ferrous metallurgy                         37,88       75,76       94,70       94,70       94,70       94,70
Electric power                             0,00        0,00         0,00     2 669,67    5 420,23    5 420,23




                                                                                                        35
         Table 14. Projected CO2 emissions by sectors (bottom-up) – sleeping installations, kt
Year                                              2007       2008        2009         2010        2011        2012
Lime production                                  216,26     225,35      225,35     225,35        225,35      225,35
Ceramics production                               5,66       5,66        5,66         5,66        5,66        5,66
Glass production                                  18,55      18,55       18,55        18,55       18,55      18,55
Cellulose and paper production                    92,36     104,17      145,76     148,86        151,18      151,18
Cement production                                712,48     837,92      998,48     587,05        587,05      587,05
-heating for industrial purposes and other CP,
                                                  0,82       1,02        1,25         1,34        1,60        1,78
production of food and beverages
Electric power                                   2 591,39   2 591,39    1 969,46   2 498,19     2 498,19    2 498,19
Combined production of heating and electric
                                                  23,55     154,02      154,02     154,02        154,02      154,02
power
Ferrous metallurgy                                0,33       0,54        0,61         0,68        0,75        0,89

        Table 15. Projected CO2 emissions by sectors (bottom-up) – known new cogeneration
                                          installations, kt
Year                                  2007         2008         2009          2010             2011         2012
Cogeneration                         205,89       281,79       281,79        347,79           347,79       335,448


            The sum of all projections for the emissions of participating installations, known new
     entrants, sleeping installations and known new cogenerations represents the projected CO2
     emissions by sectors (“bottom-up”) and is shown on Table 16.




                                                                                                               36
         Table 16. Projected CO2 emissions by sectors (bottom-up) - kt
                                               2007        2008        2009        2010        2011        2012
Overall CO2 emissions from installations
                                             50 180,44   54 530,76   56 612,53   62 555,48   65 727,60   65 367,16
registered in the Scheme, Gg CO2
Energy activities, including
-electric power                              19 957,35   23 822,18   25 347,53   29 493,99   32 549,36   33 186,04
-combined production of heat and electric
                                             8 980,51    9 118,68    9 306,84    9 466,11    9 501,11    8 452,23
power
-heating – public sector                      660,19      671,67      686,87      695,12      706,54      717,66
-heating for industrial purposes and other
CP, incl.:
     Production of chemical products and
                                              365,14      397,02      397,02      397,02      397,02      397,02
     rubber
     Production of food and beverages         73,53       77,53       80,62       88,16       91,38       92,43
     Production of wood material and
     wood articles thereof (except for        84,83       85,80       86,78       87,75       88,72       89,70
     wooden furniture)
     Production of textile and textile
                                              27,82       28,84       29,85       30,86       31,88       32,89
     articles (except for apparel)
     Production and casting of non-
                                              187,92      174,10      178,99      184,14      187,36      190,90
     ferrous metals
     Production of machines, equipment
                                              47,01       94,38       96,61       98,13       99,53       100,96
     and household appliances
     Healthcare and social activities          3,68        4,09        4,09        4,09        4,09        4,09
     Agriculture, hunting and related
                                               9,79       10,31       10,60       10,60       10,60       10,60
     services
     Distribution of natural gas              181,09      181,09      181,09      181,09      181,09      181,09
Refineries and oil products                  7 410,01    7 418,02    7 426,03    7 434,04    7 442,06    7 442,06
Cement production                            4 395,06    4 520,49    4 743,22    6 286,33    6 286,33    6 286,33
Lime production                               554,32      594,88      602,88      619,98      620,37      621,01
Cellulose and paper production                305,71      320,01      363,23      368,70      373,77      376,12
Glass production                              440,18      439,37      439,37      439,37      439,37      440,22
Ceramics production                           236,22      240,90      258,69      265,89      269,80      275,60
Ferrous metallurgy                           6 260,08    6 331,39    6 372,22    6 404,10    6 447,22    6 470,20


Reconciliation of the quantity of emission allowances by sectors
        The above “bottom-up” projections by sectors, sub-sectors and total is compared to the
macroeconomic projection derived in p.2., and presented in Table 20. At this stage, both the
differences in the two projections – bottom-up and top-down, and the difference between the
forecast for 2004 (top-down) and the reported data for installations for the same year - should be
overcome. In case of difference in data for 2004, a correction of the “top-down” projection is
undertaken.
       When the differences in the projections for the period 2005-2012 are insignificant, the
decision for a compromise projection could be taken at the level of the Inter-ministerial working
group and between ministries.
       When the differences are considerable and lead to a risk of non-implementation of the
commitments under the Kyoto Protocol, a complete and detailed revision of “bottom-up”
forecasts and projections of sectors is undertaken. The revision covers an assessment of the
                                                                                                            37
estimated production volumes and of the compliance of those volumes with the state policy
taken into account in the macroeconomic “top-down” forecast. The branch organizations are also
involved in discussions on the revision.
       As a result of the activities mentioned above, it is expected that a consensus will be
reached regarding projected CO2 emissions by sectors and sub-sectors for the period 2007–2012.
Determined projections of emission volumes are presented in a table, which repeats the structure
                                                                                              j
of Table 6 in section 3.1. Compromise volumes of emissions (allowances) are expressed by V g ,
where “j” means the specific year, and “g” – a specific sector.




                                                                                             38
                Table 17. Comparison between the macroeconomic projection and the bottom-up projection for registered installations
№          Year                                                                                    2007              2008              2009               2010              2011                2012
           Overall allowances for registered installations – macroeconomic
1                                                                                               49 470 560        50 161 260        52 583 634        58 304 621        60 343 473         59 864 886
           projection
           Overall allowances for registered installations – bottom up projection               50 180 444        54 022 797        55 709 952        61 243 618        64 315 800         63 635 910
2.1        Energy activities, including
2.1.1      Electric power – macroeconomic projection                                            22 326 044        21 907 164        23 125 522        26 268 762        28 840 447        27 355 107
           Electric power – bottom-up projection                                                19 957 347        23 314 214        24 444 958        28 182 136        31 137 556        31 454 792
2.1.2      Combined production – macroeconomic projection                                        8 061 028         8 161 776         8 240 503         8 411 681         6 994 499         7 097 189
           Combined production – bottom-up projection                                            8 980 512         9 118 680         9 306 839         9 466 113         9 501 113         8 452 229
2.1.3      Heating power – public sector – macroeconomic projection                               828 190           871 531           914 871           958 212          1 001 552         1 044 893
           Heating power – public sector – bottom-up projection                                   660 188           671 668           686 867           695 115           706 538           717 656
2.1.4      Heating for industrial purposes
                Production of chemical products and rubber – macroeconomic
                                                                                                 324 655            340 368           355 702           370 719           385 469           399 989
                projection
                Production of chemical products and rubber – bottom-up
                                                                                                 365 140            397 017           397 017           397 017           397 017           397 017
                projection
                Production of foods and beverages – macroeconomic projection                      39 739            41 792            43 872             45 801            47 903               49 909
                Production of foods and beverages – bottom-up projection                          73 531            77 529            80 617             88 161            91 385               92 433
                Production of woods and wood products (except furniture) –
                                                                                                  92 309            99 905            107 500           115 095           122 691           130 286
                macroeconomic projection
                Production of woods and wood products (except furniture) –
                                                                                                  84 830            85 803            86 777             87 750            88 724               89 697
                bottom-up projection
                Production of textile and textile products (except for apparel) –
                                                                                                  23 867            25 483            27 098             28 714            30 330               31 945
                macroeconomic projection
                Production of textile and textile products (except for apparel) –
                                                                                                  27 824            28 837            29 850             30 863            31 876               32 889
                bottom-up projection
                Production and casting of non-ferrous metals – macroeconomic
                                                                                                 129 870            132 863           135 629           138 204           140 617           142 888
                projection
                Production and casting of non-ferrous metals – bottom-up
                                                                                                 187 925            174 098           178 985           184 139           187 363           190 902
                projection
                Production of machines, equipment and household appliances –
                                                                                                  28 835            29 836            30 773             31 657            32 493               33 289
                macroeconomic projection

