Danish - Lithuanian Environmental Co-operation 1991-2000
Chapter 15
The energy sector programme
Since 1992, Lithuania and Denmark have been co-operating on environment related energy sector issues, based on a close partnership between the Danish Energy Agency and the Lithuanian Ministry of Economy (previously Ministry of Energy). Since 1992, approximately DKK 135 million (EUR 18.15 million) has been allocated to the Lithuanians through this programme where special priority has been given to the transfer of Danish experience and knowledge.
The overall objective of the Energy Sector Programme is to promote an environmental sustainable energy development in Lithuania, in line with the Lithuanian governmental policies and the international agreements on environment relating to the energy sector (The Baltic Agenda 21, The Climate Convention, The Kyoto Protocol, The Energy Charter, The Aarhus Declaration etc).
The overall targets of the Energy Sector Programme are therefore the following areas:
 | Promotion of cleaner fuels: replacement of environmentally polluting fuels with less polluting fuels like natural gas and renewable energy. |
| Promotion of efficiency improvement in production and supply of energy: lower consumption by combined heat and power production, change in heating technology, better fuel management, lowering of transmission losses etc. |
| Energy saving at the end-users: energy conservation through insulation, automation, energy management and change in behaviour concerning energy awareness. |
| Capacity-building and training both as an integrated part of each project and as general activities towards the energy sector. |
Following the decommissioning decision of Ignalina NPP, the Energy Sector Programme has especially focused on assistance for the decommissioning and the replacement of Ignalina NPP. This is done through transfer of experience and knowledge from Danish strongholds relevant to the Lithuanian situation.
Project support and achievements
The development in the project portfolio since 1992 reflects the development in the Lithuanian energy sector. Starting with numerous demonstration projects, feasibility studies and general energy-awareness projects, the programme has over the years moved to policy-oriented projects, business-plan projects and training projects. This is mainly due to the increasing awareness of energy costs and environmental effects, as well as more detailed policies from national and regional level.
District Heating
More than 50 per cent of the total allocation over the years have been used in the district heating sector.
Lithuania has a highly extended districtheating sector, which, if efficiently operated and maintained, is an important element of a sustainable heat supply. As well is the existence of district heating systems an opportunity for the use combined heat and power production, with a far higher fuel efficiency than separate production.
District heating rehabilitation studies have been performed in a number of cities (Vilnius, Kaunas, Klaipeda, Alytus, Marijampole, Panevezys, Palanga, Kedainiai), as well as a number of investments project demonstrating the feasibility of different technical solutions have been made. The studies have been performed according to the requirements of the international financing institution to ensure a proper documentation for loanfinanced renovation.
Due to the financial crises in Lithuania in the recent years, only limited loan financed renovation has been initiated. The transfer of knowledge during the feasibility studies has, however, initiated the renovation process financed by the limited resources of the district heating companies themselves. It is expected that, within the next years, a major loanfinanced renovation process in the district heating sector will be seen, not the least due to a legislative and regulatory reform of the whole energy sector which will provide a far more transparent economy for the operation and renovation of the district heating sector. A district heating training network was initiated in 2000. This network trains not only technicians, but also economics from the utilities and municipalities as owner of the systems.
Improvements and energy savings in the Lithuanian district heating system is one of the target areas of the Energy Sector Programme.
Natural gas
Lithuania is supplied with natural gas from Russia and has a widely developed network. This network is, however, not very well maintained, resulting in a high emission of methane gas from the network. Being a far more harmful climate gas than e.g. CO2, the reduction of unintended leaks of methane from the network has been supported widely. Specific projects to rehabilitate the network have been supported, as well as the development and implementation of qualified operation and maintenance strategies. The reduction obtained of the harmful climate gas, methane is equivalent to several million tons of CO2.
The efficient use of natural gas in Lithuania (in balance with electricity and district heating) is at present not very good. The initiated energy reform and the increasing use of detailed energy planning in Lithuania is expected to increase the possibility of a more efficient use of the natural gas. Natural gas will probably be the most important fuel for electricity production when the closing down of the Ignalina NPP becomes a reality. The Energy Sector Programme is hence preparing for assistance in this field to promote a more sustainable use of natural gas which is being the most environmentally friendly fossil fuel.
Electricity
The Lithuanian electricity sector is almost totally dominated by the Ignalina NPP, generating 80-90 per cent of the electricity consumed in Lithuania. The plant is however of a design which cannot be modernised to a Western European safety level. An early closure of the Ignalina NPP has therefore been a highly prioritised issue from the western community. The present low cost of electricity from Ignalina NPP and the high cost of decommission have, however, been a rather difficult barrier for a political decision in Lithuania. The Energy Sector Programme assisted in 1998-99 on the background studies for the National Energy Strategy which eventually included the graduate decommissioning decision. The Energy Sector Programme will further assist in the implementation of the Action Plan to the National Energy Strategy.
