Turkey Energy and the Environment Issues and Options Paper ESM229 ~~~~~~~~~~~~~~~~~~~~~~~~~~~I I Energy Sector Management Assistance Programme Report 229/00 NJ YJ1 jt April 2000 JOINT UNDP / WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) is a special global technical assistance program run as part of the World Bank's Energy, Mining and Telecommunications Department. ESMAP provides advice to governments on sustainable energy development. Established with the support of UNDP and bilateral official donors in 1983, it focuses on the role of energy in the development process with the objective of contributing to poverty alleviation, improving living conditions and preserving the environment in developing countries and transition economies. ESMAP centers its interventions on three priority areas: sector reform and restructuring; access to modern energy for the poorest; and promotion of sustainable energy practices. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (ESMAP CG) composed of representatives of the UNDP and World Bank, other donors, and development experts from regions benefiting from ESMAP's assistance. The ESMAP CG is chaired by a World Bank Vice President, and advised by a Technical Advisory Group (TAG) of four independent energy experts that reviews the Programme's strategic agenda, its work plan, and its achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank to conduct its activities under the guidance of the Manager of ESMAP, responsible for administering the Programme. FUNDING ESMAP is a cooperative effort supported over the years by the World Bank, the UNDP and other United Nations agencies, the European Union, the Organization of American States (OAS), the Latin American Energy Organization (OLADE), and public and private donors from countries including Australia, Belgium, Canada, Denmark, Germany, Finland, France, Iceland, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Sweden, Switzerland, the United Kingdom, and the United States of America. FURTHER INFORMATION An up-to-date listing of completed ESMAP projects is appended to this report. For further information, a copy of the ESMAP Annual Report, or copies of project reports, contact: ESMAP c/o Energy, Mining and Telecommunications Department The World Bank 1818 H Street, NW Washington, DC 20433 U.S.A. TURKEY Energy and the Environment Issues and Options Paper April 2000 Prepared jointly by the Europe & Central Asia Region, Energy Sector Unit Energy, Mining and Telecommunications Department Environment Department of the World Bank with funding from ESMAP Joint UNDPIWorld Bank Energy Sector Management Assistance Programme (ESMAP) Copyright C 1999 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing April 2000 ESMAP Reports are published to communicate the results of the ESMAP's work to the development community with the least possible delay. The typescript of the paper therefore has not been prepared in accordance with the procedures appropriate to formal documents. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The Boundaries, colors, denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any judgement on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the ESMAP Manager at the address shown in the copyright notice above. ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Contents Contents ........................................................... iii Abbreviations and Acronyms ............................................................v Preface ........................................................... vii Executive Summary ...........................................................1I 1. Current Energy-Environment Situation ............................................................ 5 Energy Resource Base ...............................................................5 Current Energy Demand and Supply ................................................................6 Primary Energy ................................................................6 Electricity ................................................................8 Energy and Electricity Intensity ................................................................8 Current Structure of the Energy Sector ................................................................9 Pollution Associated with Energy Use ............................................................... 11 Institutional and Regulatory Structure for Energy and the Environment ................ ...................... 13 2. Environmental Impacts of the Energy Sector ....................................................... 15 Expected Increases in Production, Imports and Consumption ..................................................... 15 Potential Environmental Impacts of the Energy Sector ............................................................... 