№                Year                                                                              2007              2008              2009               2010              2011                2012
                 Production of machines, equipment and household appliances –
                                                                                                  47 007            94 377            96 613             98 128            99 529           100 958
                 bottom-up projection


Междуведомствена работна група за разработване на Национален план за разпределение на квоти за търговия с емисии на парникови газове в съответствие с изискванията на Директива 2003/87/ЕС на            39
Европейския парламент и на Съвета                                                                                                                                                                        39
              Health protection and social activities – macroeconomic
                                                                                   3 765          3 962          4 159           4 356          4 553          4 750
              projection
              Health protection and social activities – bottom-up projection       3 684          4 094          4 094           4 094          4 094          4 094
              Agriculture and hunting and related to them services –
                                                                                   7 185          7 561          7 937           8 313          8 689          9 065
              macroeconomic projection
              Agriculture and hunting and related to them services – bottom-up
                                                                                   9 791          10 312         10 599         10 599         10 599          10 599
              projection
              Distribution of natural gas – macroeconomic projection              182 488        182 488        182 488         182 488        182 488        182 488
              Distribution of natural gas – bottom-up projection                  181 094        181 094        181 094         181 094        181 094        181 094
3.       Refineries – macroeconomic projection                                   6 752 931      7 158 107      7 587 593       8 042 849      8 525 420      9 036 945
         Refineries – bottom-up projection                                       7 410 007      7 418 019      7 426 031       7 434 043      7 442 055      7 442 055
4.       Cement– macroeconomic projection                                        4 236 386      4 559 839      4 980 585       6 721 709      6 919 724      7 117 740
         Cement – bottom-up projection                                           4 395 057      4 520 494      4 743 225       6 286 333      6 286 333      6 286 333
5.       Lime – macroeconomic projection                                          562 869        593 746        615 529         637 312        659 094        680 877
         Lime – bottom-up projection                                              554 321        594 884        602 879         619 977        620 365        621 012
6.       Cellulose and paper – macroeconomic projection                           375 463        412 976        480 258         509 054        537 076        562 773
         Cellulose and paper – bottom-up projection                               305 711        320 015        363 226         368 699        373 772        376 119
7.       Glass – macroeconomic projection                                         354 053        357 450        361 257         364 733        367 930        369 065
         Glass – bottom-up projection                                             440 180        439 369        439 369         439 369        439 369        440 225
8.       Ceramics – macroeconomic projection                                      154 328        157 212        160 342         162 805        165 106        167 268
         Ceramics – bottom-up projection                                          236 221        240 901        258 695         265 887        269 799        275 603
9.       Ferrous metallurgy – macroeconomic projection                           4 986 555      5 117 201      5 222 016       5 302 157      5 377 393      5 448 420
         Ferrous metallurgy – bottom-up projection                               6 260 075      6 331 393      6 372 218       6 404 099      6 447 219      6 470 203


* NOTE: The two projections for the electric power sector differ considerably because the projection for the installations assumes that the installations will not
improve their indicators in the period 2003-2012. The macroeconomic forecast assumes that as a result of the rehabilitation of power capacities, installations’
indicators will improve and specific emissions for the production of kWh electric power will be reduces by some 10 %.




                                                                                                                                                                        40
        For 2007, the difference between the aggregated projected emissions by installations and
by macroeconomic forecast exceeds 10%, therefore it is necessary to apply a compromise
projection for the emissions in 2007.
  Table 18. Compromise projection for CO2 emissions by sectors for 2007, t (allowances)

   №      Sector/Year                                                    2007
          Energy activities, including
   1.     Electric energy                                             22 326 044
   2.     Combined production                                         8 061 028
   3.     Heating power, public sector                                 744 189
   4.     Heating power for industrial purposes                        933 379
   5.     Refineries                                                  6 752 931
   6.     Cement                                                      4 395 057
   7.     Lime                                                         554 321
   8.     Cellulose and paper                                          305 711
   9.     Glass                                                        397 116
   10.    Ceramics                                                     195 275
   11.    Ferrous metallurgy                                          4 986 555
          Total                                                       49 651 606


2.2 If the potential, including the technological potential, of activities to reduce emissions was
taken into account at this level, please state so here and give details in Section 4.3 below.

         The technological potential is not taken into account at this level.

2.3 If Community legislative and policy instruments have been considered in determining
separate quantities per activity, please list the instruments considered in Section 5.3 and state
which ones have been taken into account and how.

        The effects on emissions of carbon dioxide (both in terms of reduction and increase)
resulting from the implementation of Directives 2003/96/ЕС, 2002/91/ЕС, 2001/77/ЕС,
96/61/ЕС, 2003/17/ЕС, 2001/80/ЕС, 1999/13/ЕС, have been taken into considerationduring the
development of the National Allocation Plan. See also section 5.3.

2.4 If the existence of competition from countries or entities outside the Union has been taken
into account, please explain how.

       Bulgaria’s NAP does not include special measures to assess the competition from
countries outside the European Union. The Plan will be co-ordinated with the Commission for
Protection of Competition before it is submitted for approval to the Council of Ministers.
3. Determination of the quantity of allowances at installation level
3.1. By what methodology has the allocation been determined at installation level? Has the same
methodology been used for all installations? If not, please explain why a differentiation between
installations belonging to the same activity was considered necessary, how the differentiation by
installation was done, in detail, and why this is considered not to unduly favour certain
undertakings within the State?

       According to the applied Methodology, the quantity of allowances that the country will
include in the Emission Trading Scheme will depend on the macroeconomic indicators of the
country for the period up to 2012, the forecasts for the economic development in general and by

                                                                                                41
sectors, the emission reductions according to the Kyoto Protocol, the opportunities for using the
flexible mechanisms under the Kyoto Protocol for emission reduction, and the forecasts for the
development of the installations. The determination of the quantity of allowances and their
proportion to the emissions from sources outside the scheme is based on two sources of
information:
            National GHG emissions inventory for the year 2003;
            Data about the installations based on a questionnaire, filled in by the operators of
             the installations.
        Based on the analyses of collected and verified data on the activities of each installation,
historical emissions have been calculated and data about “base year” have been determined at
installation level. As base year is accepted the average sum of the emissions from the installation
for the two years with highest emissions during the period 2002-2004. The base year of an
installation which did not function during two years of this period, is the year of operation of the
installation.
        In accordance with the requirements of the EU, the NAP envisages equal effort, equal
right and equal obligation to changes (increase or reduction) in emission levels for the two
groups of emission sources (participating and not participating) and preservation of the ratio of
the emissions of both groups. After the determination of the various types of reserves set aside
for later periods and calculative reserves, a table is structured that shows the quantity of emission
allowances by sectors and overall reserves for the Country which could be allocated through the
Scheme based on the macro-economic indicators.
        The allocation of allowances among installations within each sector is based on the
historical emissions from registered installations whose operators have submitted data on time,
the projected production volume and emissions by sectors and the methodology proposed below
which shall be applied to the sectors and the installations by sectors.
3.2. If historical emissions data were used, please state whether they have been determined in
accordance with the Commission’s monitoring and reporting guidelines pursuant to Article 14 of
the Directive or any other set of established guidelines, and/or whether they have been subject to
independent verification.