Energy Efficiency
The potentials for energy saving at the endusers in Lithuania are very high. The use of energy is simply at a very high level compared to the product obtained (industrial product, heat comfort etc). The incentives for energy saving are in general hindered by a lack of transparency in organisation and pricing in the energy sector. The process of financial unbundling, the first step in establishing market prices, in still ongoing and the restructuring of incentives for energy saving at end-users are not fully completed either.
The high cost of energy in Lithuania is not only a burden on the domestic households, but a serious burden on the Lithuanian macro economy as well and thereby the competitiveness of Lithuanian economy. The accession to the EU, and thereby the opening of the Lithuanian market and direct competition, will require a large reduction of the energy intensity, to facilitate favourable conditions for the Lithuanian industry and trade in the open competition with other EU countries.
The Energy Sector Programme has been supporting projects at two levels regarding energy saving:
| Demonstration projects on energy saving, which has covered industry, buildings and a hospital |
| activities at the Energy Efficiency Centre in Vilnius, a centre under the Lithuanian Energy Agency. |
The latter have included both training of energy auditors (buildings, industry, energy management etc) and specific campaigns to enhance the general public energyawareness.
With the ongoing financial unbundling of the energy sector and the clarification of incentives for energy efficiency, the possibilities for further development of energy saving activities will be increased.
Furthermore, the decommissioning of the Ignalina NPP and thereby the extended use of fossil fuel for electricity production, will necessitate more attention to energy saving for environmental reasons. The fulfilment of especially the Kyoto protocol on the reduction of CO2 emissions, will necessitate the development of new legislative and fiscal tools for increasing the efficient use of energy and thereby reduce the CO2 emissions at the production plants.
Renewable Energy
Except from the limited use of hydropower, Lithuania is not using its renewable energy sources very much. A main renewable energy source in Lithuania is biomass derived from straw and wood. The Energy Sector Programme has been supporting a number of demonstration projects in form of a new boiler for district heating production based on biomass. Other donors, especially the Swedish NUTEK programme, have been supporting with new boilers as well. The projects concluded that the transfer of new technologies (including operation and maintenance) are fairly easily adopted in Lithuania and that the heat economy is acceptable. A large scale development of biomass for both the heat and the combined heat and power production, is, however, in need of more detailed development of generic project documentation for dissemination as well as detailed focus on the market and logistics for biomass. This area will be explored further in co-operation between the Energy Sector Programme the DANCEE programme and the Lithuanian counterparts.
Capacity-building and training
The legacy from the Soviet period left only limited tradition and capacity of strategic energy planning and regulation, as well as policy preparation within the central administration. A modernisation of the approaches and the methodologies in the market economic energy sector regulation has only been limited. With the invitation of EU accession negotiation, the focus on administrative capacity within the energy sector and the central administration has increased dramatically, but has at the same time been restricted by the financial constraints of the public finances.
The Energy Sector Programme has been assisting the Ministry of Economy with the development of the National Energy Strategy in 1999 and is committed to assist further on the implementation of this in the form of both policies, legislation and action plans. The ongoing process of EU harmonisation is currently the most important task for Lithuania, but the adoption of international environmental agreements in Lithuania will in the future require much more attention in the energy administration. The Danish Energy Agency is furthermore participating in an EU Phare Programme financed Twinning project with the Ministry of Economy which is focusing on the adoption of the EU legislation to the energy sector and capacitybuilding within the energy administration. The Energy Sector Programme is in parallel assisting on specific training and capacity building projects.
Future plans and targets
The strategy for the future assistance from the Energy Sector Programme is to increase the focus on national energy planning, policy formulation and regulation, as well as energy saving and renewable energy. The development of environmentally sustainable policies, tools and action plan on the energy sector is very important, not only to ensure a sustainable development in Lithuania as such, but also to assist Lithuania in the replacement of Ignalina NPP, in the accession to the EU and in the implementation of international environmental agreements in Lithuania.
The very much needed technical renovation of the Lithuanian energy sector can be expected to be implemented on a business level due to legislative, regulatory and pricing reform which will facilitate far more feasible options for commercial loans and investments. Technical assistance is however still needed and will be prioritised by the Energy Sector Programme.
Further information on the Energy Sector Programme is available from:
The Danish Energy Agency
Amaliegade 44 DK - 1256 Copenhagen K
Telephone: + 45 33 92 67 00
E-mail: ens@ens.dk
Homepage: http://www.ens.dk
