Final Report to 22nd BSPC August 2013

Baltic Sea Parliamentary ConferenceBaltic Sea Parliamentary ConferenceThe BSPC Working Group on GreenGrowth and Energy EfficiencyFinal ReportAugust 2013Baltic Sea Parliamentary Conference Secretariatwww.bspc.netc/o Nordic CouncilVed Stranden 18DK-1061 Copenhagen K.Phone (+45) 33 96 04 00www.norden.org.US 2013:415BSPC_Green Growth_OMSL.indd 1 16/07/13 08.49Baltic Sea ParliamentaryConferenceThe BSPC Working Group onGreen Growth and EnergyEfficiencyFinal ReportAugust 2013Baltic Sea Parliamentary Conference The Baltic Sea Parliamentary Conference (BSPC)The BSPC Working Group on Green Growth and was established in 1991 as a forum for political dia-Energy Efficiency logue between parliamentarians from the Baltic SeaUS 2013:415 Region. BSPC gathers parliamentarians from 11national parliaments, 11 regional parliaments and 5parliamentary organizations around the Baltic Sea.© Nordic Council of Ministers 2013 The BSPC thus constitutes a unique parliamentaryText: Tryggvi Felixson and Jan Widberg bridge between all the EU- and non-EU countries ofEditing: Jan Widbergthe Baltic Sea Region.Layout: Erling LynderBSPC aims at raising awareness and opinion onPhotos: Jan Widbergissues of current political interest and relevance forCopies: 250the Baltic Sea Region. It promotes and drives vari-Print: Rosendahls-Schultz Grafiskous initiatives and efforts to support a sustainableenvironmental, social and economic developmentPrinted on environmentally-friendly paperof the Baltic Sea Region. It strives at enhancing thePrinted in Denmarkvisibility of the Baltic Sea Region and its issues in awider European context.The Baltic Sea Parliamentary Conference is theannual general assembly in the Baltic Sea Regionfor broad political debate on Baltic Sea issues. TheConference resolutions are political tools whichenables the BSPC to launch and sustain political ini-Baltic Sea Parliamentary Conference tiatives, and to approach the governments andwww.bspc.net regional organizations on issues of common inter-est.Jan WidbergThe BSPC has a number of working bodies at itsHead of BSPC Secretariatdisposal, which serve as resources for driving andjw@norden.orgimplementing BSPC priorities and objectives. AStanding Committee is responsible for the follow-up of BSPC resolutions, for identifying and address-ing issues within the BSPC field of responsibility,BSPC Secretariatand for preparing the annual Conferences.c/o Nordic CouncilThe BSPC Working Groups are political vehiclesVed Stranden 18with the overall objective of elaborating joint politi-DK-1061 Copenhagen K.cal positions and recommendations on issues ofPhone (+45) 33 96 04 00common interest in the Baltic Sea Region. BSPCwww.norden.org.external interfaces include parliamentary, govern-mental, sub-regional and other organizations in theBaltic Sea Region and the Northern Dimensionarea, among them CBSS, HELCOM, the Baltic SeaLabour Forum (BSLF) the Northern Dimension Part-nership in Public Health and Social Well-being(NDPHS), the Baltic Sea States Sub-regional Cooper-ation (BSSSC) and the Baltic Development Forum.ContentsForeword ............................................................... 51. Political Recommendations of the Working Group ............. 72. Background. ...................................................... 113. Challenges and Opportunities for green growth andenergy efficiency. ................................................ 144. Composition and Activities of the WG ......................... 365. Mid-way Report 2012 of the Working Group .................. 45ForewordEnhanced and persistent efforts to promote and support greengrowth and energy efficiency are important steps on the roadtowards a sustainable society, in which economic growth, socialwelfare and environmental stewardship go hand in hand and aremutually reinforcing. There is no contradiction between growthand sustainability – provided that growth is managed in a mannerthat safeguards the natural assets and environmental services onwhich our welfare ultimately rests.The BSPC Working Group on green growth and energy efficiencywas launched by the 20th BSPC in Helsinki in August 2011. Theoverarching mission of the Working Group is to elaborate politicalpositions and recommendations in the field of green growth andenergy efficiency and to raise the political attention on theseissues. The activities of the Working Group have spanned a broadrange of initiatives and endeavours within the field of greengrowth and energy efficiency. The Working Group issued a first setof political recommendations in its mid-way report to the 21stBSPC in St Petersburg in August 2012. The final and consolidatedpolitical considerations and recommendations are found in thisreport, which also marks the conclusion of the Group’s work.There is a growing awareness of the need for a transfer to a moresustainable use of environmental services and for a long-term andecologically based perspective on social development and eco-nomic growth. There is also a growing interest for measures to pro-Cecilie Tenfjord-ToftbyFoto:FredrikWennerlund6mote green growth and energy efficiency, by individuals as well asinstitutions and enterprises; by local communities as well asnations and regions. During the course of the Working Group’sactivities, we have witnessed many promising achievements to thisend. However, the road goes on, and there is no time for compla-cency. We are convinced that more efforts are needed to furtherdevelop and implement financing schemes that support greengrowth and energy efficiency, to strengthen efforts to develop andapply green public procurement schemes, to develop commontechnical standards and building codes for green technologies, andto increase awareness in households and enterprises about thegains of green growth and increased energy efficiency – to pick afew examples.I have had the great privilege and immense pleasure of chairingthe Working Group, together with my Vice Chairman Tony Asumaafrom the Åland Islands. It has been an enriching and educationaljourney, which has provided the Working Group with inspiringinsights and valuable knowledge from the whole Baltic Sea Region.It fills us with confidence that activities are bustling and that thewillingness and potential for cooperation on green growth andenergy efficiency is high. I would like to extend my warm thanksto my colleagues in the Working Group for their firm support,steady dedication and invaluable contributions to the progress andresults of the Group. My thanks also go to the Working Group Sec-retariat for its skilful preparations and follow-up of the WorkingGroup’s activities.Cecilie Tenfjord-Toftby, MP, Parliament of SwedenChairperson of the BSPC Working Group onGreen Growth and Energy Efficiency 2011–201371. Political Recommendations ofthe Working GroupThe BSPC Working Group on green growth and energy efficiencycalls upon the Governments of the Baltic Sea Region and, whereappropriate, the Parliaments of the Baltic Sea Region to:• Further develop and implement financing schemes that sup-port green growth and energy efficiency, at both national andregional level; develop legislation that facilitates innovativefinancing of energy efficiency measures.• Build up capacity to give temporary public support that is nec-essary to promote the development of new green technolo-gies; the support has to be designed in such way that it doesnot lock in certain technologies and crowd out private invest-ment.• Strengthen efforts to develop and apply green public procure-ment and adopt common criteria that can be applied in theregion as a whole, in order to expand markets and open up forinnovation.• Cooperate to develop common technical standards and build-ing codes for the region as a whole in order to enable econo-mies of scales for green technologies, including a commongreen labelling scheme.• Support efforts in the European Union to improve the func-tioning of the market for CO emission trading (ETS) in order2to internalise external costs.; furthermore, support in generalefforts to internalise environmental cost and cut support tounsustainable production.• Support efforts to connect national electricity grids, whichwill facilitate investments in renewable energy production andcontribute to energy supply security.• Facilitate development and investment in infrastructure fordelivering ecologically friendly fuels, such as LNG and CNG, toships.• Make efforts to increase awareness in households and enter-prises about environmental consequences of current unsus-tainable patterns of production and consumption, and aboutthe potential for improvements through green growth andincreased energy efficiency.Core Messages to the 22nd BSPC Resolution• Public awareness, in households as well as enterprises, is a pre-requisite for broad support for green growth and energy effi-ciency. Governments in the Baltic Sea Region, in cooperation10Helsinki 2 March 2012with local authorities, NGOs and other stakeholders, need tostrengthen efforts to create awareness about how green growthand energy efficiency can support well-being in the region.• Common standards and building codes are required to create alarger market for new products and innovative solutions thatsupport green growth. Through green public procurement(GPP), governments can release the business potential in newand innovative solutions. The governments in the Baltic SeaRegion should strengthen cooperation for developing commontechnical standards and building codes, as well as common cri-teria for GPP.