A Climate for Change

(^226) Evaluation of Current Activities to Mitigate Climate Change – Institutional Analysis Human Development Report - Croatia 2008
X For a broader description about the debate over aviation emis-
sions and the ETS, see http://www.euractiv.com/en/transport/
aviation-included-eu-co2-trading-scheme/article-174072 which in-
cludes numerous viewpoints on the issue as well as links to various
stakeholders and their opinions. EurActiv.com 2008.
sirable for developed countries such as Denmark and
Norway, it might be too high for Croatia. On the other
hand, some believe the amount is too small and con-
centrates on too few actors to induce actual reductions.
An annual environmental charge already exists for
motor vehicles, which generates revenue for the Envi-
ronmental Protection and Energy Efficiency Fund. The
amount is relatively insignificant as a deterrent to us-
ing passenger cars (it is essentially the price of 10-15
litres of gasoline – less than half a tank), but it does
provide revenue that can be used for pollution reduc-
tion measures.
It is worth noting that in the last four years HRK 124
million (approximately EUR 17 million) was allocated
to energy efficiency and renewable energy projects.^23
However, only HRK 49 million (EUR 6.7 million) was
actually used by energy efficiency and renewable en-
ergy projects.^24 This discrepancy indicates a lack of ab-
sorption capacity for the implementation of projects
that reduce emissions and/or a need for more effec-
tive programming to ensure that revenue from carbon
emissions fees is spent on carbon reductions or to off-
set taxes in some other way.
To date, because of the delay in agreeing on baseline
emissions levels and its relatively recent (2007) ratifi-
cation of the Kyoto Protocol, Croatia has not partici-
pated in any international carbon trading regime, and
no Croatian companies are involved in Clean Develop-
ment Mechanism or Joint Implementation projects. As
a part of the process of harmonising legislation with the
EU, Croatia is still preparing the regulation that would
allow businesses to participate in these programmes.
The business sector is generally very interested in be-
coming involved in trading mechanisms. This is espe-
cially true with regard to the National Allocation Plan
for 2010-2012, which is being developed with support
from the EU CARDS programme. Under the National
Allocation Plan, emissions allowances will be distribut-
ed to operators of installations participating in the EU
ETS. Concern exists that business representatives will
not be sufficiently involved in the development of the
plan, which is potentially the most important scheme
for dealing with Croatian emissions, given imminent
EU accession. Under the proposed plan, sources (that
is, companies) will be able to emit a certain amount
of carbon under the ETS. If a company emits less than
this amount, it will be able to sell its “extra” emissions
on the market. If an installation emits more than its
allocated amount, it will have to buy emissions on the
market. It is a complicated system, and the entrance of
Croatia into the ETS will require significant effort by in-
dustries – including the aviation industry,^25 which the
European Parliament recently voted to include in the
system.X This is a major market: the ETS system in 2007
was estimated to be worth EUR 28 billion.^26
Partially thanks to the carbon fee introduced by the
Government and Croatia’s impending entry into the
ETS, awareness among business leaders is growing.
Many already consider energy efficiency important for
reducing costs in general. There may be further poten-
tial to expand energy efficiency beyond the building
sector to include actual production systems for SMEs
and large firms. However, little baseline analysis has
been carried out regarding this issue. A positive de-
velopment in this direction is that the Croatian Cham-
ber of Economy, the largest organisation representing
business members in Croatia, is closely involved in
the development of the National Allocation Plan and
is planning to expand its involvement in energy effi-
ciency measures.
In addition to trading mechanisms and involuntary
financial mechanisms, companies such as Holcim (a
major cement company), Croatia Airlines, and HEP
are engaging in efforts to reduce emissions through
efficiency measures or by using renewable energies.
HEP has formed a sub-company whose focus is re-
newable energy development (HEP- Renewables) and
the HEP Energy Services Company (HEP- ESCO), which
concentrates on potential energy efficiency projects.
The company has also been engaged in projects to
analyse the potential for acquiring carbon credits by
participating in the project activities of the Kyoto Pro-
tocol flexible mechanisms: Clean Development Mech-
anism (CDM) and Joint Implementation (JI), as well as
Partially thanks
to the carbon fee
introduced by
the Government
and Croatia’s
impending entry
into the ETS,
awareness among
business leaders
is growing