Climate Change Financial Instrument, Latvia

The CCFI programme in Latvia.

The Climate Change Financial Instrument (CCFI) is a Government spending programme of the Republic of Latvia. Aim of the CCFI is to prevent global climate change, to adapt to the effects of climate change and to contribute to the reduction of greenhouse gas emissions (for example, implementing activities to improve the energy performance of buildings in both public and private sectors, to develop and implement of technologies involving renewable energy, as well as to implement integrated solutions to reduce greenhouse gas emissions).

Under this programme tenders are financed by the proceeds from the Assigned Amount Units (AAU) Purchase Agreements which are sold within the international emissions trading scheme under the Kyoto Protocol. The AAU sales are possible, because Latvia met the 8% emissions reduction, specified by the Kyoto Protocol for the period of 2008-2012, compared to 1990. Latvia will not need all available AAU, and the potential excess will be at least 40 million units. Use of all remaining AAU for other purposes, such as transfer to the trading companies of European Union Emission quotas is not possible - AAU cannot be converted into emissions quotas or used instead of emission quotas. However, AAU can be sold if all proceeds are used to invest in the development of Latvia. Decision on the sale of the AAU was made by Cabinet of Ministers (see Regulation No 249, adopted on April 12, 2006: " On the Commencement of Participation of Latvia in International Emission Trade ").

CCFI activities are regulated by the approved international agreements for the sale of the AAU of Latvia, as well as adopted Latvian legislation, such as the law "On Participation of the Republic of Latvia in the Flexible Mechanisms of the Kyoto Protocol" (entered into force on 13 December 2007), Cabinet of Ministers regulation No 312 "By-law of the Advisory Council of Climate Change Financial Instrument" (approved on 28.04.2009), and by Cabinet of Ministers Regulation No 644 "Procedures for Implementation of Projects Financed by the Climate Change Financial Instrument, the Submission and Examination of Reports Thereof" (approved on 25.06.2009).

Information about the tenders funded by CCFI, as well as the procedures for application, review, approval and funding are found on the website of the Ministry of Environmental Protection and Regional Development [www.varam.gov.lv.]

Mandatory regulations

Horizontal regulations:

Relevant as well is the Law "On Participation of the Republic of Latvia in the Flexible Mechanisms of the Kyoto Protocol" (adopted on 08.11.2007, in force since 13.12.2007) (amended by the Saeima on 28 January 2010, and 16 December 2010, the latest amendments in force since 1 January 2011). This Law prescribes the basic principles for participation of the Republic of Latvia in the flexible mechanisms of the Kyoto Protocol and the competence of institutions related to this participation as well as the procedures of planning, utilisation and administration of the resources obtained as a result of sale of the assigned number of units owned by the State. Of further relevance is the Cabinet of Ministers Regulation No 644 "Procedures for Implementation of Projects Financed by the Climate Change Financial Instrument, the Submission and Examination of Reports Thereof" (approved on 25.06.2009, in force since 18.07.2009). This Regulation prescribes the procedures for the implementation of projects financed by the CCFI, including the inviting of tenders and the submission and evaluation of related reports.

More specific regulations on the design and construction or renovation processes are laid down in the Cabinet of Ministers Regulation No 1185 (dated 28 December 2010) of the Open Tender "Low Energy Consumption Buildings" for the Projects Financed by the Climate Change Financial Instrument.

Other documents:

Related items include the Guidelines for scoring the projects to be carried out in compliance with the purchase of green public procurement requirements [ http://www.lvif.gov.lv/uploaded_files/KPFI/11062010/ZPI_atbilstibas_vert_vadl.pdf ].

Low Energy Consumption Buildings

The objective of the invitation for tenders is the reduction of carbon dioxide emissions, either through the construction of new low energy buildings, or the reconstruction or simple renovation of existing buildings with the objective of conserving energy (hereinafter - reconstruction).

The budget of the financial instrument under which the tenders can take place shall be LVL 7 261 722 (equals about 10 372 308 EUR).

The submitter of a project application (hereinafter - project applicant) can be a direct or indirect administrative institution, the council of a city or county of the Republic of Latvia (hereinafter - municipality), a micro, small or medium-sized enterprise registered in the Republic of Latvia (hereinafter - enterprise) or a tax-paying entity. Distinct sub-paragraphs of the regulation pertain to each of these possible types of applicants, specifying the kinds of buildings for which each type of applicant can apply.

Within the tender the maximum financial support by the financial instrument, taken in relation to the total eligible costs of the project, shall not exceed:

65 % - for micro and small enterprises and tax-paying entities;

55 % - for medium-sized enterprises;

80 % - for direct or indirect administrative institutions and municipalities.

The maximum contribution through the financial instrument available within the framework of the tender for any one project shall be LVL 750 000.

Within projects initiated as a result of the invited tenders: 24.1. the following project activities can be supported: 24.1.1. preparation of energy audit report and elaboration of technical survey report (in a building reconstruction project), and performance of the calculation of the expected energy consumption of the building of a new construction project prepared in compliance to sub-paragraph 6.4 of Annex No. 3 to these regulations; 24.1.2. preparation of the construction project and technical documentation and coordination thereof according to the procedures prescribed by regulatory enactments on the energy efficiency of buildings and construction; 24.1.3. construction of buildings in which a low energy consumption is expected; 24.1.4. performance of reconstruction works improving energy efficiency; 24.1.5. conversion of heat supply system from fossil to renewable energy sources, including installation and connection of renewable energy sources (solar collectors, pellet or woodchip heating boilers, heat pumps with transformation coefficients that comply with Table 2 of Annex No. 1 to these Regulations), all or any of this subject to the condition that, after the implementation of the project, the installed heating capacity of the equipment does not exceed the calculated required capacity for ensuring the heating and supply of hot water by more than 10% (applicable to reconstruction projects); 24.1.6. inspection of the building envelope structures during the construction phase (including the performance of air permeability tests and thermography); 24.1.7. project publicity measures; 24.2. In case the application comes from an enterprise, project publicity meaures will not be supported.

The above is specified in Cabinet of Ministers Regulation No. 1185 (dated 28 December 2010) on the invitation for tenders of "Low Energy Consumption Buildings" as potential projects to be financed by the Climate Change Financial Instrument.

More information: www.lvif.gov.lv