       Operators of identified installations were required to provide historical emissions data,
following the Commission’s guidelines. The guidelines were approved by the Inter-ministerial
working group on the development of the NAP on 3 May 2005; on their basis, letters were sent
to operators of installations; information about the activities regarding the development of the
NAP was also published on 5 May 2005 at the web-sites of the MOEW, the MEER and the MI.
       After verification of the accuracy of historical data through comparison with official data
from the NSI, information was sent to operators of installations about final historical emissions,
calculated basing on the data they submitted. Operators were asked to confirm it – a process
which played the role of additional verification on a consensus base with stakeholders.
3.3. If early action or clean technology were taken into account at this level, please state so here
and give details in Sections 4.2 or 4.3 below.

Bulgaria does not intend to take into account neither early actions, nor clean technologies (for
details see Sections 4.2 and 4.3).
3.4. If the Member State intends to include unilaterally installations carrying out activities listed
in Annex I below the capacity limits referred to in that Annex, please explain why, and address,
in particular, the effects on the internal market, potential distortions of competition and the
environmental integrity of the scheme.

                                                                                               42
      Bulgaria does not intend to include unilaterally installations carrying out activities listed
in Annex I to the Directive below the capacity limits as referred to in Art.24 of the Directive.
        The Government’s decision on the total number of installations to which allowances will
be allocated is based on the best available information about the installations covered by the
Directive. Bulgaria does not need to include additional installations in the Scheme for fulfilling
its obligations under the Kyoto Protocol; therefore, the costs and the administrative burden
related to the inclusion of lower capacity installations in small and medium-size enterprises
would not be justified.
3.5. If the Member State intends temporarily to exclude certain installations from the scheme until 31
December 2007 at the latest, please explain in detail how the requirements set out in Article
27(2)(a)-(c) of Directive 2003/87EC are fulfilled.

     At this stage, Bulgaria does not intend to temporary exclude any installations before 31
December 2007.

4. Technical aspects
4.1. Potential, including technological potential
4.1.1 Has criterion 3 been used to determine only the total quantity of allowances, or also the
distribution of allowances between activities covered by the scheme?
4.1.2 Please describe the methodology (including major assumptions made) and any sources
used to assess the potential of activities to reduce emissions. How is it ensured that the total
quantity of allowances allocated is consistent with the potential?
4.1.3 Please explain the method or formula(e) used to determine the quantity of allowances to
allocate at the total level and/or activity level taking the potential of activities to reduce
emissions into account.

4.1.1 Criterion 3 requires that the quantity of allowances to be allocated should be consistent
with technological and other potential of activities covered by the Directive to reduce their
emissions. This criterion is mandatory in relation to the determination of the total national
quantity of allowances and optional in relation to the determination of quantities across different
activities or sectors.
        Criterion 3 has been applied regarding the total quantity of allowances which Bulgaria
will allocate in the National Allocation Plan. A specifics of the transition in Bulgaria during the
last four or more years is the existence of unused production capacities (referred to as “sleeping
installations” in the National Allocation Plan) which, once in operation, shall come under the
scope of the GHG emission trading scheme. These installations have outdated equipment, and
historical data does not exist for their emissions for the last several years, therefore, an
assessment of their technological potential to reduce emissions in order to apply criterion 3 is not
possible.
        Data from the Second National Action Plan on Climate Change has been used for the
application of Criterion 3. The emission reduction potential in 2010 is estimated to 4 mln. tonnes
in the energy sector and 0.7 mln. tonnes in the industry.
       Due to data constraints on the potential to reduce emissions from different sources,
it was not possible to make an assessment of the technological potential of the various
groups at sector level.



                                                                                                43
4.1.2. The approach of Bulgaria in relation to GHG emission levels is to limit, to the extent
possible, industrial activities with high carbon intensity.
4.1.3 Because Criterion 3 shall be applied at national level only and not on sector level (see
4.1.1.) and in accordance with the requirements of the EC, the NAP provides for an equal effort
of the two groups of emission sources (participants and non-participants), i.e. the equal right and
obligation of those two groups to reduce emissions and preserve the ratio of their emissions.
4.1.4. If benchmarking was used as a basis for determining the intended allocation to individual
installations, please explain the type of benchmark used, and the formula(e) used to arrive at the
intended allocation in relation to the benchmark. What benchmark was chosen, and why is it
considered to be the best estimate to incorporate achievable progress? Why is the output
forecast used considered to be the most likely development? Please substantiate the answers.

Benchmarking has not been used to decide on the allowances at installation level. A
methodology, intended to have a similar effect to benchmarking, has been applied to new
entrants. New installations receive allowances based on the lowest emission factor for the type of
activity during the basic period. For sleeping installations, the average emission factor is applied
for the type of activity during the basic period. This way, new entrants are required to be at least
such effective as the most effective existing installation. As for the sleeping installations, they
should be more effective than the average effectiveness in the respective sector.

4.2. Early action
4.2.1 If early action has been taken into account in the allocation to individual installations, please
describe in which manner it is accommodated. Please list and explain in some detail the measures
that were accepted as early action and what the criteria for accepting them were. Please
demonstrate that the investments/actions to be accommodated led to a reduction of covered
emissions beyond what followed from any Community or national legislation in force at the time the
action was taken.
4.2.2 If benchmarks are used, please describe on what basis the grouping of installations to which the
benchmarks are applied was made and why the respective benchmarks were chosen. Please also
indicate the output values applied and justify why they are considered appropriate.

4.2.1. According to Annex III to the Directive early action may be taken into account. The
Commission’s guideline on this criterion states:
       “Early action” is to be understood as actions undertaken by an operator of an installation
covered by the Directive to reduce emissions before the National Allocation Plan is published
and notified to the Commission. In line with criterion 4, only measures that operators undertake
beyond requirements arising from Community legislation can qualify as early action. More
stringent national legislation, applied to all covered installations or to an activity, will impact the
potential to reduce emissions (criterion 3). Therefore, early action is limited to reductions of
covered emissions beyond reductions made pursuant to Community or national legislation, or to
actions undertaken in the absence of any such legislation.
       The guidelines also state that early action, if used, should be applied to determine the
quantity of allowances to be allocated to individual installations.
       There are two issues to be considered here: first, identifying clear cases of early action,
and second, devising a mechanism within the NAP to reward this early action.
        In relation to the first of these issues, it is clear from the guidelines of the Commission
that the allocation of allowances for early action depends on the motivation behind the emission
reduction action. Any action undertaken for involuntary reasons, such as compliance with
legislation, is excluded. When a reduction has been achieved accruing a net economic benefit,

                                                                                                   44
which would arise even in the absence of future carbon constraints, there would appear to be
little justification for rewarding early action.
       It should be mentioned that, because of the process of accession of Bulgaria to the ЕU
and the foreseeable future measures to reduce greenhouse gas emissions, the objective
application of those two criteria to identify early action is difficult.
       Instead, the methodology used in the NAP provides for the use of an average sum from a
two-year historical period with highest emissions during the period 2000-2004. This approach
gives a market regulated bonus to installations which have invested in emission reduction as a
form of early action during this period, without need of any additional administrative action. To
some extent, this historical approach rewards also the co-generation.
4.2.2. Benchmarking has not been used.


4.3. Clean Technology (if applicable)
4.3.1 How has clean technology, including energy efficient technologies, been taken into account
in the allocation process?
4.3.2 If at all, which clean technology has been taken into account, and on what basis does it
qualify as such? Have any energy production technologies intended to be taken into account
been in receipt of approved State aid for environmental protection in any Member State? Please
state whether any other industrial technologies intended to be taken into account constitute “best
available techniques” as defined in Council Directive 96/61EC, and explain in what way it is
particularly performing in limiting emissions of covered greenhouse gases.