• Connecting national grids will facilitate investments in renewa-ble energy production and contribute to energy supply security.The governments in the Baltic Sea Region should support andstrengthen efforts by the national grid operators to improve theconnections of national grids across borders.• Investment in infrastructure, businesses and buildings is greatlyneeded in order to exploit the potential for energy efficiencyand green growth at national, regional and local level. The gov-ernments in the Baltic Sea Region need to further develop andimplement financing schemes that support green growth andenergy efficiency, and to develop legislation that facilitates inno-vative financing of energy efficiency measures.112. BackgroundAbout 85 million people live in the Baltic Sea catchment area,according to HELCOM. Together, they could become a very impor-tant player in the field of green growth and energy efficiency. Theyhave the potential to transform their conventional economy to agreen one, in which production and consumption is carried out inan environmentally sustainable manner. They also have the poten-tial to foster eco-innovation and increase energy efficiency by20–30%, and still maintain profitability in their industries. Stringentand persistent policies are needed to realize this potential. A jointgreen growth and energy efficiency vision for the BSR could be aneffective lever in such a process.Green growth should combine economic development and envi-ronmental sustainability, and support social sustainability. As inter-est is growing, both among the public in general and industry, ingreen growth and energy efficiency, it is timely, topical and moti-vated to strengthen parliamentary involvement and influence onthese matters. Therefore, the Baltic Sea Parliamentary Conference,in August 2011, decided to establish a Working Group on greengrowth and energy efficiency. The WG delivered a mid-way reportto the 21st BSPC in August 2012, including a number of policy rec-ommendations1.What is Green Growth?As a useful point of departure, the Working Group agrees with thedefinition of green economy presented in the OECD report ongreen growth from 20112: “Green growth means fostering eco-nomic growth and development while ensuring that natural assetscontinue to provide the resources and environmental services onwhich our well-being relies. Together with innovation, going greencan be a long-term driver for economic growth, through, for exam-ple, investing in renewable energy and improved efficiency in theuse of energy and materials.”Resource EfficiencyResources are limited and, with the projected rise in world popula-tion from the current 7 billion to 9 billion in 2050, the use of natu-ral resources is expected to rise. Resource efficiency is therefore akey to securing growth and jobs in Europe. The use of materials1 Mid-Way Report with Political Recommendations of the BSPC Working Group on GreenGrowth and Energy Efficiency, 20 August 2012.2 Towards green growth. A summary for policy makers, OECD, May 2011.12has to be reduced and waste minimised. This can only be achievedthough improved resource management, changes in consumer pat-terns and improved production processes. New logistical solutionsare also needed. The key to all this is technological innovation andawareness raising.A successful implementation of green growth will boost economicperformance, create many new opportunities for businesses aroundthe Baltic Sea, increase security in the supply of essential resources,and support the efforts to curb dangerous climate change.Energy Efficiency – the Key to Green GrowthIssues relating to energy efficiency have a central significance, andneed much emphasis. The cost of energy is rising and is expected torise further in the years to come. Access to affordable energy is veryimportant for facilitating growth and prosperity in the Baltic SeaRegion. The cheapest energy is the energy that is saved throughmeasures that increase energy efficiency. The Working Group is ofthe view that measures to improve energy efficiency are of outmostimportance for continued green growth in the Baltic Sea Region.Energy issues are also a crucial factor in the ongoing global debateon climate change.Energy efficiency is the key component in EU’s Road Map 2050directive3. In its mid-term report in August 2012, the Working Grouprecommended binding national targets for energy efficiency thattake into account the specific conditions in the individual countries.This is in accordance with the position of the European Parliament.The Working Group advocated that member states, in addition towhat is specified in the newly adopted EU directive, develop andimplement measures that are needed to achieve the binding targets.Binding targets and binding measures should not be seen as mutu-ally exclusive solutions.The development and implementation of EU policies for promotingenergy efficiency is of utmost importance for creating a level play-ing field and promoting cooperation. The Working Group agreesthat the EU should set uniform methods and rules for measuringenergy efficiency and its impact.3 The document describes the EU goal to reduce greenhouse gas emissions by 80% by 2050compared to 1990, as decided in 2009.13Many Obstacles...In a survey of the opinions of the Working Group members con-cerning obstacles for the implementation of energy efficiencymeasures, it was pointed out that high investment costs and insuffi-cient funding are seen as obstacles to the application of economicenergy efficiency measures, both with regard to consumers as wellas the energy providers. At the same time, companies consider thepay-back periods as being too long. Also, a lack of information andknowledge about energy efficiency measures on the part of thesmall end consumers is identified as hindering the development ofan energy efficient economy. The context of the measures is impor-tant; for instance, financial constraints can stem from vastly differ-ent developments: while in some countries limited financial meansimpede extensive action, others have already undertaken signifi-cant efforts to boost energy conservation measures, thereby mak-ing further, separate measures uneconomical. Geographical dis-tances and population density are also important when it comes toidentifying energy-efficient solutions in the transport sector.... but also Important AccomplishmentsThe survey among the members of the WG also showed that thereare several examples of successful measures in breaking downobstacles and thereby promoting energy efficiency. Besides rele-vant EU directives and funds in the area of energy efficiency, manymember states have drafted their own national or regional legisla-tion to promote and support energy efficiency measures. Subse-quent information campaigns range from broad initiatives aimed atraising awareness to concrete support and advice programs. Withregard to the private buildings sector, some countries have intro-duced energy certificates, which have led to significant energy effi-ciency improvements in single-family detached houses. In terms offunding, measures include economic incentives in the form of taxbreaks as well as subsidies for energy-efficient measures.143. Challenges and Opportunitiesfor Green Growth and EnergyEfficiency3.1 Vision and StrategiesThe move towards a green economy is high on the global agenda,as was clearly formulated in the final document at UN Conferenceon Sustainable Development in Rio de Janeiro in 2012 (Rio + 20),“The Future We Want”. The greening of the economy is relevant forall economies, irrespective of size and organization. It can beviewed as a natural continuation of Agenda 21, which was adoptedin Rio de Janeiro 1992 and had a noteworthy effect on policydevelopment in all parts of the world.Green growth is an instrument for the greening of the economyand promoting sustainable development. The concept can beapplied at global level as well as at local and all intermediate levels.The transition is already underway. Some states have made signifi-cant advances; others have been more reluctant to promote greengrowth. However, the Working Group has not noted any fundamen-tal disagreement about the need to make the green transformation.From a national perspective, green growth is a path that generatesnew jobs, improves efficient use of limited resources, reduces pol-lution and improves living conditions for the public at large. From aregional perspective, such as the Baltic Sea Region, green growth isan instrument for closer cooperation, sharing relevant knowledgeand experiences, reducing barriers to trade, improving the environ-mental status of the Baltic Sea and improving air quality. For theworld, green growth is about sustainable growth in a worldapproaching its resource limits.3.2 ChallengesThere is a wide support for the “greening of the economy” at local,national, regional and global level. However, the transition from thecurrent economic paradigm to green economic growth and energyefficiency faces a number of obstacles, which will be overcomewith time. The negative consequences of current consumption pat-terns and production methods pose a serious threat