16 Emissions of TSP, SO2, NO., Lead, CO, and VOCs ............................................................... 16 Impacts on Population, Land, Agriculture, Forestry, Biodiversity, and Tourism .......... .......... 18 Waste Disposal ............................................................... 19 Risk of Accidents ............................................................... 19 Emissions of C02, CH4 and N20 ............................................................... 20 3. Options for Mitigating the Environmental Impacts of the Energy Sector ........... 23 Inproved Energy Efficiency ............................................................... 23 Demand-Side Management ............................................................... 23 Technical Efficiency ............................................................... 25 Improving Teclnologies and Practices ............................................................... 27 Improved Coal Mining Practices ............................................................... 28 Clean Coal Technologies ............................................................... 28 Improved Aslh Disposal Practices and Utilization of Flyash .................................. .................. 30 Inter-Fuel Substitution ............................................................... 30 High Quality Imported Coal for Power and Industry ............................................................... 30 Natural Gas ............................................................... 31 Nuclear Power ............................................................... 33 Hydroelectric Power ............................................................... 33 Other Renewables ............................................................... 34 Electricity Trade ............................................................... 36 A-iii hnproved Fuel Quality for the Industrial, Residential, and Transportation Sectors ..................... 36 Lower-Sulfur Diesel Fuel .............................................................. 37 Unleaded Gasoline .............................................................. 37 Conversion of Vehicles to CNG/LPG .............................................................. 38 Institutional, Legal, and Regulatory Measures .............................................................. 38 Improvements in Environmeiital Management .............................................................. 38 Institutional Reforms in the Energy Sector .............................................................. 39 Market-Based Instruments .............................................................. 41 4. Alternative Scenarios for of Environmental Impact Mitigation ........................... 43 Scenarios .............................................................. 43 Special Studies .............................................................. 44 Annex: Turkey and the Climate Change Issue ........................................................ A-1 A.1. Turkey's Position with Respect to the UNFCCC .............................................................. A-1 A.2. The UNFCCC and the Kyoto Protocol: Commitments vs. Opportunities .......................... A-2 A.3. Possible Approaches for Turkey on the UNFCCC and the Kyoto Protocol ....................... A-5 References .......................................................... A-9 Figures and Tables Figure 1-1. Primary Energy Production by Source, 1997 ...............................................................7 Figure 1-2. Primary Energy Imports, 1997 ...............................................................7 Figure 1 -3. Total Final Consumption by Source, 1997 ................................................................8 Figure 1-4. Electricity Generation by Energy Source, 1997 ...........................................................8 Figure 2-1. Controlled S02 Emissions, by Sector .............................................................. 17 Figure 2-2. Controlled Particulate Emissions, by Sector .............................................................. 18 Figure 2-3. C02 Emissions, by Sector .............................................................. 21 Figure 2-4. C02 Emissions, by Fuel .............................................................. 21 Table 1- 1. Primary Energy Reserves of Turkey, 1997 ............................................................... 5 Table 1-2. Total Electricity Supply, by Source (1998) .............................................................. 10 Table 1-3. Electricity Prices for Households and Industry, 1997 (US cents/kWh) ...................... 11 Table 1-4. CO2 Emissions from Fossil Fuel Combustion by Sector ............................................. 12 Table 1-5. Turkish and WHO Air Quality Standards (jxg/m3) ...................................................... 