4.3.1. Criterion 8 effectively extends criterion 3 to the installation level and states that a NAP
shall contain information on the manner in which clean technologies, including energy efficient
technologies, are taken into account. As in the case of criterion 7, the Commission has stated in
its guidance document that applying this criterion is optional.
According to the Commission, this criterion will be deemed to be fulfilled if a Member State
clearly explains in its NAP whether it intends to take clean technologies into account and if so,
how.
Bulgaria does not take into account clean technologies.
4.3.2. Bulgaria considers that the main result of the implementation of the Directive, through
setting prices to GHG emissions, will be the automatic initiative to use clean and energy efficient
technologies. Therefore, clean technologies, promoted in the NAP, include the energy efficiency
activities and the use of renewable energy sources, which are priorities of the National Energy
Strategy (through setting aside allowances for “joint implementation” projects with indirect
effect on power generation) and the co-generation (through a special reserve of allowances).


5. Community Legislation and Policies
5.1. Competition policy
5.1 If the competent authority has received an application from operators wishing to form a pool and
if it is intended to allow it, please attach a copy of that application to the National Allocation Plan.
What percentage of the total allocation will the pool represent? What percentage of the relevant
sector’s allocation will the pool represent?



                                                                                                  45
The emission trading Directive allows operators of installations to form a pool for the
performance of their obligations. The formation of a pool is subject to approval by both the
country’s competent authority and the European Commission.
       For Bulgaria, a joint fulfilment of the obligations will be carried out in the cases, when a
legal person registered in Bulgaria operates of two or more installations registered in Bulgaria
and performing the same activity covered by the Scheme. The operator may transfer allowances
between those installations free of charge. Reporting and verification of reports in such cases are
separate for each installation, within four months after the end of the respective calendar year.


5.2 Internal market policy (Art. 43 of the Treaty)
5.2.1 How will new entrants be able to begin participating in the EU emissions trading scheme?

New entrant is any installation carrying out one or more of the activities covered by the trading
scheme which has obtained an emission trading permit or an update of its permit due to a change
in the nature or functioning or an extension of the installation, after January 1st, 2007. New
entrant is also an installation constructed before 2004 which has not operated with more than
50% of its production capacity for at least one calendar year in the period 2002-2004. New
entrant is also an installation constructed after January 1st, 2004, or where changes have been
introduced in the nature or functioning or an extension of the installation after this date. Delayed
installations are not considered new entrants. Four groups of new entrants are determined:
      new installations constructed after 1st January 2004;
      installations registered in the scheme, in case of change in their nature or functioning or
       an extension of the installation after 1st January 2004;
      installations for which the issuing of a permit is refused before January 1st, 2007;
      “sleeping” installations – installations constructed before 2004 which have not operated
       with more than 50% of their production capacity for at least one calendar year in the
       period 2002–2004.
        Bulgaria intends to form a reserve for new entrants (RNE) for those installations which
perform one or more of the activities within the scope of the trading scheme and which will
obtain an emission trading permit before 31 December 2007. As “new entrants” are treated also
installations whose permits will be re-issued after 01.01.2007, due to changes in nature or
functioning or extension of the installation, as well as “sleeping” installations and installations
with refusal to obtain a permit before January 1st, 2007 and which will enter into the scheme with
a delay.
        The RNE is divided in two components: a set-aside for known new entrants (planned or
in process of construction during the development of the NAP) and a set-aside for unknown new
entrants (installations which will start to function before 31.12.2007 but are not known at the
time of development of the NAP).
        The second component of the RNE will be considerably smaller in the First NAP, due to
the fact that the plan covers only one year and, practically, it is not possible that there will be a
significant number of installations which will start functioning without being known.
       Transfer of emission allowances between operators of installations
        Transfer of emission allowances between operators of installations will be carried out
through the national register based on the emission allowances market and observing the national
legislation.



                                                                                              46
        In case that a person registered in Bulgaria is operates two and more registered
installations performing the same activity covered by the Scheme, the operator may transfer
allowances between those installations free of charge. In such cases, the reporting and
verification of the report are carried out for each installation separately, within four months after
the end of the respective calendar year.
       Closing down of installations
        An installation, whose production capacity in a defined year falls below the capacity
defined in the Directive for participation in the Scheme, is considered closed and allowances are
not issued to such an installation for the next year. Not issued allowances of closed installations
will be added to the RNE.
       Rules for a new entrant apply if a closed installation is re-opened.
5.2.2 In the case that there will be a reserve for new entrants, how has the total quantity of
allowances to set-aside been determined and on what basis will the quantity of allowances be
determined for each new entrant? How does the formula to be applied to new entrants compare
to the formula applied to incumbents of the relevant activity? Please also explain what will
happen to any allowances remaining in the reserve at the end of the trading period. What will
apply in case the demand for allowances from the reserve exceeds the available quantity of
allowances?

       The EU methodology on allocation of emission allowances allows the formation of
reserves. The country may decide not to form a reserve and to oblige registered installations and
new entrants to buy allowances from the market. In the conditions in Bulgaria, this approach
would pose considerable difficulties to investors, therefore the methodology applied here
envisages reserves for later allocation which shall be unified in a common reserve.
        The reserves represent real emission allowances. They may be allocated and the NAP
shall contain rules for taking decision on requests for use of reserve allowances.
        Calculative reserves are also set aside, which are allocated in the process of development
of the NAP.

                                              V res 2003
       Reserve for delayed installations (                 )
       The quantity of this reserve might be corrected at the latest possible moment before
Bulgaria’s NAP is notified to the European Commission.
       For the period 2007-2012, this reserve is calculated as a percentage (5%) of the projected
emissions from registered installations. It is formed on the expense of the quantity of emissions
from installations not covered by the Scheme in covered sectors, and represents potential
increase in the quantity of allowances to be allocated.
                           Table 19. Reserve for delayed installations
Year                                2007         2008           2009       2010       2011       2012
Overall CO2 emissions from
installations covered by the      49 470,56 51 669,22 55 486,21 62 616,48 65 755,27 66 596,14
Scheme, Gg CO2
Reserve for new entrants, Gg
                                   2 473,53    2 583,46        2 774,31   3 130,82   3 287,76   3 329,81
CO2
        The main rule for allocation of the allowances from this reserve requires that installations
which are delayed to register receive no more allowances than the allowances they would receive
if they registered on time, using the same methodology. Depending on the specific year, in which
delayed installations are registered, the following procedure for allocation of allowances is
observed:

                                                                                                47
        1. Installations which are registered in the period 30.11.2005 - 28.02.2006, are included
in the final list of installations participating in the emission trading scheme and receive the same
quantity of allowances, as if they have registered on time, using the same methodology. They
shall be included in the Plan notified to the EC. If the total quantity of allowances in the reserve
turns out to be insufficient, all installations which are registered with a delay within this period,
receive a reduced number of allowances proportionally to the shortage of allowances, and
installations registered with a delay within the next years, do not receive allowances free of
charge.
        2. Installations registered after 28.02.2006 but before the end of 2007 receive for 2007 the
same number of allowances as the number they would receive in case of timely registration,
using the same methodology. In the case that an installation obtains a valid emission trading
permit during 2007, it receives for 2007 a number of allowances proportional to the remaining
period until the end of the year, calculated in calendar days. If the quantity of the reserve is
insufficient, all installations which are delayed to register, receive a reduced number of
allowances, proportional to the shortage of allowances. Installations registered with a delay
within the next years do not receive allowances free of charge.
       3. Installations which receive a valid emission trading permit in 2008, receive 5% less
allowances than if they registered on time, for each year of the trading period, using the same
methodology. If the quantity of the reserve is insufficient, all installations which delay to register
in 2008, receive a reduced number of allowances, proportional to the shortage, and installations
which are registered with a delay during the next years, do not receive free of charge allowances.
        4. Installations which delay to register for each of the next years, receive another 5% less
allowances for each year of delay. Thus, an installation which register in 2012, shall receive 25%
less allowances. If the quantity of the reserve turns out to be insufficient or runs out in the
respective year, all installations, which delay to register during the respective year, receive a
reduced number of allowances, proportional to the shortage, and installations which receive an
emission trading permit in the next years, don’t receive allowances free of charge.
       If an installation’s emission trading permit is issued after the beginning of a respective
year, the installation receives only a part of the allowances allocated to it. This part is
proportional to the remaining period until the end of the year, calculated in calendar days.
        The final quantity of allowances to be allocated to installations after 28 February, 2006
shall be determined before 15 January of the year which follows the year of registration. Each
year the not allocated allowances remaining in the reserve for delayed installations shall be
transferred to the reserve for new entrants.
                                                              j
       Calculative reserve for compulsory measures ( V            RP   )
        This calculative reserve is formed with the purpose to issue additional allowances to
installations which will introduce compulsory measures in the period 2007 – 2012 leading to
increase in emissions. For example, such installations are desulphurization installations, using
lime and limestone, changes in the requirements for emergency supply in nuclear power stations,
etc.
                        j
        The volume V RP for each year “j” is determined based on the reduction of pollutant
emissions (mainly SO2), planned in relation to the international obligations of the country, and is
equal to the emissions with which the macroeconomic prognosis is corrected (p. 2.3.2).
                            Table 20. Reserve for compulsory measures