to our socie-ty’s long-term well-being and existential basis. The transition to agreener economic paradigm is therefore too slow. The question iswhat can be done to increase the speed of progress?15The Working Group sees four types of obstacles: political/legal,economic, vested interests, and perception and tradition.On the political/legal level, lack of predictable and regulatory cer-tainty for businesses is an obstacle. Many investments are based onstable long-term rate of return, in particular in the energy sectorwhere the payback time can be over 25 years. Furthermore, thereare subsidies that support unsustainable solutions. Uncertaintyabout property rights can also hinder much-needed investments.Technical standards and building codes are often based on oldtechnologies, and so hinder the use of innovative technologies.Lack of common standards across state borders makes it difficultto benefit from economies of scale.On the economic level, there is a lack of positive economic incen-tives to shift to greener solutions, because environmental costs arefrequently not or only partially internalised. The lack of financingof high upfront investment costs that yield positive rates of returnin the long run can be an obstacle to investments by small andmedium-size enterprises. It can also hinder improvements thatwould have both economic and environmental benefits in residen-tial housing. Lack of human capital with the necessary technicalskills may also hinder progress.Vested interests can be a real obstacle to the green transformation.Those who base their livelihoods on unsustainable productionmethods are reluctant to support development that may not bene-fit them, at least not in the short term.Perception and traditions derive from times when naturalresources were viewed as almost unlimited and economic growtha law of nature. They prevent the recognition of the limits ofresources and the importance of maintaining healthy ecosystemsthat provide societies with many important services, such as cleanwater and air.3.3 Measures to Support Green Growth andEnergy EfficiencyGreen growth and energy efficiency can be achieved throughimproved resource management, including reduced pollution andincreased productivity, where long-term benefits replace short-term profits. Innovation is imperative. New and green solutionsmust replace old and unsustainable habits. However, it is importantthat policies are technology neutral to prevent preclusion ofpotentially efficient solutions.16The Working Group sees several categories of measures that couldbe deployed to support and nurture the growth of green growthand energy efficiency initiatives and projects:• Awareness-raising• Economic incentives• Standards and labels• Financing schemes• Green public procurement• International cooperation• Research and development17Berlin 12 October 2012Awareness-raisingThe green transformation needs broad public support. Awareness bybusinesses and the public at large is essential. The members of theWorking Group have provided a number of examples of awareness-rais-ing actions.In its mid-way report in 2012, the Working Group recommendedimproved information about green growth and energy efficiency. Therecommendation stated that there is a need to provide consumers andbusinesses with concrete knowledge about and advice on the mid- and18long-term gains from energy efficiency measures, both in savingenergy costs and in providing business opportunities.There is a broad agreement that existing opportunities for increas-ing energy efficiency are not fully exploited. There is a need to pro-vide consumers and business with more information about poten-tial gains from energy efficiency. There is a need to continue thework on common energy labelling, based on life-cycle analysis, andto disseminate and exchange information about best practices.Non-governmental organizations (NGOs) play an important role inawareness-raising and should be supported in this work.Examples of best practices:• The Centre for Renewable Energy (Landeszentrum für Erneur-bare Energien) in Neustrelitz in Mecklenburg-Vorpommern(Germany) is working to inform the wider population thoughinteractive and modern exhibitions. Businesses can also pre-sent their products and solutions in the centre.• The island of Samsø in Denmark has been working since 1997to become a “renewable energy island” and a demonstrator forrenewable energy technologies. The ambition is to become100% fossil-free by 2030.• On the island of Bornholm, with a population of some 40 000people, 10 000 house owners will be visited in 2013 and 2014in order to explore the potential for energy efficiency meas-ures in their homes. See www.brightgreenisland.com• In Hamburg, a WWII bunker has been converted into an“energy bunker” as a showcase for the public, and a formertoxic waste dump has been converted into an “energy hill”,exploiting wind, sun and gases for energy production.• Since 2009, Mecklenburg-Vorpommern has been conductingcoaching sessions in bio energy villages. The municipalitiesreceive support on awareness-raising as regards the use ofrenewable energies. By now, the drafting of a code of practiceon bio energy villages, sustainable use of land, financial issues,the involvement of citizens, information sharing etc. has beenat the centre of attention. The program also involves therecruitment of new actors as well as detailed problem-solving(problems, questions, experiences) during the implementationperiod (investments, construction, operation of facilities).Economic IncentivesBusinesses and consumers respond to prices. Policies that provideeconomic incentives to use natural resources efficiently and that19make pollution more expensive have proved effective. The respon-siveness of businesses and consumers to price signals can bestrengthened through information-based measures. Information isneeded to highlight the consequences of environmental damagecaused by specific activities, as well as the availability and benefitsof greener alternatives. Economic incentives can be supportedwith non-market instruments such as regulation, technology sup-port and voluntary approaches.The Relevant Price as an IncentiveEnergy pricing might be a hurdle for energy efficiency and renewa-ble energy if the price for energy does not fully reflect the produc-tion costs, including external costs. A general observation is thathigh energy prices entail strong energy efficiency incentives, andvice versa. A case in point could be Germany or Denmark, whereenergy prices are high, and where extensive efforts are made topromote energy efficiency. Price transparency is also a prerequisitefor energy efficiency.Energy prices in Europe can be affected by developments inenergy supply in other parts of the world. The recent increase ingas supply in the United States has reduced the demand for coal inthe US, but has subsequently increased exports of coal from US tothe EU4. This is also due to the low price of CO2emissions inEurope. The consequence is that less-polluting energy sources arebeing replaced by coal, which conflicts with the road map for EUenergy policy. To avoid such a development, the external costs ofenergy need to be reflected in the energy price. This is anotherargument for the need to amend the ETS system.Standards and LabelsThere should be clear and coherent standards and labelling forenergy efficiency compliance, for instance on household appli-ances. It should be obvious how much energy (and money) a cus-tomer saves when buying an “energy efficiency compliant” gadget.The life-cycle perspective on energy consumption of a productshould therefore be taken into account when assessing the energyefficiency performance of that product. Consequently, a commonsystem for measuring improvements in energy efficiency is neces-sary.4 It increased by over 20% from 2011 to 2012.20Examples of best practices• The city of Växjö in Sweden introduced free parking for envi-ronmentally friendly cars and a subsidy to everyone whobought such cars, e.g. ethanol-driven cars.