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Country Profile – Croatia
Review of Status of Emissions Trading Activities in CG11
Countries
Miroslav Malý - ENVIROS, Prague
Jaroslav Jakubes - ENVIROS, Prague
Jiřina Jílková - IREAS o.p.s., Prague
Eva Šnajdrová - IREAS o.p.s., Prague
Working version for CG11 workshop in Zagreb, Croatia, 28.-29.May 2002
Project No.: ECZ-2024
September 上午九上午九
Country Profile – Croatia September 上午九上午九
TABLE OF CONTENTS
1. LATEST POSITION WITH REGARD TO RATIFICATION OF THE KYOTO PROTOCOL 2
2. BRIEF DESCRIPTION OF THE ENERGY SECTOR AND STATUS OF ENERGY SECTOR
REFORM 2
2.1 PRIMARY ENERGY SOURCES 2
2.2 ENERGY UTILITIES, OWNERSHIP AND PRIVATISATION OF POWER SECTOR 2
Power generation, transmission and distribution ................................................................................. 2
Privatisation of power sector ............................................................................................................... 2
Electricity market liberalisation ............................................................................................................ 3
2.3 ELECTRICITY PRODUCTION, CONSUMPTION, IMPORT AND EXPORT 3
2.4 STRUCTURE OF INSTALLED CAPACITY AND POWER GENERATION 3
2.5 FUTURE INVESTMENT PLANS 4
2.6 DISTRICT HEATING / COMBINED HEAT AND POWER 5
2.7 TYPICAL ELECTRICITY AND NATURAL GAS PRICES TO INDUSTRIAL AND DOMESTIC USERS 5
3. CURRENT NATIONAL CLIMATE CHANGE RELATED POLICIES 5
3.1 ENERGY RELATED TAXES AND SUBSIDIES 6
3.2 TRANSPORT POLICIES 6
3.3 TECHNICAL STANDARDS 6
3.4 AGRICULTURAL POLICIES 6
3.5 INFORMATION AND AWARENESS PROGRAMMES ON ENERGY EFFICIENCY 6
4. OPPORTUNITIES FOR COST EFFECTIVE, LOW COST AND HIGH COST GHG EMISSION
REDUCTION POTENTIALS 7
5. CURRENT AND FUTURE AVAILABILITY OF DOMESTIC AND INTERNATIONAL CAPITAL
FOR ENERGY SECTOR PROJECTS 7
6. ATTITUDE TO FUTURE COMMITMENT PERIODS 7
7. SPECIFIC COMMENTARY ON THE APPROACH IN EACH COUNTRY FOR ESTABLISHING
A DOMESTIC EMISSIONS TRADING SYSTEM. 7
8. CAPACITY BUILDING NEEDS WITH REGARD TO CLIMATE CHANGE STRATEGY 7
9. LIST OF THE KEY EMISSIONS TRADING STAKEHOLDERS AND PLAYERS 8
9.1 GOVERNMENTAL SECTOR 8
State Directorate for the Protection of Nature and Environment ......................................................... 8
9.2 PRIVATE SECTOR (ENERGY AND HEAT PRODUCTION, INDUSTRY, ASSOCIATIONS) 8
Croatian Chamber of Commerce ........................................................................................................ 8
9.3 NGO´S AND OTHERS 8
Energy Institute "Hrvoje Pozar" Ltd. .................................................................................................... 8
10. REFERENCES 8
11. SUMMARY TABLE 10
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Country Profile – Croatia September 上午九上午九
1. LATEST POSITION WITH REGARD TO RATIFICATION OF THE
KYOTO PROTOCOL
Croatia hasn’t ratified the Kyoto protocol yet, the commitment set by the protocol is GHG emissions
reduction by 5% in comparison to the base year 1990 (proposed). As due to consequences of war and
transition the introduction of additional measures would undoubtedly have negative socio-economic
implications, Republic of Croatioa proposes UNFCCC Secretariat the year 1990 as its reference year.
2. BRIEF DESCRIPTION OF THE ENERGY SECTOR AND STATUS
OF ENERGY SECTOR REFORM
2.1 Primary energy sources
Croatia has certain domestic sources of oil and natural gas, however, these sources cover domestic
requirements only partially. About 54% of primary energy sources is imported – mainly crude oil, coal,
gas and electricity. Croatia is net exporter of oil products. The share of fossil fuels on total primary
energy consumption is more than 86%.