                                                                                               48
Year                                                 2007   2008   2009   2010   2011   2012
Reserve for compulsory measures, Gg CO2             330,53 475,82 512,08 560,99 729,91 899,81
       From this reserve of allowances, during the development of the NAP, additional
allowances are allocated to specific installations for the year, when the compulsory measure is
introduced, as well as for the following years. The date planned for the installation to reduce
emissions of harmful substances under the integrated permit is considered the first date of the
increased quantity of allowances.
       Allowances which are not used in the development of the NAP are added up to the
reserve for new entrants.
       Installations for which a date is not yet planned for the introduction of compulsory
measures, may apply for additional allowances as a new entrant, when submitting an application
for update of the permit regarding the introduction of the measure.

      Reserve for new entrants (except for cogeneration)
      The methodology of the EC allows the formation of a reserve for new entrants in the
Scheme.
       New entrant is each installation corresponding to the definition in section 5.2.1. above.
       The rules for allocation allowances differ for each type of new entrant.
       In this section are described new entrants – installations newly constructed in the period
2004 – 2012, whose start is:
       а) planned or known, or
       б) unknown yet,
but in both cases is part of the macroeconomic forecasting.
       This reserve is formed within the projected quantity of allowances for the respective
group of installations or sector.
       Planned or known installations
       For each group (g) the reserve is calculated as a sum of the reserves for the individual
new installations, according to the Methodology.
        V gj = ∑ V ij
          RN       RN
                 i          (for each year j of the period)
                                                                           ij
        The reserve for a single new installation (i) for one year (j) V RN is defined (and then
allocated) on the basis of the forecast production volume of the new installation for the
                    ij
respective year P N and the emission factor of the operating installation E f min g which has the
lowest emissions per production unit for one year from the period 2002-2004 from all
installations in the group “g”. In the energy sector, the emission factor is defined also by type of
fuel (local and imported coal, natural gas, oil, oil residue and other types of fuels).
        V ij = P ij ∗ E f
          RN     N          min g

        For this purpose, for each group of installations, the installation with the lowest emissions
is defined when the analysis of the emissions from participants in the Scheme for the period
2002–2004.
      Applicants to be included in the list of planned or known new entrants are presented by
owners of new installations, MOEW, MEE, MRDPW and other interested organizations.
Planned production volumes are subject to approval by the Working Group. These installations


                                                                                              49
are included in the allowances allocation list and will receive allowances after they obtain a valid
emission trading permit and start the operation of the installation.
        Unknown new entrants
      At the stage of macroeconomic projecting, allowances are set aside in the reserve for
unknown new entrants.
                            Table 21. Reserve for unknown new entrants
Years                                     2007     2008       2009      2010        2011        2012
Reserve known new and sleeping
installations, including cogeneration,   4 401,44 4 791,63 4 453,73 9 264,49 12 017,72       12 003,88
Gg CO2
Reserve unknown new entrants, Gg
                                          0,00    1 000,00 2 000,00 3 000,00      4 000,00    5 000,00
CO2


        For installations which undergo changes in nature or functioning or extension, the
following allocation principle is applied:
             For extension of the installation’s capacity over the capacity of the old
                installation, the above rule for a new entrant is applied.
             Allowances determined in the initial allocation are preserved.
        When a part or the whole old installation is closed down, the rule applied is the same as
for closing of installations (see p.5.2.).
        Installations for which a permit is refused until 01 January 2007 shall cease their
activities on that date or reduce their production capacity below the limits set for participation in
the Scheme. Allowances allocated to them under the NAP are cancelled and transferred in the
reserve for new entrants. Principles for allocation allowances to newly constructed installations
apply to such installations after they obtain a permit.
        When a sleeping installation submits an application to obtain an emission trading permit
because of the restoration of its activities and the permit is issued, the installation receives
allowances under the rules for new entrants – newly constructed installations, - but the average
emission factor for the type of activity from the base year of the sector is applied to such
installation.
        New entrants receive allowances after obtaining an emission trading permit and the
commissioning of the installation. When this happens after the beginning of the respective year,
the installation receives for this year a number of allowances that is proportional to the remaining
period of the year calculated in calendar days.
       The business plan of the operator of an installation and the integrated permit are used,
when it is necessary to determine the production volume of a new entrant.
        Allowances remaining in the reserve for new entrants at the end of the year are added up
to the reserve for the next year.

        Reserves for new cogeneration
       Two reserves for cogeneration are formed RCG1 and RCG2 , which are part of the reserve
for new entrants for each year of the period.
       RCG1 – reserve of allowances for emissions from power generation of new natural gas
cogeneration.
         RCG2 – reserve of allowances for emissions from generation of heating from new
entrants with cogeneration in the scheme. It reflects the transformation of an installation with

                                                                                              50
thermal power below 20 MW in a cogeneration with thermal power over 20 MW, and it is
included in the trading scheme.
        The volume RCG1 shows total emissions in the country from electric energy generation
of new natural gas cogeneration and increases the emissions in the cogeneration sector. The
increase is determined on the basis of expected production of electric energy from a new
cogeneration with an emission factor 0,33 t CO2/MWh. This factor is applied in case the
conditions (fuel consumption) for heat generation remain the same after the introduction of the
cogeneration. The purpose of this reserve is to promote Government’s policy on support of
effective cogeneration.
        The volume of RCG2 – is equal to the volume of emissions form heating generation of
new entrants with cogeneration in the scheme, which will transform a heat installation with
thermal power under 20 MW into a cogeneration with thermal power over 20 MW, and this way
it is included in the scheme. This reserve is neutral regarding the overall emissions for the
country. It increases allowances available in the sector cogeneration for new entrants in the
scheme and reduces, by the same quantity, the emissions in the group of non-participants.
        The volume of the reserves is determined on the basis of Bulgaria’s targets regarding
introduction of new highly effective cogeneration. For a target of 18% , the reserve is determined
as the difference between forecasted and target production of electric energy is multiplied by an
emission factor 0,33 t CO2/MWh. The quantity of allowances for heat generation installations of
below 20 MW power is set to 20% of the allowances allocated to the production of electric
energy.
Table 22. Reserves based on the target for introduction of new highly effective cogeneration
Year                                          2007       2008       2009       2010       2011           2012
Target cogeneration 18%, GWh                 6 733,80   6 895,80   7 043,40   7 295,40   7 570,80   7 765,20
Production by forecasts, GWh                  5 800      5 772      5 835      6 080      6 123      5 411
Expected increase by years, GWh                187        450        846       1 215      1 448      2 354
Allowances, electric energy, number           61 631    148 381    279 146    400 977    477 850     776 877
Allowances, thermal power under 20 MW,
number                                        12 326     29 676     55 829     80 195     95 570     155 375
Total new unknown new cogeneration, number    73 957    178 057    334 975    481 172    573 420     932 252
       The allowances remaining in this reserve at the end of the year are added to the reserve
for new entrants.