• Some 20 years ago the Nordic Countries established a com-mon eco-label, the Swan, The Swan has developed criteria forsome 70 product categories and issued over 2 000 licenses tomanufacturers who fulfil the criteria. Gallup polls indicate thatthe ecolabel is recognised by about 90% of the consumers inthe Nordic Region as a sign of good quality and reduced envi-ronmental impact.FinancingFunding for investments and projects is a crucial factor for promot-ing green growth and energy efficiency. The problem is not lack offunds, but rather constraints in allocating funds to the investmentneeded5. In the mid-way report in 2012, the Working Group con-cluded that many opportunities for economic energy efficiencymeasures, particularly in the residential housing sector, are unex-ploited because of financial constraints. It was recommended thatGovernments, banks and financial institutions, as well as powercompanies, should develop and implement innovative financingfor energy efficiency investments.The main investment will have to come from the private sectorusing private funds. A number of factors contribute to the gapbetween the economic potential for energy efficiency versus com-mercial achievements. These need to be overcome. The WorkingGroup supports policies where public funds, such as NordicInvestment Bank, the European Investment Bank, the KfW (Kredi-tanstalt für Wiederaufbau), and the European Investment Fund, canbe strategically applied for mobilising private sector funding. Forthe housing sector, innovative financing schemes for energy effi-ciency investments are needed. Furthermore, financing schemesshould be tailored particularly for SMEs, which often lack the finan-cial capabilities to acquire expertise on and implement energy effi-5 The Secretariat compiled a questionnaire regarding the obstacles to and possibilities ofenergy efficiency, and the members of the WG gave written responses. According to theresponses, high investment costs and insufficient funding across the board are listed asobstacles for the application of economic energy efficiency measures, both with regard toconsumers and energy providers. Companies consider the amortization periods as beingtoo long. In 2010, EU presented a report on energy efficiency financing, in which the capi-tal market gap for energy efficiency financing was documented. The report included highpre-investment development and transaction costs, information failure and high perceivedend-user credit risks as explanatory factors.21Berlin 12 October 2012ciency measures. The lack of bankable projects (feasibility studyand business plan) is a major obstacle to progress. There is alsoreason to believe that the removal of specific legal barriers, forinstance those that prevent energy companies or municipalitiesfrom collecting payments related to their customer’s energy sav-ings, could support progress.Examples of best practices• In Estonia, the most successful initiative to increase aware-ness and investment in energy efficiency is the KredEx-managed loans, guarantees and grants for housing associa-tions for full-scale energy renovation. http://www.kredex.ee/apartment-association/• In Germany, the KfW offers several financial support pro-grammes for construction of energy-efficient new houses andfor renovation of old buildings to higher energy efficiencystandards. The interest rate for the subsidies is coupled to theefficiency aims www.kfw.de22Bornholm 10 June 2013• On the island of Bornholm, a financing scheme for energyloans is being developed. It will enable households to borrowwithout collateral up to 200 000 DKK at 3.5% interest forenergy improvements.• Mecklenburg-Vorpommern is running a climate protectionloan program (Klimaschutz-Darlehensprogramm) for energyefficiency and renewable energies. Eligible entities are, amongothers, bodies and institutions incorporated under public law.The program especially supports the storage of renewableenergies, the usage of energy efficiency potentials and renewa-ble energies, pilot and demonstration projects as well as theproduction of solar energy on municipal properties. With itsdirective for the support of climate protection measures (Kli-maschutz-Förderrichtlinie), the state furthermore grants finan-cial support to implement measures contained in the Land’sAction Plan Climate Protection.Create Markets through Green PublicProcurement (GPP)The public sector consumes goods and services that amount to16% of GDP. This implies that as a big purchaser, the public sectorcan set standards that can change the behaviour of producers, and23initiate innovation. If possible, the public sector should use this lev-erage to a much greater extent that it does today. The EU shoulddevelop standards for environmentally sound and energy-efficientpurchases in order to facilitate GPP and to support a level playingfield for businesses. If the public sector in more than one stateapplies the same purchasing criteria for smart green technologies,a larger market will be created. This will enable businesses toexploit economies of scale. GPP has the potential to create newmarkets by stimulating demand for green technologies, both goodsand services, with new job opportunities.In the mid-way report in 2012, the Working Group recommendedfurther use of green public procurement. The Group observed thatcontracts are too often awarded on basis of lowest cost, rather thanthe most economically advantageous tender based on life-cyclecosting; this leads to an inefficient allocation of resources andlosses for national economies. The Group referred to a proposalfrom the Commission that would, if adopted, open up for GPP, andfacilitate access by SMEs to public procurement contracts, and pro-mote life-cycle cost assessments and efficient use of resources.Examples of best practices• The Nordic Council of Ministers has developed a common setof GPP criteria for some products. By applying the same crite-ria for GPP in all five Nordic countries, the market will beenlarged. Producers could be expected to be more interestedin meeting the criteria and competition would increase, yield-ing new solutions at lower price.• All public institutions in Mecklenburg-Vorpommern, includingcolleges, universities and university hospitals, receive theirelectricity from renewable energies.Enlarge Markets through Cooperation in the BSRMany of the states around the Baltic Sea are small, so the nationalmarkets are small. Successful innovation requires access to largemarkets in order to exploit economies of scale. By introducingcommon technical standards, for instance building codes, barriersto trade will be reduced and the size of the market increased.Green solutions and best practices need to be disbursed acrossborders without delays, using the many existing cooperativearrangements. The accelerating diffusion of green technologiesacross borders will yield environmental benefits for the Baltic SeaRegion as a whole.24In the mid-way report in 2012, the Working Group voiced supportfor BASREC (Baltic Sea Region Energy Cooperation) and the planof work adopted by the Ministerial meeting in May 2012. TheGroup recommended that the plan should be fully supported andimplemented in order to promote concrete measures for connect-ing the energy grids of the region and for using the limited energyresources of the region efficiently.Research and DevelopmentNew technologies will have to replace old ones in order for greengrowth to succeed. In other words, innovation plays a key role inthe transformation. Social and economic inertia can be so strongthat it stops innovation with potentially large benefits. Many envi-ronmental externalities are underpriced and that makes innovationuneconomical6. Because of this, it can be very hard for new tech-nologies to compete with existing technologies. Consequently,temporary public support is needed in certain cases. The supporthas to be designed in such way that it does not lock in certaintechnologies and crowd out private investment. As stated above,well-designed public procurement standards can be applied as aninstrument in this context. Barriers to trade can also impede inno-vation, as described above.• The Latvian company OSC built the world’s first electric-driven 4×4 off-road rally car OSCar eO to compete in the8400-km Dakar rally. The car was equipped with a single235 kW / 800 Nm permanent magnet electric motor. Seehttp://www.dakar.com/dakar/2012/us/rider/maris-saukans.html• The demonstration and innovation project RH2-Werder/Kes-sin/Altentreptow in Mecklenburg-Vorpommern integrates aCO -free hydrogen storage facility within a wind park, allow-2ing consumer access to wind energy on demand, regardless oftime. With a total load exceeding 140 MW it belongs to thelargest onshore wind parks in Germany. The project aims todemonstrate that regenerative power plants can make anactive contribution to increased network stability.6 The current price of CO2 illustrates this very well. Many renewable energy sources are noteconomical and the effort to develop technologies that improve carbon capture and stor-age (CCS) has been limited by low CO2 prices.253.4 Sectors and Technologies with Great PotentialThe green growth agenda is complex and involves many differentsectors. Energy efficiency is a keystone for green growth. The Work-ing Group has identified sectors and particular initiatives in theBaltic Sea Region that are considered to have great potential in thework to promote green growth and energy efficiency:• Housing and buildings• Transportation• Electricity generation and markets• Carbon capture, storage and re-use• Smart electricity grids• WasteHousing and buildingsAlmost 40% of final energy consumption in EU is in residentialhouses, public and private offices, shops and other buildings. Two-thirds of this is for heating. Through the application of existingtechnologies, large and economic energy savings are possible. Thispotential remains to be tapped. Some of countries around the Bal-tic Sea have made important advances, while others have hardlyexploited this opportunity. Improved energy efficiency in buildingsis the single most important opportunity for green growth. Somecountries have gained useful experience in tapping this potentialthat other countries could utilize. The potential also holds businessopportunities since energy efficiency measures will demand prod-ucts and services, such as insulation installations.In its Mid-Way Report in August 2012, the Working Group recom-mended concentrated and prioritized initiatives for energy effi-ciency in the building sector. It was pointed out that energy effi-ciency measures are most economically beneficial when they arean integrated part of