Table 1: Primary energy sources balance of Croatia (1999) in PJ
petrol. RES + electricity heat TOTAL
(PJ) coal crude oil gas nuclear hydro
products waste
Domestic
0,4 64,7 53,0 23,7 13,9 156
production
net imports 11,7 185,9 -59,7 37,9 8,5 184
stock
-2,4 -2,1 5,2 0,7 1
changes
TPES 10 248 -55 92 24 14 8 341
Source: IEA
2.2 Energy utilities, ownership and privatisation of power sector
Power generation, transmission and distribution
The electricity sector is run by the Croatian Electricity Company, or Hrvatska Electropriveda (HEP), a
state-owned firm, which is responsible for generation, transmission and distribution. HEP presently
generates about 95% of Croatia's electricity, the remainder coming from privately-owned industrial
cogeneration power plants and small hydroelectric facilities. HEP has three major oil-fired plants
(Zagreb, Sisak, and Rijeka) plus several small plants fired with coal and natural gas. The Zagreb
facility also has a 160 MWe gas-fired combined heat and power (CHP) plant.
The Transmission Division of HEP controls the power transmission grid in Croatia. Electricity
distribution is operated exclusively by HEP's Distribution Division through 21 distribution regions that
largely correspond to the country's counties.
The Croatian government plans to restructure, liberalise and privatise the energy sector. This
restructuring is expected to emphasise compatibility with the European Union. The development and
implementation of energy policy is the responsibility of the Ministry of the Economy.
Privatisation of power sector
Privatisation activities in Croatia are not as advanced as with some of the other countries in Eastern
Europe. Croatia has been trying to transfer state assets to the private sector on a gradual basis.
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Country Profile – Croatia September 上午九上午九
It is expected that HEP, the state-owned electric utility, could be restructured as early as June 2002.
This could include separation of the generation, transmission, and distribution activities. Other
activities, such as district heating, could also be separated. Eventually, 25% of HEP could be sold to
investors. A separate system and market operations unit was set up within HEP in January 2002.
However, this unit is not expected to be independent until 2003.
Electricity market liberalisation
Major energy reform legislation was passed by the Croatian parliament in July 2001. This included five
new laws:
Law on Energy - umbrella law to set up rules for accountability and transparency ;
Law on Electricity Market - sets up the structure for a system operator and a market operator
which would eventually be independent of the electric utility;
Law on Energy Regulatory Agency - sets up a Regulatory Council and provides for
restructuring INA and HEP;
Law on Oil and Oil Derivatives Market - provides for access to oil and gas pipelines;
Law on Gas Market - provides for access to imported gas by buyers who will consume large
quantities of gas themselves or use it for cogeneration.
Under the new proposed reforms resulting from new energy legislation, electricity consumers who use
over 40 GWh per year will be allowed to buy electricity directly from suppliers and negotiate better
prices. There are 15 large industrial electricity consumers who use over 40 GWh. It is expected that
the size requirement will eventually be reduced over time and eventually all consumers will be allowed
to buy competitively.
2.3 Electricity production, consumption, import and export
Although Croatia's electricity generation has increased from 8,6 GWh in 1992 to nearly 11,0 GWh in
1999, the country's electricity consumption, which has risen from 10,9 GWh in 1992 to 13,6 GWh in
1999, continues to exceed domestic generation, forcing Croatia to rely on electricity imports to meet
domestic demand. Croatia imports a considerable amount of power each year, and one potential
source for the imported electricity is the 632 MWe Krško nuclear power plant, located on the border
with Slovenia and jointly owned by the two countries. After several years of negotiations, Croatia and
Slovenia appear to have finally resolved most financial and other issues concerning the plant. Croatia
has not been using electricity from Krško in recent years.
2.4 Structure of installed capacity and power generation
Croatia has 3 601 MWe of electric generating capacity, consisting of 2 076 MWe of hydroelectric and
1 525 MWe of thermal.
Hydroelectric power is Croatia's largest source of domestic energy, accounting for approximately 35%
of domestic energy production and around 20% of total energy consumption. The country's
hydroelectric plants are located along the Adriatic coastline at Obrovac, Senj, and Zakucac, as well as
along Croatia's border with Slovenia and Hungary at Varazdin.
Croatia also has three oil-fired plants in Zagreb, Sisak, and Urinj, and several smaller gas and coal-
fired plants that account for about 40% of the country's total electricity generation.