       Allowances set aside for compensation of ERUs transferred to other countries under
JI projects

        Allowances from this set aside shall be cancelled in case of transfers of ERUs under JI
projects. Thus, the indirect double counting shall be avoided. This quantity is a sum of the
following elements:
      Approved joint implementation projects: the total quantity of ERU with indirect effect
       determined in the validated project documents (production of electric energy from RES,
       cogeneration and reduction of electricity consumption of)
      Supported JI projects with indirect effect: 90% of the quantity of requested ERU
      Limit for new JI projects with indirect effect: the limit has been defined by the
       Government as an admissible amount of ERUs for these types of projects.
        The adopted targets for RES and for cogeneration are 11% and 18%, respectively. Only
half of the introduced production of electric energy from RES and cogeneration will be achieved

                                                                                                    51
through new JI projects. The estimate is that the new capacities for achieving those targets will
increase from 20% to 100% in the period 2007–2010. The forecast for the final electricity
consumption includes 2% consumption reduction under new JI projects that increases through
the years from 40% to 100%. Under these assumptions, the allowances set aside (the limits) are
determined for such types of projects with indirect effect - Table 23. After those limits are
reached, the support and the approval for such projects shall cease. The allowances for
cogeneration and RES are on the expense of sector “Electric Power”.
                 Table 23. Allowances for new JI projects with indirect effect
   Year                                      2008          2009       2010          2011        2012
1 RES target 11%, GWh                        4 214         4 304      4 458         4 627       4 745
2 Production, GWh                            2 723         2 839      2 957         3 113       3 310
3 Necessary increase, GWh                     597          1 026      1 502         1 514       1 436
   Allowances JI - 50% new RES target*
4                                           328 108       564 218    825 825       832 590     789 580
   1,1t/MWh
5 Cogeneration objective 18%, GWh           6 895,80      7 043,40   7 295,40      7 570,80   7 765,20
6 Production, GWh                            5 772         5 835      6 080         6 123      5 411
7 Necessary increase, GWh                     450           846       1 215         1 448      2 354
   JI allowances - 50% new co-gen.*
8                                           179 856       338 359    486 033       579 212     941 670
   0,7t/MWh
   JI for reduced (2%) consumption of
9                                             766           783        811           841         863
   electricity, GWh
   Allowances for JI for consumption of
10                                          597 636       813 904    1 053 780 1 093 560 1 121 640
   electricity, 1,1 kg/kWh
   Total for new JI projects with
11                                          1 105 600 1 716 481 2 365 638 2 505 362 2 852 890
   indirect effect
   Total allowances which are
12 subtracted from electric power           507 964       902 577    1 311 858 1 411 802 1 731 250
   sector


       Table 24 shows the quantity of emission reductions, verified or planned under approved
or supported JI projects. They are taken into account in the forecast for the production and
consumption of electric energy.
   Table 24. Allowances for approved and supported new JI projects with indirect effect
Year                            2008             2009             2010             2011           2012
Approved ERUs                 1 238 897       1 259 305        1 278 048        1 310 825      1 350 728
Supported ERUs               678 243,00      678 243,00       678 243,00        678 243,00    678 243,00
New projects with indirect
                             1 105 600,00   1 716 481,00      2 365 638,00    2 505 362,00    2 852 890,00
effect
Total allowances              3 022 740       3 654 029        4 321 929        4 494 430      4 881 861


       The last row in Table 24 shows the quantity of allowances set aside for cancellation with
the purpose to compensate emission reductions units under JI projects with indirect effects,
which are transferred to other countries.
        In transfers of emission reduction units under JI projects implemented in installations
covered by the scheme, when the projects fall under the definition of direct double counting, the
respective quantity of allowances is cancelled from the respective account of the installation in
the national register.
        Allowances remaining in the RNE at the end of the trading period will be added to set-
aside for the next period.

                                                                                                 52
        If there are any surplus allowances in the RNE at the end of 2007, these will be
auctioned. In addition, allowances allocated to an operator who is not able to receive a permit,
will be auctioned. The Government will use the incomes from auctions to cover expenses related
to the implementation of the Scheme.
     Calculative reserve for heating companies for standardization of degrees/day
(RDHcold)

        Operators of installations who are heating companies, may apply for correction of the
allocation of allowances as a result of the standardization of degrees/day, if in the served region
the values of day/degrees in the basic period (the two years with highest emissions in the period
2002-2004) were lower than the average long standing values.

       Based on historical data, it was found that during this period the average winter
temperatures were higher than the average long term temperatures. In relation to this fact, the
quantity of annual allowances to be allocated to heating companies increases by RDHcold. The
quantity is calculated based on numeric data from the NIMH, the MEE and the SEWRC for the
heating in the discussed period. The average monthly temperatures during this period were with
1,14 ºC higher than the average long term temperatures. If the two values were equal, the energy
necessary for heating would by higher by 3,4%. Therefore, the reserve is set to 3,4% of the
emissions from heating companies in 2003. The correction per installation for each additional TJ
thermal power, which would be sold if the temperature would be equal to the average long term
temperatures, has been determined, depending on the type of fuel and the production method, as
follows:
        70 allowances for natural gas boilers
        160 allowances for natural gas cogeneration
        100 allowances for liquid fuel boilers
        250 allowances for liquid fuel cogeneration
        500 allowances for coals cogeneration.

        In 2003, the sum of the CO2 emissions of heating companies was 4 373 109 t. In normal
winter temperature in 2003, heating companies would have emitted a surplus of 148 686 t CO2.
For the period 2007 – 2012, the reserve for standardization of the degrees/day is therefore set to
892 116 t CO2, or 148 686 t per year.

       If the sum of corrections requested by the installations is higher than the reserve set aside,
individual requests will be re-calculated proportionally, so that their sum becomes equal to the
reserve. If the total reserve is not spent, the remaining allowances will be cancelled.

        MOEW will publish in due time the form for correction request. The operators of
installations will be invited to submit requests when verified reports are presented to the EEA. .

5.2.3 Is information already available on the number of new entrants to expect (through
applications for purchase of land, construction permits, other environmental permits etc.)? Have
new or updated greenhouse gas emissions permits been granted to operators whose installations
are still under construction, but whose intention it is to start a relevant activity during the period
2007- 2008?

  The information on planned new entrants was collected in the process of development of the
NAP, as follows:
          From the MOEW and its agencies:



                                                                                                53
               o projects “Joint Implementation”, supported or approved by the time the NAP
                 was developed and foresee the construction of new facilities or upgrade of
                 existing facilities;
               o from the Regional Inspectorates of Environment and Water– regarding the
                 type and the capacity of the enterprises in their respective regions;
               o from Direction “Preventive Actions” in the MOEW – for enterprises in the
                 process of construction;
               o from the Executive Environment Agency – for installations which are in the
                 process of obtaining a permit.
          From sector forecasts in the energy sector and the industrial sectors, provided by the
           MEE.
          From the MRDPW;
          From branch organizations – for new installations in the respective branches.
More specific data on planned new entrants is provided in Table 21, section 5.2.2. above.

5.3. Other legislation or policy instruments
5.3.1 Please list other Community legislation or policy instruments that were considered in the
establishment of the National Allocation Plan and explain how each one has influenced the intended
allocation and for which activities.
5.3.2 Has any particular new Community legislation been considered to lead to an unavoidable
increase in emissions? If yes, please explain why the change in emissions is considered to be
unavoidable, and how this has been taken into account.