12 Table 1-6. Winter Season Air Pollution Trends in Various Turkish Cities ............... ................... 13 Table 3-1. Build-up of Existing Contracts, 2000-2015 (bcm/year) ............................................. 31 Table 3-2. Possible Build-up of Additional Gas Supplies Reflecting MOU Being Negotiated .. 31 Table 3-3. Sectoral Breakdown of Natural Gas Demand Projections (bcm) ................................ 33 Table 3-4. Hydroelectric Energy Potential, End 1996 .............................................................. 34 Table A- 1. C02 Emissions Per Capita in Various Countries (tons) .................... ...................... A-1 Table A-2. Key Commitments vs. Opportunities for Turkey's Participation in Climate Change Conventions Under Various Options ............................... A-5 iv Abbreviations and Acronyms ANL Argonne National Laboratory bcm billion cubic meters BOO build-own-operate BOT build-own-transfer BOTAS Petroleum and Natural Gas Pipeline Corporation C&C command and control CFB circulating fluidized bed CNG compressed natural gas CO carbon monoxide CO2 carbon dioxide DSI State Hydraulic Works DSM demand-side management ECCB Energy Conservation Coordination Board EIEI Electrical Power Resources Survey and DeveloDment Administration ESMAP Joint World Bank/UNDP Energy Sector Management Assistance Program ESP electrostatic precipitator FGD flue gas desulfurization GHG greenhouse gas GoT Government of Turkey GW gigawatt GWh gigawatt-hour HHV high heating value IERR internal economic rate of return IGCC integrated gasification combined cycle IPP independent power producer kcal kilocalorie kWh kilowatt-hour LNG liquefied natural gas LPG liquefied petroleum gas LV low-voltage MBI market-based instruments MENR Ministry of Energy and Natural Resources MoE Ministry of Environment MOU memorandum of understanding Mtoe million tons of oil equivalent MV medium voltage MVA megavolt-ampere MW megawatts, electric N20 nitrous oxide NEAP National Environmental Action Plan v Abbreviations and Acronyms, cont'd NECC National Energy Conservation Center NO2 nitrogen dioxide NO, nitrogen oxides O&M operation and maintenance 03 ozone OECD Organization for Economic Cooperation and Development PFBC Pressurized fluidized bed combustion ppb parts per billion PPP purchasing power parity PV photovoltaics SCR selective catalytic reduction SEE state economic enterprises SIS State Institute of Statistics SO2 sulfur dioxide SPO State Planning Organization T&D transmission and distribution TA technical assistance TEAS Turkish Electricity Generation and Transmission Companv TEDAS Turkish Distribution Company TEK Turkish Electricity Company TFC total final consumption TKI Turkish Lignite Enterprises TL Turkish lira TOOR transfer of operating rights TPAO Turkish Petroleum Corporation TPES total primary energy supply TSP total suspended particles TTK Turkish Hardcoal Enterprises TUBITAK The Science and Technical Research Council of Turkey TUPRAS Turkish Petroleum Refineries Corporation TW terawatt IJNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Chan2e VOC volatile organic compound [tg/m3 micrograms per cubic meter vi Preface Turkey has initiated several reforms in the energy sector. It is beginning to privatize its power sector, is diversifying its fuel supplies by expanding the use of natural gas, and is taking measures to address environmental problems. However, although these steps are clearly in the right direction, Turkey lacks an integrated energy-environment strategy that presents policymakers with clear means of evaluating the various policy and investment options. Furthermore, Turkey is currently assessing its choices vis-a-vis the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. In order to develop its negotiating position, it has to be able to assess the cost-effectiveness of options for greenhouse gas (GHG) mitigation and their impact on Turkey's overall strategy for developing its energy sector. The present paper is an initial effort to assist Turkey in developing its energy-environment strategy. It represents the end of the first phase of the Turkey Energy and Environment Review, which has been funded by the Energy Sector Management Assistance Programme (ESMAP), administered jointly by the World Bank and United Nations Development Programme; and by the World Bank's Europe and Central Asia Region and Environment Department. A previous draft of the paper (dated October 25, 1999) was translated into Turkish and served as the basic discussion document at an Energy and Environment Workshop on the environmental impact of energy development in Turkey held in Ankara on November 12, 1999. The workshop was cosponsored by the World Bank, ESMAP, and the Turkish Treasury. The more than 100 participating experts represented a wide range of stakeholders, including business and academic entities, private consulting