The Krško nuclear plant in Slovenia will begin to supply Croatia with electricity by July 2002, as
Croatia should have become joint owner of the plant in January 2002. Croatia built the plant jointly
with Slovenia, although it is located in Slovene territory.
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Country Profile – Croatia September 上午九上午九
Picture 1 : Installed Electricity Generation Capacity in Croatia (MW) in 1999
Structure of installed capacity - Croatia -1999
(MW)
Conventional
Thermal
Hydroelectric
2 076
1 525
Source: DOE/EIA
Picture 2 : Structure of power generation in Croatia in 1999
Structure of domestic power
generation - Croatia - 1999
4%
coal
32%
oil and oil
products
gas
nuclear
hydro (excl.
storage)
geothermal /
solar / wind
biomass /
54%
waste
10%
Source: DOE/EIA
2.5 Future investment plans
Croatia plans to increase generating capacity, especially with natural gas as the fuel. Enron Europe
had signed a 20-year agreement to supply electricity at a fixed price to HEP. Under this agreement
Enron Europe had expected to build a 240 MWe natural gas combined cycle plant at Jertovec, north of
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Country Profile – Croatia September 上午九上午九
Zagreb, which would have been the first independent power plant in Croatia. However, the agreement
was annulled in mid-2000, when the Croatian government decided the terms of the contract were not
favourable.
In the longer term, Croatia also plans to rehabilitate the 125 MWe coal-fired Plomin I power plant.
Croatia also plans to complete the 210 MWe coal-fired Plomin II power plant. In February 2002, HEP
participated in a Washington meeting with potential American investors in the Croatian energy sector
sponsored by the U.S. Department of Commerce and the U.S. Trade and Development Agency. HEP
announced the following five opportunities for independent or joint venture generation projects:
Natural Gas-Fired Power Plant with 300 MWe capacity, planned to begin operation in 2006.
HEP is also looking for investors for a gas pipeline that would service this project.
Coal-Fired Power Plant with 500 MWe capacity, planned to begin operation in 2010.
Lesce Hydroelectric Power Plant with 40 MWe capacity, planned to begin operation in 2006.
Podsused Hydroelectric Power Plant with 43 MWe capacity, planned to begin operation in
2008.
Drenje Hydroelectric Power Plant with 40 MWe capacity, planned to begin operation in 2009.
2.6 District Heating / Combined Heat and Power
At the end of 1999 about 112 000 consumers were connected to district heating systems. Total heat
sales 1,2 TWh. The dominant fuels of the hot water and steam energy production are natural gas and
fuel oil.
Three cities in Croatia, Zagreb, Osijek and Sisak have public co-generation plants and district heating
systems, operated by HEP - National Power Company. Several towns in Croatia have individual block
boilers i.e. public heating plants but on a much smaller scale. Combined heat and power production or
co-generation processes are organised in the public co-generation plants and industrial co-generation
plants.
2.7 Typical electricity and natural gas prices to industrial and
domestic users
The following table gives a brief review of average electricity and natural gas prices for households
and industry in Croatia in 1998 - 2001.
Table 2: Average end-user electricity and natural gas prices in Croatia (USD/kWh)
electricity natural gas
year households industry households industry
1998
1999 0,075 0,053 0,0214 0,0218
2000 0,0214 0,0218
2Q/2001
Source: IEA, International Gas Union
3. CURRENT NATIONAL CLIMATE CHANGE RELATED POLICIES
The Croatia plans to prepare a National Action Plan which will set up a framework for systematic
addressing of climate change issues, including establishment of institutional and organisational
framework for partnership of all the stakeholders, government, public institutions, local authorities and
services, scientific community, private business and others. The Action Plan will contain two basic
parts - Capacity Building Program and Implementation Program.
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Country Profile – Croatia September 上午九上午九
3.1 Energy related taxes and subsidies
In Croatia, the following taxes are imposed on energy related products. The revenue from excise taxes
and VAT goes into the central budget.
Objective of the tax Excise tax rate VAT rate
Unleaded petrol 311.7 EUR/kl 22%
Leaded petrol 376.6 EUR/kl 22%
Diesel 194.8 EUR/kl 22%
LPG 13 EUR/t 22%
Light fuel oil 39 EUR/kl 22%
Other energy products such as coal, natural gas, district heating and electricity are subject to 22%
VAT rate.
In Croatia an introduction of CO2 air emission charge is considered.
3.2 Transport policies
The following CHG mitigation policies are priority ones in Croatia:
Support and development of urban public transport
Utilisation of alternative fuels (biodiesel, hydrogen) covered by the BIOEN and TRANSCRO
national energy program.