1. Directive 2003/17/ЕС on the quality of petrol and diesel fuels
   The Directive requires oil refineries to produce fuel with low sulphur content, as a
   consequence of which installations falling within the scope of the emission trading Directive
   face increases in emissions of carbon dioxide from installations covered by the emissions
   trading Directive. The increase in emissions from those installations will occur in parallel to
   a decrease in CO2 emissions from the transport sector.
2. Directive 1999/13/ЕС on the limitation of emissions of volatile organic compounds due
   to the use of organic solvents in certain activities and installations
   The Directive sets emission limit values for different activities based on their annual
   consumption of VOCs for which an integrated permit or an emission trading permit is
   required. Thermal processing is one of the main methods used for reducing VOCs emissions.
   The system requires a significant energy input in order to maintain the required operating
   temperature. This leads to an increase in emissions of carbon dioxide, which has been taken
   into account during the development of the NAP by providing for a calculative reserve for
   compulsory measures.
3. Directive 2001/80/ЕС on the limitation of emissions of certain pollutants into the air
   from large combustion plants
   Compulsory measures related to the compliance with the requirements of Directive
   2001/80/ЕС and the norms it sets for maximum permitted norms of emissions to the ambient
   air from the large combustion installations for a number of pollutants, also lead an to
   inevitable increase in emissions of carbon dioxide from those installations. This has been


                                                                                                  54
   taken into account in the process of development of the NAP by providing for a calculative
   reserve for compulsory measures.
4. Directive 96/61/ЕС concerning Integrated Pollution Prevention and Control
   The integrated permit required under this Directive, is an individual administrative act,
   granting a permit for functioning of certain installations or parts of installations under certain
   conditions which guarantee the compatibility of the installation with regulatory requirements.
   The functioning of all installations covered by the emission trading scheme is authorized and
   defined through the integrated permit, except for combustion plants with thermal power of 20
   to 50 MW. The integrated permit, issued under Directive 96/61/ЕС, is used also in the
   framework of the procedure on issuing of an emission trading permit, which represents a
   permit for functioning of installations listed in Annex 1 to Directive 2003/87/ЕС. Before the
   start of the procedure on issuing emission trading permits for installations covered by both
   Directives, those installations should obtain an integrated permit and implement the measures
   included in the permit to achieve compliance with the legislation in force. Some of these
   measures have a direct effect on greenhouse gas emissions level from these installations.
5. Directive 2004/8/ЕС concerning cogeneration
   The NAP includes sufficient reserves for new cogeneration and for Joint Implementation
   projects for cogeneration.
6. Directive 2001/77/ЕС concerning the promotion of electricity produced from renewable
   energy sources
   Allowances are set aside in the NAP for Joint Implementation projects for production of
   electricity from renewable sources.
6. Public consultations
6.1 How is this national allocation plan made available to the public for comments?
6.2 How does the Member State provide for due account to be taken of any comments received before
a decision on the allocation of allowances is taken?
6.3 If any comments from the public received during the first round of consultation have had
significant influence on the national allocation plan, the Member State should summarize those
comments and explain how they have been taken into account.


6.1 The businesses participated in the development of the NAP through representatives of their
branch organizations in the inter-ministerial working group and they advocate the interests of the
operators covered by the emission trading Directive.
       Information about the development of Bulgaria’ NAP has been presented to the public
through:
            information campaigns organized by the MRDPW and the MEE;
            specialized seminars organized by the Bulgarian Industrial Association, Bulgarian
             International Business Association and other NOGs;
            training and workshop within the Dutch project.
            media publications;
            web-pages of the MOEW, MEE and MRDPW.
       The various stages in the development of the NAP have been covered by the media which
have provided information to the public and facilitated the public debate on this topic. The

                                                                                              55
updated and well structured section on the development of the Nap at the MOEW web-site
provide information to all who are interested in the topic..
6.2 After Bulgaria’s NAP has been published on the web-site of MOEW, a special link is
available that allows all interested parties to send comments on the NAP within the given
timeframe. Gathered comments are summarized by the MOEW and presented to the inter-
ministerial working group responsible for the development of the NAP.
6.3 The inter-ministerial working group reviews all comments provided by the public and
accepts or declines them with arguments. Results from the working group’s discussions are
registered in protocols. To facilitate decision making, consultants from Netherlands and Bulgaria
with proved international experience and capacity on climate change provide technical assistance
to the working group. The WG will review all comments provided during public consultations
and will make decisions, following the procedure described above.


7. Other criteria than those listed in Annex ІІІ to the Directive

7.1. Have any criteria other than those listed in Annex III to the Directive been applied for the
establishment of the National Allocation Plan? If yes, please specify which ones and how they
have been implemented. Please also justify why any such criteria are not considered to be
discriminatory.


       No criteria other than the ones listed in Annex III of the Directive have been applied.




                                                                                              56
List of Installations covered by Directive 2003/87/ЕС and proposed allocation
                         of allowances to them for 2007

№ in the
           Installation                                        Year   Allowances
  list
  34       AGROPOLICHIM AD                                     2007       274 218
  111      ALKOMET                                             2007          24 169
  263      AMILUM BULGARIA EAD                                 2007          46 521
  80       ARSENAL AD                                          2007           3 859
  261      ASENOVA KREPOST AD                                  2007           3 072
  118      BIOVET AD - Razgrad                                 2007          31 647
  78       BISSER OLIVA AD                                     2007           3 690
  124      BRIKELL ЕAD                                         2007      1 530 578
 9-143     Bulvarko ООD                                        2007       155 463
  122      BULGARGAS ЕAD KS Petrich                            2007                0
  123      BULGARGAS ЕAD - Chiren region                       2007           5 239
  110      BULGARGAS ЕAD , KS Kardam 1                         2007           1 642
  121      BULGARGAS ЕAD Ihtiman region, KS Ihtiman            2007                0
  119      BULGARGAS ЕAD, Stara Zagora region, KS Lozenets     2007          24 500
  120      BULGARGAS ЕAD, Ztara Zagora region, KS Strandja     2007          23 911
  117      BULGARGAS ЕAD, Vulchi Dol region, KS Kardam 2       2007          59 697
  109      BULGARGAS ЕAD, Vulci Dol region, KS Provadia        2007          66 105
  259      BULKOM PLUS                                         2007           8 347
  167      BUDESHTE – BUTOVO                                   2007           3 831
  115      BUDESHTNOST AD                                      2007           6 790
  189      VARODOBIV                                           2007          18 781
  193      VARCHIM                                             2007          20 688
  104      VMZ ЕAD                                             2007          16 496
  105      VMZ ЕAD Ignatovo                                    2007           7 851
  135      VULKAN                                              2007       367 692
 9-135     VULKAN                                              2007       125 437
  100      GUARD INVEST                                        2007           8 488


  136      DEVNYA CEMENT AD                                    2007      1 646 190
  149      DRUJBA GLASS PLANTS AD, site Plovdiv                2007       117 462
  145      DRUJBA GLASS PLANTS AD, Sofia                       2007          55 236
  279      DARVOOBRABOTVANE BT AD                              2007           4 374
 262       ELMAZ                                               2007          3 126
  2        ENERGY COMPANY MARITSA IZTOK III                    2007      5 180 537
 211       PAPER PLANT AD                                      2007              0
 206       PAPER PLANT-BELOVO AD                               2007         17 900
  76       ZAGORA FRUKT AD                                     2007          1 743
 9-76      ZAGORA FRUKT AD                                     2007            820