firrns, and environmental NGOs, as well as the main Turkish government agencies concerned with energy and environmental issues. The format of the workshop comprised formal presentations, followed by question and answer sessions, in the morning; and five separate breakout sessions in the afternoon, covering improved energy efficiency, inter-fuel substitution, institutional/legal/regulatory measures and market-based instruments, Turkish options to participate in the UNFCCC, and improved technologies and practices. At the end of the workshop a representative of each breakout group presented the group's main findings and recormnendations. The previous draft of the paper was generally well received at the workshop as a reasonable presentation and analysis of the priority issues and options. In particular, the discussions during the workshop confirmed most of the draft's proposals for further work, including (1) scenarios to analyze Turkey's key policy options and (2) special studies to investigate specific topics, designed primarily to generate additional information and, in some instances, possibly lead to investments. The current version of the paper takes into account the minor revisions and the priorities for further work suggested by the workshop participants. It was prepared by a team consisting of James Moose (Energy Economist), Robin Bates (Energy Economist), Stratos Tavoulareas (Power Engineer), and Odil Tunali Payton (Environmental Specialist) from the World Bank. On the Turkish side, contributions were made by the Treasury, the Ministry of Energy and Natural Resources (MENR), the Ministry of Environment (MoE), the State Planning Organization (SPO), the State Institute of Statistics (SIS), the Turkish Electricity Generation and Transmission Company (TEAS), the Turkish Electricity Distribution Company (TEDAS), the Petroleum vii Pipeline and Natural Gas Corporation (BOTAS), Turkish Lignite Enterprises (TKI), State Hydraulic Works (DSI), the Electrical Power Resources Survey and Development Administration (EIEI), the Ministry of Health, the Ministry of Forests, the Ministry of Foreign Affairs, the Science and Technical Research Council of Turkey Marmara Research Center (TUBITAK-MAM), the Clean Energy Foundation, the Society for the Protection of Nature (DHKD), Greenpeace Mediterranean, Recovery & Recycling Scientific and Technical Services Ltd., ABERSAN Environmental Services Inc., the Kocaeli University New and Renewable Energy Resources and Technologies Research Unit, and the Istanbul Chamber of Industry. viii Executive Summary Turkey is rapidly growing in terms of both its economy and its population. In parallel, its demand for energy, particularly for electricity, is increasing fast. In the 1990s energy consumption increased about 4.4 percent per year, with electricity consumption growing at an average annual rate of about 8.5 percent. Any rapid expansion of energy production and consumption produces a wide range of environmental impacts at the local, regional, and global levels. In Turkey, although total suspended particulates (TSP) and sulfur dioxide (SO2) levels have declined in some big cities- mainly because the main fuel used for heating has switched from lignite to either imported coal or natural gas-overall emissions have been growing countrywide. According to the National Environmental Action Plan,' between 1990 and 1996 an estimated 15 million people in Turkish cities were exposed to levels of SO2 and TSP that exceeded World Health Organization standards. This led to significant health problems associated with air pollution, and to accompanying losses in economic productivity. With respect to global environmental issues, although Turkey's carbon dioxide (CO2) emissions are still the lowest among Organization for Economic Cooperation and Development (OECD) countries in terms of per capita emissions, these emissions too have been growing rapidly-at an average annual rate of 4.3 percent since 1990. Currently, Turkey is not a Party to the United Nations Framework Convention on Climate Change (UNFCCC). Turkey's position is that it is considered a developing country according to the United Nations, the World Bank, the Montreal Protocol, UNCTAD, GATT, and the OECD. As such, Turkey has chosen not to become a Party to the Convention because it objects to being included on the same list as industrialized countries that have agreed to work toward reducing their greenhouse gas (GHG) emissions to 1990 levels (see the Annex to this report). Projections for Turkey indicate a continuing increase in demand for energy, especially for electricity, in the next two decades. According to the government's long-term investment plans, energy consumption will nearly quadruple by 2020. Lignite and hydropower will see the largest growth in production. Gross electricity demand is projected to increase by slightly more than 