housing production and housing renovation.The Working Group voiced support for certified energy classifica-tion of buildings. Furthermore, the Group recommended govern-ments to take further steps to make energy efficiency a mandatoryrequirement in renovation projects, and to encourage the produc-tion of plus-energy housing. Finally, the Working Group stated thatsmart metering would enable consumers to better monitor andadapt their actual consumption, and energy billing should be madesimple, transparent and accurately reflect actual consumption26Examples of best practices:• According to KfW, about 39 million flats in Germany are in needof renovation. The average efficiency of these buildings is threetimes worse than the recent standard for new buildings. KwFhas a programme for energy efficiency construction and reha-bilitation. In 2011, 1 billion EURO triggered 12 billion EURO ofprivate investment. Tax returns of these activities were 2.9 bil-lion EURO. The investment resulted in 246 900 jobs for one yearand reduced greenhouse gas emissions by 0.6 m tCO2. https://www.kfw.de/inlandsfoerderung/Privatpersonen/index-2.html• After the energy crisis 30 years ago, Finland took bold steps toincrease energy efficiency in housing and can be considered apioneering country in this field. However, more can be done. In2010, a new initiative was started for Energy-Smart Build Envi-ronment (ERA17). The goal is to achieve the 2020 goal threeyears earlier, in Finland’s centennial year, 2017.http://era.17.fi/en/• The Nordic Build Charter has been developed, to push thelimits of sustainable performance and to achieve zero emissionover the building lifetime. Over 100 Nordic companies andinstitutions have signed the charter.http://www.nordicinnovation.org/nordicbuilt/• In the city of Torun (Poland), two geothermal drillings havebeen made in order to replace the CO -emitting coal-based2municipal heating system with a CO -free geothermal system.2This enterprise is economically feasible and runs without statesubsidies.• Several multi-storey buildings have been renovated in Ce ̄sis(Latvia) in line with the ESCO principle. These complex energyefficiency measures have reduced heat consumption by 50%.The ESCO principle enables renewal of property withoutincreasing property management costs for inhabitants.TransportModern societies depend on efficient transport. Transport is energydemanding and accounts for over 30% of final energy consumptionin EU. It is the fastest growing sector in terms of energy use, withstrong reliance on fossil fuels. It needs to be made more efficientand less reliant on fossil fuels. This can be achieved through theintroduction of advanced traffic management systems and effi-ciency standards for all vehicles across all transport modes, as wellas other measures to promote vehicle innovation. A broad Pan-Euro-pean approach is needed. However, there is much that each state ormacro-region can achieve. Maritime transport in the Baltic Sea is27Mongstad 1 March 2013challenged with stricter limits for the emissions of sulphurs (SO )2and nitrates (NO ) in the future. However, this can also serve as anxopportunity for clean-tech development.The use of liquefied natural gas (LNG) or methane as a fuel forships appears to be a very promising solution to many of the chal-lenges facing the shipping industry in the Baltic Sea. The use ofLNG could be greatly facilitated if the infrastructure for deliveringLNG to ships could be developed further, and common and user-friendly standards for e.g. LNG-couplings must be established. Thisis a task where the governments need to be involved7.Examples of best practices:• M/S Viking Grace represents a completely new generation offerries, with its revolutionary Liquefied Natural Gas (LNG) fuelsystem built by Wärtsilä, interior design by the award-winningdSign Vertti Kivi & co, and a host of other innovations provid-ing the passengers with a totally new and fresh cruise experi-7 Reference is made to the resolution of the 20th BSPC, paragraph 11: ”to intensify researchand to promote the use of alternative marine fuels such as – for example – Liquefied Natu-ral Gas (LNG) in the Baltic Sea Region and others by supporting innovative emissionreduction technologies and by creating incentives for investments in the development ofthe necessary port infrastructure with a well-developed distribution network and uniformindustry- and usage standard.”28ence. With its Liquefied Natural Gas powered engines,hydrodynamically optimized hull design and new sound-proofing technology, M/S Viking Grace will be the greenestand quietest ferry in the Baltic Sea and in the world. Themost modern technology will be used in all areas of theM/S Viking Grace, starting with its engines and propulsionsystem to the high-speed wireless internal network used tokeep the passengers both informed and entertained.• When M/S Stavangerfjord is put in operation in 2013, it willbe the first and largest cruise ferry in the world to sail witha “single LNG engine,” thus using the cleanest fuel available.In this way Fjord Line will meet the new, stricter standardsfor sulphur content in fuels long before the deadline in2015. The ship is almost complete at Bergen Group Fosenand starts sailing on Sunday 14 July. Bergen Group Fosen isalso building M/S Bergensfjord which is equipped identi-cally to its award-winning sister ship. M/S Stavangerfjordand M/S Bergensfjord are the first large cruise ferries in theworld powered exclusively by liquefied natural gas (using“single fuelled LNG engines”). For this reason, these shipsare the most environmentally friendly in their class withsignificant environmental benefits compared to ships pow-ered by traditional heavy fuel oil. Emissions of nitrogenoxides (NOx) are reduced by 92%. Emissions of sulphur areeliminated completely, while particulate emissions arereduced by 98%. Last but not least, the technology FjordLine uses reduces net emissions of greenhouse gases (CO )2by 22%. This calculation includes emission of methane thatincreases with LNG as fuel, contributing to the total emis-sions of greenhouse gases.• Public transport in Russia runs mainly on gasoline and die-sel fuel, which are significant factors in air pollution in Rus-sian cities. The use of LNG as engine fuel is considerablymore effective in terms of more environmentally friendlyspecifications and significant decrease in the amount ofharmful emissions. Furthermore, the price of LNG is onlyhalf that of diesel fuel and gasoline. In order to improve theenvironmental situation, the Russian PM Dmitry Medvedevon May 13 issued a decree regarding alternative energysources. According to the decree, 50% of public transportwill be converted to LNG use. In the near future, Russia willdevelop relevant technical regulations and build additionalgas stations.• In Latvia, vehicle registration tax and annual vehicle opera-tion tax is not levied on electric cars.29Electricity GenerationElectricity is the lifeblood of modern society, and is expected to haveto play an even greater role in the future8. Analysis indicates that elec-tricity production in Europe could be made free of greenhouse gasemissions by 2050. Germany aims to achieve this in conjunction withending the use of nuclear energy.To achieve the double goal of emission-free and increased use of elec-tricity the use of wind-, bio- and solar energy will have to grow. Onemain challenge is grid stability, since production must be kept in bal-ance at all times. Integration of grids across national borders willmake the stabilisation easier and more economic. Furthermore, theintroduction of smart-grids will help to reduce fluctuations indemand.Renewables will move to the centre of the energy mix, maturingfrom technology development to mass production and deployment.They will proceed from small-scale to large-scale production, integrat-ing local and more remote renewable sources, and developing themin a manner and format applicable to the potential of the respectivecountry. Subsidies will disappear and they will become commerciallycompetitive.Storage technologies remain crucial. Storage is currently often moreexpensive than additional transmission capacity. There is a certain gasbackup generation capacity, while conventional storage based onHEP is limited. Greater efficiency in their use and competitive costsrequire an improved infrastructure for integration across Europe.Examples of best practices• The electricity market between Finland, Denmark, Norway andSweden is considered one of the most integrated, harmonisedand advanced cross-border electricity markets in the world. Fourdistinct national markets have been merged into one single andcommon wholesale market. This is due to both full political sup-port and close cooperation between the numerous market play-ers. There has been a dialogue with Lithuania, Latvia and Estoniaabout how the Nordic market could be successfully expanded.Links with other parts of Europe are also being developed.8 In the EU energy road map 2050, all scenarios show that electricity will have to play a muchgreater role than now (almost doubling its share in final energy demand to 36–39% in 2050)and will have to contribute to the decarbonisation of transport and heating/cooling . Accord-ing to the road map, electricity could meet around 65% of energy demand from passengercars and light-duty