                                                                        57
  75    ZAGORKA AD                                        2007      12 514
 260    ZAHAREN KOMBINAT KRISTAL AD                       2007      23 842
 138    ZLATNA PANEGA CEMENT AD                           2007     512 921
9-138   ZLATNA PANEGA CEMENT AD New 1                     2007     587 046
 173    IDEAL STANDARD BULGARIA AD                        2007      33 032
 130    INSA OIL                                          2007      13 748
 150    INTERIOR GLASS                                    2007       8 098
9-150   INTERIOR GLASS                                    2007      18 545
  70    KALIAKRA AD                                       2007       6 469
 144    KALTSIT                                           2007      60 795
9-144   KALTSIT                                           2007      60 795
  42    KAMIBO EOOD                                       2007      15 583
 142    KARIERI I VARODOBIV                               2007      23 144
 181    KERAM INVEST                                      2007       1 541
 257    KERAMAT AD, Vetrishte                             2007         998
 255    KERAMAT AD Div Diadovo                            2007       1 080
 256    KERAMAT AD, Kaspichan                             2007       6 770
 176    KERAMIT GT AD                                     2007       3 691
 183    KERAMIKA - 98                                     2007       1 633
 160    KERAMIKA BURGAS 2001 ООD                          2007      14 266
 165    Ceramics Plant Dragovishtitsa KERAMIENGINEERING   2007       5 977
9-258   Ceramics plant Botevgrad                          2007          50
 161    KERAMICHAN KASHTA STRALDJA EOOD                   2007       7 603
 196    KZ BAGRENTSI                                      2007       2 905
9-209   KOSTENETS HHI AD                                  2007      14 876
 131    KREMIKOVTSI AD АД                                 2007   4 764 488
 125    KRONOSHPAN BULGARIA EOOD                          2007      32 125
 285    KTM AD                                            2007      25 507
 202    LESOPLAST AD                                      2007      19 773
 128    LUCKOIL NEFTOCHIM BURGAS AD                       2007   6 739 183
 9-87   MAYER MELHOFF NIKOPOL                             2007      77 482
  99    MARITSA TEX                                       2007       9 591
 282    MASHSTROY                                         2007       1 575
  73    Municipal Hospital Prof. Dr ST. KIRKOVICH         2007       3 765
 271    MEKOM AD                                          2007       4 485
 166    MIZIA                                             2007       4 630


 74     MIROLIO BULGARIA EOOD                             2007        18 233
9-146   NOVO STAKLO EAD                                   2007        17 838
253     OGNIANOVO-К – LIME PLANT OGNIANOVO                2007    134 719
254     OGNIANOVO-К – ZNHV PUKLINA                        2007        79 936
 84     OLOVNO-TSINKOV KOMPLEX AD                         2007        25 994
 9      BALKANPHARMA-DUPNITSA АД                          2007        15 811
 4      PLOVDIV SOUTH                                     2007        31 210
200     PIRINHART AD                                      2007            0
137     PLEVENSKI CEMENT AD                               2007    240 613
281     PROGRESS AD                                       2007         2 949
112     PROMET STEEL                                      2007        38 276

                                                                 58
273     RADOMIR METALI AD                              2007        36 074
265     RECULTIVATION AAD                              2007            0
215     REMOTEX RADNEVO EAD                            2007         5 327
185     RODNA INDUSTRIA -91                            2007         1 608
208     SVILOZA AD                                     2007        37 490
147     RUBIN AD                                       2007        76 555
177     SK-13 PLEVEN KAMENINA AD                       2007          518
9-275   Solidus                                        2007          329
132     Stomana Industry AD                            2007    139 510
9-132   Stomana Industry AD                            2007        37 879
158     STROYKERAMIKA АД - Mezdra                      2007         6 896
157     STROUKERAMIKA VRATSA                           2007         4 398
269     STROYKERAMIAK OOD Montana                      2007         1 094
9-269   STROYKERAMIAK OOD Montana                      2007         5 610
266     TERA AD                                        2007         2 340
152     TERRA 2000                                     2007         3 263
 16     TPP BOBOV DOL ЕAD                              2007   2 426 681
 37     TPP DEVEN AD                                   2007   1 535 880
 14     TPP to VIDACHIM                                2007    503 420
 7      TPP MARITSA 3 AD                               2007    332 511
 11     TPP MARITZA IZTOK 2 ЕAD                        2007   8 962 881
 3      TPP Plovdiv North                              2007    134 322
 35     TPP to ZAHARNI ZAVODI AD                       2007        95 053
 27     TPP Rousse Iztok cogeneration                  2007    663 816
9-27    TPP Rousse Iztok kondensatsionna               2007    190 974
 33     TPP SVILOZA                                    2007    572 182
 36     TPP-VARNA ЕAD                                  2007   2 641 067
9-36    TPP-VARNA ЕAD                                  2007   2 591 391
 15     HEATING COMPANY - PERNIK ЕAD - TPP Republika   2007   1 079 192
9-15    HEATING COMPANY - PERNIK ЕAD - TPP Republika   2007        23 550
 12     HEATING COMPANY Sliven ЕAD                     2007    186 731
 21     HEATING COMPANY SOFIA AD - Injstroy            2007         7 172
 25     HEATING COMPANY SOFIA AD - Ovcha Kupel-1       2007        17 228
 26     HEATING COMPANY SOFIA AD - Ovcha Kupel-2       2007        21 149


 23     HEATING COMPANY SOFIA AD - Suha Reka           2007        17 566
 22     HEATING COMPANY SOFIA AD - H.Dimitar           2007        36 090
 20     HEATING COMPANY SOFIA AD - Zemlene             2007    261 810
 19     HEATING COMPANY SOFIA AD - Lulin               2007    186 959
 18     HEATING COMPANY SOFIA AD- TPP Sofia            2007    438 288
 24     HEATING COMPANY SOFIA AD- Levski G             2007        17 523
 17     HEATING COMPANY SOFIA AD- TPP Sofia-Iztok      2007    706 286


                                                              59
 9-5    HEATING COMPANY-BURGAS                   2007        42 131
 5      HEATING COMPANY-BURGAS                   2007        77 820
 38     HEATING COMPANY-VARNA ЕAD , Varnenchik   2007        22 788
 39     HEATING COMPANY-VRATSA - Mladost         2007        26 149
 40     HEATING COMPANY-VRATSA - Gradska         2007        13 013
9-40    HEATING COMPANY-VRATSA - Gradska         2007        17 107
9-31    HEATING COMPANY-VТ AD                    2007        12 342
 31     HEATING COMPANY-VТ AD                    2007        33 151
 32     HEATING COMPANY-GABROVO                  2007        37 251
 13     HEATING COMPANY-KAZANLAK                 2007        38 759
 30     HEATING COMPANY-PLEVEN ЕAD               2007    140 434
9-30    HEATING COMPANY-PLEVEN ЕAD               2007        76 890
 46     HEATING COMPANY-RAZGRAD                  2007        10 362
 6      HEATING COMPANY-SHUMEN -ЕAD              2007        32 637
 44     HEATING COMPANY-YAMBOL ЕAD               2007          822
9-44    HEATING COMPANY-YAMBOL ЕAD               2007         7 920
 85     TSP BIOVET AD                            2007        37 412
9-85    TSP BIOVET AD                            2007        49 500
9-148   TRAKYA GLASS BULGARIA                    2007    103 381
199     TRAKYA PAPIR AD                          2007        28 166
198     TRUD AD                                  2007         6 075
201     PAPER PLANT STAMBOLIISKI AD              2007    129 797
210     FAZERLES AD                              2007        28 558
180     KHAN ASOARUH AD                          2007        48 964
9-180   KHAN ASOARUH AD                          2007         2 031
179     KHAN ASPARUH                             2007         9 984
134     HOLSIM BULGARIA AD                       2007    542 135
9-134   HOLSIM BULGARIA AD NOVA 1                2007    373 024
277     HRANINVEST HRANMACHCOMPEX AD             2007          670
 58     CHUGUNENA ARMATURA BULGARIA AD           2007          679
262     SHAVARNA-97 OOD                          2007         1 725
284     SHAMOD AD                                2007         9 636
 10     UMIKOR MED AD                            2007        73 979
126     YAMBOLEN AD                              2007        15 495




                                                        60

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:7
posted:10/30/2012
language:Unknown
pages:60