7 percent annually within the same period. In order to meet the projected demand in electricity, Turkish authorities anticipate that 43,000 MW of capacity will be needed by 2010, with another 44,000 MW to be added between 2010 and 2020. This translates to bringing on line an average of 2,500 MW of new generation capacity every year for the next 10 years. Among the planned new thermal power plants are 29 new lignite-fired units, plus 22 operating on hard coal, 33 on natural gas, and 16 on oil. In addition, 32 new hydroelectric power plants will have been commissioned, and there are plans to commission 10 nuclear power plants, the first of which (2 X 1,000 MW) could come on line as early as 2008. Turkish Republic Prime Ministry, State Planning Organization, Turkey: National Environmental Action Plan (Ankara, Turkey, 1997). 1 2 Turkey: Energy and Environment The projected rapid growth in energy consumption in the next two decades is likely to result in large increases in energy-related pollution unless countermeasures are taken. For example, if, as projected, the combustion of high-sulfur domestic lignite triples its current levels by 2020, the resulting annual TSP, SO2, and nitrogen oxides (NO,) emissions could more than triple, reaching 18 million tons, 3.5 million tons, and 1.6 million tons respectively, assuming no environmental controls are implemented. Although the government has already introduced regulations and technological measures intended to reduce TSP and S02, these may need strengthening. In addition, emissions from the transport sector are rapidly growing. Apart from their contribution to ambient concentrations of TSP, SO2, and NO,, vehicles emit dangerous pollutants to the air such as lead, carbon monoxide (CO), and volatile organic compounds (VOCs). Other potential environmental impacts of the projected energy sector expansion include displacement of populations resulting from large hydropower projects; adverse effects on land, agriculture, forestry, biodiversity, and tourism; deforestation due to unsustainable harvesting of fuelwood; ash and nuclear waste; risk of accidents; and emissions of greenhouse gases that contribute to climate change. Nevertheless, the following are several options that Turkey can consider for mitigating the environmental impacts of rapidly increasing energy usage, some of which are more cost- effective than others: 1. Increasing energy efficiency through demand-side management (DSM) and technical efficiency improvements, such as improvements in power generation efficiency and reductions in transmission and distribution losses; 2. Improving technologies and practices, such as clean coal technologies; 3. Inter-fuel substitution-for examnple, substituting high-quality imported coal for lignite and expanding the use of natural gas, hydroelectricity, and other renewables (wind, solar, geothermal, biomass); 4. Expanding electricity trade by importing electricity from adjacent countries with excess capacity such as Bulgaria; 5. Improving fuel quality for the industrial, residential, and transportation sectors-in particular, lowering the sulfur in diesel fuel, phasing out lead in gasoline, and converting vehicles to compressed natural gas/liquefied petroleum gas; 6. Institutional, legal, and regulatory measures, such as improving environmental management and undertaking institutional reforms in the energy sector, including privatization and pricing reform; and 7. Employing market-based instruments to enhance incentives for reducing the environmental impacts of energy production and consumption. The costs and benefits associated with each of these are explained in detail in Chapter 3. It is unlikely that any single option will reduce substantially the potential environmental impacts of the additional energy consumption likely to occur under Turkey's existing energy strategy. Thus, the challenge for decisionmakers is to choose and implement a combination of options that would offer a reduction in impacts sufficient to meet Turkey's environmental goals while also being cost-effective. That choice would involve difficult decisions about (1) the level of environmental impacts that is acceptable to society at large and (2) the level of cost it is reasonable for the economy to bear without reducing economic growth. Executive Summary 3 Turkey's decisionmakers will be greatly assisted in assessing the trade-offs between costs and environmental impacts if analyses can be prepared to indicate the orders of magnitude of the incremental costs and the incremental impacts of different combinations of options. Such analyses should include environmental impact reduction scenarios, as well as carefully selected special studies; and the trade-offs should be exhibited clearly by using presentations such as Multi-Attribute Trade-Off Analysis (MATA). The scenarios, which would emphasize different