3.3 Technical standards
No information available at the moment.
3.4 Agricultural policies
In agriculture, the following measures have been supported:
Energy-from-agricultural biomass
Improvement in application of organic and mineral fertilizers aimed at nitrous oxide (N 2O) emission
reduction
Reduction in methane (CH4) emission by decreased fermentation
Anaerobic fermentation related to decomposition of organic manure and biogas generation
3.5 Information and awareness programmes on energy efficiency
In 1997, the Government of the Republic of Croatia reached a decision to initiate a National Energy
Program (NEP) project within the PROHES program (Program of Development and Organisation of
Croatian Energy Sector). The program was launched to develop an energy management framework
that will principally promote clean technologies, gas networking, energy efficiency, and the use of
renewable resources and environmental protection. Eleven programs have thus far been established
in the fields of energy efficiency, renewable resources, transport and gas networking in Croatia.
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Country Profile – Croatia September 上午九上午九
4. OPPORTUNITIES FOR COST EFFECTIVE, LOW COST AND HIGH
COST GHG EMISSION REDUCTION POTENTIALS
The highest emission reduction potential till 2010 in Croatia is in fuel switching to natural gas in power
sector (1135 kt CO2). Significant potentials are also in thermal insulation improvements in public sector
and households (441 + 401 kt CO2), use of biomass for CHP and heat generation (251 + 698 kt CO 2).
There are also some smaller potentials for RES development – small hydro (126 kt CO2), wind (117 kt
CO2), solar energy in households and public sector and demand-side measures, especially in industry.
5. CURRENT AND FUTURE AVAILABILITY OF DOMESTIC AND
INTERNATIONAL CAPITAL FOR ENERGY SECTOR PROJECTS
Following the political changes that took place at the beginning of 2000, Croatia embarked on the road
of key political and economic changes. Important steps were taken towards improving the investment
climate, progressing with privatisation, and enhancing fiscal sustainability through a Stand-by
Agreement reached with the IMF. The democratic and pluralistic nature of the political institutions were
reinforced.
6. ATTITUDE TO FUTURE COMMITMENT PERIODS
No clear position towards future commitments is set up in Croatia.
7. SPECIFIC COMMENTARY ON THE APPROACH IN EACH
COUNTRY FOR ESTABLISHING A DOMESTIC EMISSIONS TRADING
SYSTEM.
Both JI and emissions trading are seen as possible instruments. It is however expected to achieve the
major part of the reduction by domestic measures and the share between domestic and international
measures is still the matter of negotiations.
In the Joint Implementation, the Croatia is prepared to sign the letter of endorsement with PCF and
signed the memorandum of understanding with the Netherlands, so far there were no projects realised
yet.
8. CAPACITY BUILDING NEEDS WITH REGARD TO CLIMATE
CHANGE STRATEGY
One of the areas for capacity building assessment is the data collection, where most of the data that
are needed are taken from existing data collection systems, remaining ones are obtained by means of
direct contacts with individual pollution sources or expert estimations. Croatia participates in
UNDP/GEF Regional Project “Capacity Building for Improving the Quality of Greenhouse Gas
Inventories (Europe/CIS region)“. Scope of the project is capacity building for improving the quality of
data inputs to national GHG inventories, using the good practice guidance of the IPCC, and includes
emission database management, and systems for collecting, managing and utilising activity data and
emission factors.
Cadastre of Emissions into Environment, which could serve as a basis for national registry, was
established on 1996. Unfortunately system has not reached a sufficient level of liability yet. System will
be improved within the Third LIFE Project” Reconstruction of national emission inventory system and
enforcement of its implementation”.
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Country Profile – Croatia September 上午九上午九
9. LIST OF THE KEY EMISSIONS TRADING STAKEHOLDERS AND
PLAYERS
9.1 Governmental sector
State Directorate for the Protection of Nature and Environment
Ulica grada Vukovara 78, HR-10000, Zagreb, Croatia
Ms. Visnja Grgasovic, Atmosphere protection department
tel.:+385-1-611-1992/613-3444; fax: + 385-1-611-8388; e-mail:duzo@ring.net
Ministry of Environmental Protection and Physical Planning
Ulica grada Vukovara 78, 10000 Zagreb, Croatia
Ms. Jasenka Necak
tel: +385-1- 610-6560; Fax: +385-1- 611-2073; e-mail: jasenka.necak@duzo.tel.hr
9.2 Private sector (energy and heat production, industry,
associations)
HEP – Hrvatska Elektroprivreda
Ul. Grada Vukovara 37, 10000 Zagreb Croatia
Mr. Zoran Stanic, Environmental Coordinator, Development Department
tel: +385 1 632 2857; fax: +385 1 617 0478; e-mail: zoran.stanic@hep.hr
Croatian Chamber of Commerce
Draskoviceva 45, 10000 Zagreb, Croatia
Mr. Nicola Cabrajec
tel: +385-1- 460-6764, 460-6705; fax: +385-1- 460-6737; e-mail: ncabrajec@hgk.hr
9.3 NGO´s and others
Energy Institute "Hrvoje Pozar" Ltd.