vehicles.30Helsinki 2 March 2012Carbon Capture, Storage and Re-UseFossil fuels, the major source of CO emissions, are expected to2remain an important energy source for the foreseeable future. Car-bon capture technologies is one of the possible solutions for theprevention of dangerous change in the world climate and thus con-stitute a potentially important step on the way to a green economy.A successful application of carbon capture and storage technolo-gies will make it possible to store CO either for re-use or perma-2,nently. Carbon capture technologies are evolving, but mustbecome commercially viable within a few years. The availabilityand utilization of such technologies depends not only on the tech-nology itself, but also on political and financial incentives to imple-ment the technologies. It is important that the development andimplementation of carbon capture technologies is carried out inaccordance with national and regional political agreements andlegislation. The states and regions in the Baltic Sea Region are freeto decide if and how they want to promote, subsidize and imple-ment carbon capture storage and re-use technologies. In e.g. Meck-lenburg-Vorpommern, the geological storage of carbon dioxide isprohibited by law.31Examples of best practices• CO Technology Centre Mongstad (TCM) in Norway is facilitat-2ing the development of new and innovative CCS technologies9.TCM has also formed an international test centre network forcarbon CCS facilities around the world, in order to shareknowledge to accelerate much needed progress. In this con-nection, the Norwegian Petroleum Directorate has produceda CO atlas with a survey over possible CO storage locations2 2on the Norwegian shelf. See http://bspc.s3.amazonaws.com/Presentation%20meeting%205%20Halland.pdf• In Borzecin (SW Poland), a system for enhanced gas recovery(EGD) is in operation to capture and re-use CO and limit CO2 2emissions to the atmosphereSmart Electricity GridsA smart electricity grid is based on information and communica-tion technologies that the supplier and consumer of electricity canmake use of to increase efficiency and save money. The technol-ogy is also expected to facilitate the integration of small-scale elec-tricity production to the grid. The smart grid allows for systematiccommunication between suppliers (their energy price) and con-sumers (their willingness-to-pay), and permits both the suppliersand the consumers to be more flexible and sophisticated in theiroperational and consumption strategies. Smart grids can reducethe need for production capacity for electricity to meet peak loads.Examples of best practices• The Danish island of Bornholm has become a preferred site fortesting and demonstrating new green technologies with focuson electric cars, solar panels, energy efficiency constructionand the development of an intelligent grid. About 2 000 house-holds and businesses are involved in the test10, the aim ofwhich is to make this complex task more understandable andapplicable to the public at large.9 The Working Group visited Mongstad in connection with its meeting in March 2013 andissued a statement after the meeting, which can be found in section 4 of this report.10 The Working Group was informed about the project at its meeting on Bornholm in June2013 and issued a statement that can be found in section 4 of the report.32WasteWaste is an underutilized resource. Waste increases with affluence.The average per capita waste in EU is 6 tons per year. Waste pre-vention or reusing or recycling material is a way forward with theaim to decouple waste generation from economic activity. EU has agoal of recycling 50% of household waste and 70% of constructionand demolition material by 2020. The life-cycle approach is animportant building block in sustainable development.Examples of best practices• In the four Nordic Countries, a tax is levied on waste that isnot directed to recycling.• Lahti Science and Business Park in Finland has an ongoing pro-ject for the collection and utilization of biomass, energy wasteand construction waste and ash. In the area of Päijät-Häme, thecooperation with Lahti has achieved 96% recycling of urbanwaste.• District heating can contribute to energy efficiency in a verysubstantial and cost-effective way. The City of Helsinki hasexploited this potential. It has recently also included theenergy from purified waste water to improve the energy effi-ciency of the district heating system. The return water for thewastewater treatment plants is also used for cooling in thesummer11.11 The Working Group visited the plant for district heating in Helsinki in connection with itsmeeting in March 2012.343.5 Conclusion: Recommendations to SupportGreen Growth and Energy EfficiencyThe Working Group acknowledges the many important initiativesby local authorities, national governments, regional organizationsand United Nations to promote the imperative transition togreener economics.The BSPC Working Group on green growth and energy efficiencycalls upon the Governments of the Baltic Sea Region and, whereappropriate, the Parliaments of the Baltic Sea Region to12:• Further develop and implement financing schemes that sup-port green growth and energy efficiency, at both national andregional level; develop legislation that facilitates innovativefinancing of energy efficiency measures.• Build up capacity to give temporary public support that is nec-essary to promote the development of new green technolo-gies; the support has to be designed in such way that it doesnot lock in certain technologies and crowd out private invest-ment.• Strengthen efforts to develop and apply green public procure-ment and adopt common criteria that can be applied in theregion as a whole, in order to expand markets and open up forinnovation.• Cooperate to develop common technical standards and build-ing codes for the region as a whole in order to enable econo-mies of scales for green technologies, including a commongreen labelling scheme.• Support efforts in the European Union to improve the func-tioning of the market for CO emission trading (ETS) in order2to internalise external costs; furthermore, support in generalefforts to internalise environmental cost and cut support tounsustainable production.• Support efforts to connect national electricity grids, whichwill facilitate investments in renewable energy production andcontribute to energy supply security.• Facilitate development and investment in infrastructure fordelivering ecologically friendly fuels, such as LNG and CNG, toships.• Make efforts to increase awareness in households and enter-prises about environmental consequences of current unsus-tainable patterns of production and consumption, and about12 The recommendations are not in order of priority.35the potential for improvements through green growth andincreased energy efficiency.The Working Group is aware of the complexity of these issues andthe need to analysis carefully the effect of each action and changein policy. History shows that solutions to one problem may createnew ones, and this should be avoided.364. Composition and Activities ofthe Working GroupMandate and MissionThe 20th Baltic Sea Parliamentary Conference in Helsinki in August2011 agreed on the launching of a BSPC Working Group on greengrowth and energy efficiency. The Conference also adopted themandate for the Working Group. The Working Group is constitutedas an ad-hoc working group under the auspices of the StandingCommittee of the Baltic Sea Parliamentary Conference in accord-ance with the BSPC Rules of Procedure.The overarching objective of the Working Group is to elaboratepolitical positions and recommendations in the field of greengrowth and energy efficiency. For this purpose, the Working Groupshould establish and maintain contacts with relevant institutions,organizations and other players in the Baltic Sea Region. The Work-ing Group and its members should aim at raising the politicalattention on green growth and energy efficiency, for instance bypursuing those issues in the national parliaments of the membersof the Working Group. Moreover, the Working Group should con-tribute to the exchange of knowledge and best practices within itsarea of responsibility.The Working Group should provide political input to the Confer-ence resolutions of the 21st (2012) and the 22nd (2013) Baltic SeaParliamentary Conferences.All member parliaments and parliamentary organizations of theBSPC are invited to participate in the Working Group.The full mandate of the Working Group can be retrieved from thehomepage of the Working Group: http://www.bspc.net/page/show/520MembersCecilie Tenfjord-Toftby, MP, Chairperson of the Working Group,Swedish RiksdagTony Asumaa, MP, Vice Chairperson of the Working Group, ÅlandIslands LagtingKarin Gaardsted, MP, Danish FolketingChristina Gestrin, MP, Finnish RiksdagMariusz Orion Jedrysek, MP, Polish Sejm37Stockholm 12 December 201138Siri Meling, MP, Norwegian StortingOleg Nilov, MP, State Duma of the Russian FederationJochen Schulte, MP, Mecklenburg-Vorpommern LandtagMaxim Shingarkin, MP, State Duma of the Russian FederationTorsten Staffeldt, MP, German BundestagSabine Steppat, MP, Hamburgerische BürgerschaftIngela Nylund Watz, MP, Swedish RiksdagWille Valve, MP, Åland Islands Lagting, Nordic Council Committeeon Business and IndustryRaimonds Ve ̄jonis, MP, Latvian