key policy objectives, would comprise packages of options selected to achieve those objectives realistically and at least, or reasonable, cost. As a starting point, the following four scenarios could be considered: . The Reference Scenario. This would assess the environmental and cost impacts of implementing Turkey's existing energy strategy. * A scenario to reduce greenhouse gas (GHG) emissions. This could include transmission and distribution (T&D) loss reduction, the more aggressive use of DSM, market-based instruments, and a greater penetration of non-traditional renewables, such as wind and small hydropower. It could also quantify the change in costs and GHG emissions caused by various levels of the nuclear power program. * A scenario to reduce local and regional environmental impacts. This would involve a package of options that might again include T&D loss reduction, DSM, and non- traditional renewables, along with clean coal technologies and certain technical approaches aimed at TSP, SO2, waste disposal, and lead reduction. * A Reform Scenario. This would estimate the environmental and cost impacts associated with more-aggressive reform in the energy sector, such as vertical and horizontal unbundling, full commercialization of the state-owned enterprises, and more extensive privatization. The results of the GHG reduction scenarios would aid Turkey in evaluating and choosing among its options for addressing its problem with the UNFCCC. Turkey could continue with its current approach of petitioning to be removed from the Annexes and, if its plea is rejected by the Parties, choose to stay out of the international legal framework on climate change. Altematively, Turkey could sign on to the UNFCCC as an Annex I country but not to the Kyoto Protocol. Also, if it does sign on as an Annex I Party, it could propose to phase-in its emission limitation measures over time. Finally, it could negotiate becoming a Party as a non-Annex I country in exchange for undertaking "voluntary commitments," which might be in the form of lowering the carbon intensity of its economy as opposed to reducing absolute emissions. But no matter which approach is chosen, Turkey would need to carefully weigh the costs of commitments it would be undertaking against the potential opportunities that would arise from its status under the UNFCCC. Based on the work done in connection with this report, special follow-up studies on a number of key areas are recommended. These areas are (1) energy demand forecasting; (2) assessment of T&D loss reduction; (3) a study of the coal/lignite mining subsector; (4) emissions from the non- power sector; (5) assessment of renewable energy resources; (6) potential for cogeneration; (7) improved management and utilization of solid waste produced by power plants; (8) review of the institutional, legal, and regulatory framework in Turkey pertaining to the environment, along with the scope for market-based instruments; and (9) improvement of petroleum fuels quality. 1 Current Energy-Environment Situation Energy Resource Base 1.1 Turkey has a wide variety of conventional and renewable energy resources including lignite, hard coal, asphaltite, bituminous shale, oil, natural gas, hydropower, and biomass, as well as geothermal, wind, and solar energy. However, most of these are of inadequate quality and quantity. Turkey's hydropower reserves are estimated to be around 1 percent of world reserves, and its oil and natural gas reserves are negligible compared to the world total. Energy reserves and potential are summarized in Table l-1. Table 1-1. Primary Energy Reserves of Turkey, 1997 Additional Total Reserves Proven Estimated Estimated Hard coal (million tons) 428 698 1,126 Lignite (million tons) 7,300 775 8,075 Asphaltite (million tons) 45 37 82 Bituminous shale (million tons) 555 1,086 1,641 Hydropower (TWh) 125 309 434 Oil (million tons) 46.3 - 46.3 Natural gas (bcm) 9.4 - 9.4 Geothermal for electricity (MW) 200 4,300 4,500 Geothermal for heat (MW) 2,250 28,850 31,100 Nuclear (tons of uranium) 9,129 9,129 - not known. Source: World Energy Council, Turkish National Committee, 1998. 1.2 Lignite is the most abundant domestic energy source, and is found in almost all of Turkey's regions. Total proven reserves are 7.3 billion tons, of which 3.4 billion tons are in the Afsin-Elbistan area. The bulk of the Turkish lignites have low calorific value coupled with high contents of sulfur and ash. For example, the average calorific value of the Afsin-Elbistan lignite is 1128 kcal/kg while its ash content is 20 percent and sulfur content 2 percent. Proven hard coal reserves of 428 million tons are limited mainly to the Zonguldak area. 1.3 Unlike its neighbors Iran and Iraq, Turkey is poor in oil and natural gas. Proven reserves are only 46 million tons of oil, and less than 10 billion cubic meters (bcm) of natural gas. If no