Savska cesta 163, 10000 Zagreb, Croatia
tel. ++385 1 6040 588; fax ++385 1 6040 599; e-mail: eihp@eihp.hr; web: http://www.eihp.hr/
10. REFERENCES
1. Acosta, R.: Guidelines for Reporting and Review GHG Inventories under the Convention and
Guidelines under Article 5.1 of the Kyoto Protocol (Presentation at the workshop "National
Systems for Flexible Mechanisms: Implementation Issues in EIT Countries" - Szentendre,
Hungary, May 2002); UNFCCC secretatiat 2002
2. DOE Fossil Energy International Activities website (http://www.fe.doe.gov/international/e-
eur.shtml)
3. EIA/DOE Country analysis briefs website (http://www.eia.doe.gov/cabs/contents.html)
4. Energy balances of non-OECD countries 1998-1999 (2001 edition); OECD/IEA Paris, 2001
5. Energy statistics of non-OECD countries 1998-1999 (2001 edition); OECD/IEA Paris, 2001
6. Key World Energy Statistics from the IEA - 2001 Edition, OECD/IEA Paris, 2001
7. Speck, S., McNicholas, J. and Markovic M.: Environmental Taxes in an Enlarged Europe – An
Analysis and Database of Environmental Taxes and Charges in Central and Eastern Europe.
Regional Environmental Centre, Szentendre, Hungary, October 2001.
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Country Profile – Croatia September 上午九上午九
8. The First National Communication of the Republic of Croatia to the United Nations Framework
Convention on Climate Change (UNFCCC), Ministry of Environmental Protection and Physical
Planning of the Republic of Croatia, 2001
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Country Profile – Croatia September 上午九上午九
11. SUMMARY TABLE
Country Croatia
Date of Ratification of Kyoto Protocol not ratified yet
Kyoto Preparation (Yes/No)
National Communication in CRF no
National Registry no
Monitoring and Verification Protocols no
JI Projects Office no
Climate Change Policies (Yes/No)
National GHG mitigation strategy included in yes
national communications
Carbon taxes ($/tonne) 0
Electricity taxes ($/kwh) 0 (22% VAT)
Renewables taxes ($/kwh) 0
Energy Sector subsidies for fossil fuels 0
Energy Sector subsidies for renewable 0
energy
Programmes to raise awareness and yes
promote energy-efficiency
Performance Standards yes
Energy and GHG Emissions Intensity of
Economy (1999)
CO2 Emissions (Mt of CO2) 19,04
TPES/capita (toe/capita) 1,83
TPES/GDP (toe/thous. 1995 USD) 0,45
Elec. Consumption / capita (kWh/capita) 2 809
CO2 / TPES (t CO2/toe) 2,34
CO2 / capita (t CO2/capita) 4,27
CO2 / GDP (kg CO2/1995 USD) 1,04
Opportunities for low and high cost GHG 1. biomass heat and CHP sources
reduction JI projects (best sectors) 2. RES (small hydro, wind)
3. energy savings in industry
4. thermal insulation of buildings
5. fuel switching to gas in power sector
Current and Future Level of domestic and
international capital for investment in the energy
sector
Experience with JI (e.g – World Bank PCF, Erupt Both JI and ET seen as possible instruments
etc …) prepared to sign the letter of endorsement with PCF
signed the MoU with Netherlands
no JI projects realised yet.
Experience with international emissions trading no
(any deals brokered?)
Experience with emissions trading (policy studies, no
discussion documents)
Establishment of Registry (work underway or not no
yet started?)
Policies on Allocation of Surplus (work underway no
or not yet started)
Attitude to future commitment periods of KP (no No clear position
discussion or some discussions)
highlighted data – to be checked/updated
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