SaeimaMeetingsThe presentations at the Working Group meetings, as well as addi-tional material, can be retrieved from the WG website http://www.bspc.net/page/show/520The BSPC Working Group on green growth and energy efficiencyheld its inaugural meeting in the Swedish Parliament in Stock-holm on 12 December 2011. The meeting was led by the WG Chair-man Ms Cecilie Tenfjord-Toftby, Sweden. Expert presentationswere provided by Ms Mia Crawford, CBSS/Baltic 21, and Mr Fre-drik von Malmborg, Ministry of Enterprise, Energy and Commu-nications, Sweden. The meeting was primarily devoted to initial dis-cussions about the mandate, scope and priorities of the WG, recog-nizing that the overarching mission of the Group is to elaboratepolitical recommendations on green growth and energy efficiency,and to bring an added political value from the parliamentary sideto the process of creating sustainable growth in the Baltic SeaRegion. Additional information will be found under Related Infor-mation.The Working Group held its second meeting in Helsinki on 2March. The overall theme of the meeting was “Measuring energyefficiency”. The WG made study visits to the Katri Vala Heating andCooling Plant, the Nordic Investment Bank, and the Nordic Environ-ment Finance Corporation. Briefings were given by Mr PekkaSauri, Deputy Mayor of the City of Helsinki, Mr Juhani Aaltonenand Mr Marko Riipinen, Helsinki Energy, and by Mr Johan Ljun-gberg, Senior Director, Head of Environment, NiB, and Mr MagnusRystedt, Managing Director, Nefco. The meeting was opened withtwo expert presentations: Energy efficiency as a Strategic Tool toMeet Energy, Climate and Economic Challenges in the Baltic SeaRegion by Professor Peter Lund, Aalto University, and EU EnergyEfficiency Legislation by Mr Patrick Matschoss, PhD, Universityof Oldenburg, Finnish Institute of International Affairs.39Riga 8 June 2012The Working Group held its third meeting in Riga on 8 June. Thethemes of the meeting were “Green business opportunities” and“Green public procurement”. On top of the agenda were the mid-way report and the political recommendations of the WorkingGroup, to be presented at the 21st Baltic Sea Parliamentary Confer-ence in St Petersburg 26–28 August. The meeting appointed TonyAsumaa, Åland Islands, as Vice Chairperson of the Working Group.Expert presentations were delivered by Mr Valdis Bisters, Directorof the Climate Policy and Technology Departments of the LatvianMinistry of Environmental Protection and Regional Developments,Mr Lauri Tammiste, Estonian Development Fund, Director, Energyand Green Economy, and Mr Hannes Mädo, Estonian Ministry ofthe Environment, Member of Directorate. The meeting was precededby a study visit to Getlini ECO, which is a high-tech and environmen-tal friendly ecological waste management company.See: www.getlini.lv/lv/The challenge of converting wind energy into hydrogen and then toelectricity was one of the key items on the agenda of the fourthmeeting in the BSPC Working Group on green growth and energyefficiency, which was held in Berlin on 12 October. The WG made astudy visit to a hybrid power plant in Prenzlau operated by ENER-40TRAG, where it was given a briefing by Mr Werner Diwald. Thepower company operates 500 wind-turbines in Germany, Franceand the UK. One of the tasks of ENERTRAG is to convert and storewind energy so it can be used flexibly when and where it isneeded. For this purpose, the company is developing technologyto transform wind energy into hydrogen. The hybrid power plantin Prenzlau/Brandenburg is a pilot project for this purpose(https://www.enertrag.com/en/project-development/hybrid-power-plant.html) Similar projects are on-going in other countries,including Norway and Iceland where some hydrogen stations havebeen established, but using other renewable energy sources. TheWG was also given presentations on the German energy transitionby Mr Olaf Weber, Kreditanstalt für Wiederaufbau, and Mr RomanZurhold, the German Energy Agency. The WG meeting was hostedby WG member Torsten Staffeldt, German Bundestag.The technologies for CCS (Carbon Capture and Storage) are evolv-ing, but their commercial viability needs to be developed. The fifthmeeting of the BSPC Working Group on green growth and energyefficiency took place at the CO Technology Centre Mongstad, Nor-2way, which is the world’s largest facility for testing and improvingCO capture. Expert briefings were made by Vian Smith, TCM,2and Eva Halland, the Norwegian Petroleum Directorate. The WGreleased the following statement:Climate change is a serious threat to the development and pros-perity of human society. According to a new report published bythe World Bank, the average global temperature could increaseby 4 degrees during this century, causing a sea level rise of over1 metre. The effects would be disastrous. Fossil fuels, the majorsource of CO emissions, are expected to remain the dominant2energy source for the foreseeable future. The risk of failure inreaching the goal to stop global warming at 2 degrees Celsius islooming. There is an imminent need to reduce the dependencyon fossil fuels, extend the use of renewable fuels, and curb theemissions of climate gases. One important method for this is CO2capture and storage (CCS). CCS technologies are evolving, butmust become commercially viable within a few years. The avail-ability and utilization of CCS depends not only on the technol-ogy itself, but also on political and financial incentives to imple-ment the technologies. Currently, the price of CO is too low to2function as an attractive economic incentive. The functioning ofthe European Trading System needs to be strengthened in orderto support investments, development and implementation ofnew and sustainable energy technologies. The BSPC WorkingGroup on green growth and energy efficiency recognizes and41commends the importance of the CO Technology Centre Mong-2stad (TCM) in Bergen in developing new and innovative CCStechnologies. Furthermore, it welcomes the important initiativestaken by TCM to form an international test centre network forcarbon CCS facilities around the world, in order to share knowl-edge to accelerate the productization and commercialization ofCCS technologies.The sixth and final meeting of the Working Group was held inthe Bright Green Island of Bornholm on 9–11 June. The citizens,politicians, public administration and enterprises of BornholmBornholm 9 June 201342have made dedicated and combined efforts to turn Bornholm intoa 100% sustainable and carbon-free community by 2025, includinglocal, sustainable and eco-friendly solutions for growth and newbusinesses. See www.brightgreenisland.com. Expert presentationswere given by Mette Tiensuu on “Bright Green Island”, byCamilla Sandfeldt on “Green Construction”, by Per Boesen on“Electric Cars in Bornholm”, by Winni Grosbøll, Mayor on Born-holm, on “Political Aspects on Bright Green Island”, and by MaxiNachtigall from CBSS/Baltic 21 on “Greening the Economy of theBaltic Sea Region”. The Working Group also made study visits tothe eco-grid demonstration house “Villa Smart” with a presentationby Maja Bendtsen, and to the “Vasagaard”, a sustainable forest pigfarm. The WG meeting was primarily devoted to thorough delibera-tions over the WG Final report, which will be presented at the22nd BSPC in Pärnu on 25–27 August 2013. The Working Groupissued the following statement from the meeting:In order to meet the challenges of tomorrow, a transformation tomore environmentally sustainable economies is needed in theBaltic Sea Region. The BSPC Working Group on green growthand energy efficiency has been established by the Baltic Sea Par-liamentary Conference to develop policy recommendations thatsupport that goal.At its meeting on the island of Bornholm 10–11 June 2013, theWorking Group has learned how the public, businesses and poli-ticians have designed and implemented a vision for sustainabledevelopment in an island community of some 40 000 people.