additional reserves are discovered and the current production levels are maintained, oil reserves will be depleted in 14 years. Natural gas production, on the other hand, is fairly recent, 5 6 rurkey: Energy and Environment but is growing rapidly. Production, which is concentrated in the fields of the Marmara Region and in the southeastern province of Siirt, grew by 23 percent between 1996 and 1997, but from a very low base. 1.4 Unlike its neighbors to the southeast, however, Turkey is well endowed with water resources. In fact, 35-40 percent of electricity generation is provided by hydropower. Hydropower potential in larger plants is 125 terawatt-hours (TWh) from 35 gigawatts (GW) of generation capacity. Currently, only one-third of this potential is being exploited. In addition, there may be significant potential for mini-hydropower plants, although this has not yet been quantified. 1.5 Turkey currently uses substantial arnounts of biomass in the form of wood and animal and plant wastes, particularly dung. These are burned for heating and cooking purposes, mainly in rural areas. Such traditional fuels amount to about 25 percent of total primary energy production, although their share is expected to decline. 1.6 Turkey has significant reserves of other renewable energy sources. The western coast and southeast Anatolia were identified as very favorable locations for wind power generation. For example, annual average wind speeds were found to be around 2.5 meters/second and the annual wind power density at 2.4 w/m2. Moreover, geothermal potential is substantial at about 35 GW. Whereas a small portion of Turkey's renewable energy potential-particularly geothermal energy and, to a lesser extent, wind energy-is beginning to be utilized, others such as biogas and solar (for electric applications) are still practically untapped. For example, Turkey's biogas production potential was identified as 3-4 bcm per year (1.5-2 million tons of oil equivalent, or Mtoe). However, neither the government nor the private sector has started capitalizing on this resource yet. Current Energy Demand and Supply Primary Energy 1.7 In parallel with a fast-growing economy and population, Turkey's energy demand is also increasing rapidly. Turkey's GDP grew at an annual average rate of 4.2 percent from 1973 to 1997, while the population increased by roughly 2 percent annually during the same period. As a result, total primary energy supply (TPES) has been increasing by about 4.5 percent per year, slightly above the growth in GDP. 1.8 In 1997, TPES was 71.4 Mtoe. The largest share of supply, 43 percent, was oil, followed by a combination of lignite and hard coal at 29 percent and natural gas at 13 percent. 1.9 By contrast, Turkey's primary energy production was 27.7 Mtoe. The Turkish coal sector, which includes hard coal as well as lignite, accounts for nearly one-half of the country's total primary energy production, with lignite being the main domestic energy source at 11.8 Mtoe in 1997. Hydro production was 3.4 Mtoe, while non-commercial sources such as wood and animal/plant wastes constituted 7 Mtoe. Other renewables such as geothermal and solar were marginal at 0.3 Mtoe (see Figure 1-1). Current Energy-Environment Situation 7 Figure 1.1. Primary Energy Production by Source, 1997 Solar Wood % 19.9% Dung 0.3 \ I 5.5% Hard Coal Geothermal \I l X Electricity 4.9% 0.3% Lignite 42.5% Geothermal Heat Oil 0.4% Hydro N.Gas 13.1% 0.8% 12.4% Source: World Energy Council, Turkish Natonal Committee, 1998 1.10 Turkey currently meets more than one-half of its energy demand through imports, and the share of imports in TPES has been rising as growth in demand increasingly exceeds growth in domestic production. In 1997, total energy imports arnounted to 45.6 Mtoe, of which 65 percent was oil, 19 percent natural gas, and 13 percent hard coal, with petroleum coke, other coal, and electricity accounting for the remaining 3 percent (see Figure 1-2). Figure 1-2. Primary Energy Imports, 1997 Secondary Coal Hard Coal 1% 13% Gas 19% Oil --- 65% Petrocoke 2% Source: World Energy Council, Turkish National Committee, 1998. 1.11 Total final consumption (TFC)-that is, TPES after energy losses in electricity generation, production of synthetic gas, refinery use, and other activities-increased from 54.3 Mtoe in 1996 to 55.0 Mtoe in 1997. Oil's share in TFC was the largest at 44.6 percent. Coal (including lignite, hard coal, and secondary coals such as coke) followed at 21.8 percent, electricity at 12.1 percent, and natural gas at 8.8 percent. Non-commercial fuels such as fuelwood and animal wastes still constituted 12.4 percent of the total in 1997 (see Figure 1-3), although their share has been declining from nearly 40 percent of the TFC in the 1970s. 1.12 The industrial sector claims 36 percent of TFC, while 35 percent is used by the residential/commercial sector, 21 percent by transport, 5 percent by agriculture, and 3 percent by others. 