“Bornholm – Bright Green Island” is a visionary as well as apractical instrument, which has brought about a positive devel-opment for the people of Bornholm. It can serve as useful exam-ple for the Baltic Sea Region in how to use limited naturalresources sustainably. As a test centre for new technologies, Born-holm will also serve the wider European and global communityin identifying solutions that increase energy efficiency and pro-mote the use of renewable energy.The “Bornholm Bright Green Island” initiative illustrates theimportance of having broad-based political support and toengage the public and the business community in supporting atransformation in the economy. The significance of awareness-raising and the involvement of households as well as schoolchil-dren is another lesson that can be learned from Bornholm. Theinitiative demonstrates how island societies and small commu-nities, taking advantage of their special circumstances, can con-tribute to the solution of global challenges43The BSPC Working Group on green growth and energy efficiencycommends the effort made by the municipal and regionalauthorities of Bornholm, the businesses community and thepublic at large, and encourages other communities around theBaltic Sea to use the experiences in Bornholm as a source ofinspiration.The sixth meeting also agreed to issue a statement on the recentlyintroduced EU Tariffs on Chinese solar panels:Tariffs on Solar Panels will Delay the Introduction of GreenTechnologies: The necessary transformation to a sustainablegrowth and improved energy efficiency requires easily availableand affordable technologies and equipment for renewableenergy generation, both in households and in enterprises. It isimportant to promote international cooperation on researchinto and development of green technologies, and to find efficientmodels for manufacturing, trade and marketing that lower thecost for the end consumers. The decision by the European Com-mission to impose punitive tariffs on Chinese-made solar panels(PV) is a step in the wrong direction. It constitutes an unfortu-nate protectionist measure that will reduce the availability ofsolar panels in the European market, increase the costs of theconversion to more sustainable energy systems, and delay theintroduction of green technologies on a broad scale. The tariffswill therefore hamper the conversion to a greener society.Although the Commission claims that this is an anti-dumpingmeasure, the tariffs will have negative consequences for the EU2020 goals. This also underlines the importance of China joiningthe WTO and contributing constructively to the establishment ofa level playing field and fair conditions for international trade.The Working Group on green growth and energy efficiency oper-ates under the auspices of the Baltic Sea Parliamentary Confer-ence, a political platform that gathers parliamentarians from atotal of 27 parliaments and parliamentary organizations in theBaltic Sea Region. The Working Group will present its final reportat the 22nd Baltic Sea Parliamentary Conference in Pärnu on25–27 August 2013. Webpage: http://www.bspc.net/page/show/520Signed:Cecilie Tenfjord-Toftby, MP, Chairperson of the Working Group,Swedish RiksdagTony Asumaa, MP, Åland Islands LagtingKarin Gaardsted, MP, Danish Folketing44Christina Gestrin, MP, Finnish RiksdagMariusz Orion Jedrysek, MP, Polish SejmSiri Meling, MP, Norwegian StortingOleg Nilov, MP, State Duma of the Russian FederationJochen Schulte, MP, Mecklenburg-Vorpommern LandtagMaxim Shingarkin, MP, State Duma of the Russian FederationTorsten Staffeldt, MP, German BundestagSabine Steppat, MP, Hamburg BürgerschaftIngela Nylund Watz, MP, Swedish RiksdagWille Valve, MP, Åland Islands Lagting, Nordic Council Commit-tee on Business and IndustryRaimonds Ve ̄jonis, MP, Latvian Saeima455. Mid-Way Report with PoliticalRecommendations of the BSPCWorking Group on GreenGrowth and Energy EfficiencyOn 20 August 2012, the Working Group released its mid-way report.The key aspects of the report are recapitulated below.Basic PositionsThe Working Group has agreed that the definition of green econ-omy presented in the OECD report on green growth mirrors theGroup’s perception of the concept and thus serves as a generalguideline for its work: “Green growth means fostering economicgrowth and development while ensuring that natural assets con-tinue to provide the resources and environmental services onwhich our well-being relies. Together with innovation, goinggreen can be a long-term driver for economic growth through,for example, investing in renewable energy and improved effi-ciency in the use of energy and materials.”The Working Group notes that the cost of energy has been risingand it is expected to rise further in the years to come. Access toaffordable energy is very important for facilitating growth andprosperity in the Baltic Sea Region. The cheapest energy is theenergy that is saved through measures that increase energy effi-ciency. The Working Group agrees that measures to improveenergy efficiency are of utmost importance for continued greengrowth in the Baltic Sea Region. Energy issues are also a crucial fac-tor in the ongoing global debate on climate change.Political RecommendationsBased on discussions so far in the Working Group, and taking intoaccount relevant and current external information, the WorkingGroup proposes 6 political recommendations as a mid-way conclu-sion of its work. Those political recommendations will be con-veyed to the 21st BSPC in St Petersburg 26–28 August 2012.The Working Group calls on the Governments of the Baltic SeaRegion, the CBSS and the EU to:471. Support BASREC (Baltic Sea Region Energy Coopera-tion): Strengthened, frequent and continuous dialogue isneeded between the ministers responsible for energy coopera-tion in the Baltic Sea Region (BASREC). At the BASREC Ministe-rial Meeting on 14–15 May 2012, the energy ministers of theregion agreed on a new plan of work for the next three years.The plan should be fully supported and implemented in orderto promote concrete measures for connecting the energy gridsof the region and for using the limited energy resources of theregion efficiently.2. Improve Information about Green Growth and EnergyEfficiency: There is broad understanding that existing oppor-tunities and measures for increasing energy efficiency are notfully exploited. There is a need to promote and supportresearch and development on green growth and energy effi-ciency, and to provide consumers and businesses with concreteknowledge about and advice on the mid- and long-term gainsfrom energy efficiency measures, both in saving energy costsand in providing business opportunities. Energy labelling ofproducts, based on life-cycle analysis, should be further devel-oped and disseminated, and efforts to exchange informationabout best practices should be supported. Such informationshould be reflected in public procurement.3. Promote and Allocate Financial Resources for Initiativeson Green Growth and Energy Efficiency: Many opportuni-ties for economic energy efficiency measures, in particular inthe residential housing sector, are unexploited because of finan-cial constraints. There is a need for innovative financingschemes to make use of these opportunities. Governments,banks and financial institutions, as well as power companies,should develop and implement innovative financing for energyefficiency investments. Resources should be allocated to pro-vide incentives to initiate pilot projects on energy efficiency.Financing schemes should be tailored especially to SMEs,which often lack the financial capabilities to acquire expertiseon and implement energy efficiency measures.4. Make Concentrated and Prioritized Efforts on EnergyEfficiency in the Building Sector: Energy efficiency meas-ures are most economical when they are an integrated part ofhousing production and housing renovation. They should beaccompanied and underpinned by a certified energy classifica-tion of buildings. Governments should take further steps tomake energy efficiency a mandatory requirement in renovation48projects, and encourage the production of plus-energy housing.The further development and implementation of certificationsystems for energy classification of new as well as old buildingsshould be promoted. Smart metering should enable consumersto better monitor and adapt their actual consumption, andenergy billing should be made simple, transparent and accu-rately reflect actual consumption.5. Promote the Development of Nationally Adapted Bind-ing Targets: There should be binding national targets forenergy efficiency that take into account the specific conditionsin the individual countries. In addition to what is specified inthe newly adopted EU directive, member states should developand implement measures that are needed to achieve the bind-ing targets. The development and implementation of EU poli-cies for promoting energy efficiency is of utmost importancefor creating a level playing field and promoting cooperation. EUalso needs to set uniform methods and rules for measuringenergy efficiency and its impact.6. Promote Green Public Procurement (GPP): Each yearEuropean public authorities spend the equivalent of 16% of theEU Gross Domestic Product on the purchase of goods and ser-vices. All too often contracts are awarded on the basis of lowestcost, rather than the most economically advantageous tenderbased on life-cycle costing; this leads to an inefficient allocationof resources and losses for national economies. However, as amajor purchaser, the public sector is in a strong position to setstandards that can change the behaviour of producers in agreener direction. The public sector should be encouraged touse this leverage to a much greater extent that it does today.The EU should develop environmentally sound, energy effi-cient, and economically fair public procurement standards inorder to facilitate Green Public Procurement and to support alevel playing field for businesses. The development regardingthe pertinent proposal for a directive of the European Parlia-ment and of the Council on public procurement (COM [2011]896 final) as part of the so-called procurement package shouldbe closely followed in this regard. Efforts to facilitate access bySMEs to public procurement contracts and to promote life-cycle cost assessments and an efficient use of resources shouldbe supported.Baltic Sea Parliamentary ConferenceBaltic Sea Parliamentary ConferenceThe BSPC Working Group on GreenGrowth and Energy EfficiencyFinal ReportAugust 2013Baltic Sea Parliamentary Conference Secretariatwww.bspc.netc/o Nordic CouncilVed Stranden 18DK-1061 Copenhagen K.Phone (+45) 33 96 04 00www.norden.org.US 2013:415BSPC_Green Growth_OMSL.indd 1 16/07/13 08.49