8 Turkey: Energy and Environment Figure 1-3. Total Final Consumption by Source, 1997 Solar Electricity Wood 0.1% 12.1% 9.7% Oil 44.6% 2.7% Geothermal Natural Gas Heat 8.8% Coal 0.2% 21.8% Source: Ministry of Energy and Natural Resources, 1999. Electricity 1.13 Electricity consumption has been growing at an average annual rate of 9 percent since the early 1990s. In 1997, total electricity consumption reached 82,300 gigawatt-hours (GWh), and per capita consumption was 1,643 kilowatt-hours (kWh). The industrial sector was the largest consumer of electricity at 54 percent of the total, followed by residential/commercial use at 42 percent. 1.14 In order to keep up with the surge in electricity demand, electricity generation has also been growing rapidly in the last few years. Between 1996 and 1997, it grew by 9 percent to reach 103,000 GWh, with an installed capacity of 21.9 GW. Hydroelectric power plants account for more than 10 GW of installed capacity, or 46 percent of the total. Lignite-fired plants make up for 29 percent of capacity, followed by natural gas at 16 percent and oil at 6 percent, with the remainder generated by hard coal and others. Figure 1-4 provides the generation by energy source. Oil's share in total generation has been declining as the shares of lignite and hydropower have increased and natural gas has become more readily available in the country. Figure 1-4. Electricity Generation by Energy Source, 1997 Lignite Natural + Hard Gas Coal 21% 33% Oi ydro 7% 39% Source: World Energy Council, Turkish National Committee, 1998. Current Energy-Environment Situation 9 Energy and Electricity Intensity 1.15 Based on nominal GDP figures, both energy and electricity intensities appear higher in Turkey than in the rest of the OECD. However, using purchasing power parity (PPP) to calculate GDP at 1990 price levels, Turkish energy and electricity intensities are actually lower than those of OECD countries. This is largely because the cost of living in Turkey is lower than the OECD average, so that Turkish GDP is higher (in U.S. dollar terms) when converted from Turkish lira to U.S. dollars on the basis of PPP rather than the nominal exchange rate. However, no matter how the energy and electricity intensities are measured, there is much room for improvements in energy efficiency. Current Structure of the Energy Sector 1.16 The Turkish energy sector has traditionally been state-owned, with the government influencing the management and decisions of the State Economic Enterprises (SEEs). Because past governments have often kept energy prices low, the SEEs have not been able to generate enough revenue to undertake investments, and thus have been dependent on the Turkish Treasury for capital endowments and state guarantees for investments. Among other negative impacts on the economy, such pricing policies have encouraged the inefficient use of energy, contributing to the rapid growth in energy demand and imports. Moreover, due to very limited capital, SEEs have not been able to invest in reducing the environmental impacts of their operations. In the last few years the govermnent has committed to sector and pricing reform and prices have generally been increased, and this is helping to reduce the SEEs' deficits. 1.17 The government has started selling the operating rights to lignite mines, power plants, and power distribution facilities to the private sector under the so-called transfer of operating rights (TOOR) arrangements. It has also initiated the privatization of the state-owned refinery (the Turkish Petroleum Refineries Corporation, or TUPRAS) and the oil products distributor (Petrol Ofisi), and is implementing a private financing program in the power sector involving build-operate-transfer (BOT) and build-own-operate (BOO) schemes for power plants. In the gas sector, BOTAS is still a monopoly, but there is movement toward liberalizing natural gas imports and establishing third-party access to the transport and distribution of gas. 1.18 Until 1994, electricity generation, transport, and distribution were the monopoly of the Turkish Electricity Company (TEK). In 1994, TEK was divided into two companies: the Turkish Electricity Generation and Transmission Corporation (TEAS) and the Turkish Electricity Distribution Corporation (TEDAS). Both TEAS and TEDAS report to the Ministry of Energy and Natural Resources (MENR). TEAS currently owns 70 percent of the country's generating capacity and operates the transmission system (including dispatching), while TEDAS owns and manages the main distribution systems. Under the government's on-going privatization program, the operating rights for 12 existing thermal power plants under TEAS and 20 of the 25 regional distribution companies under TEDAS are supposed to be transferred to the private sector. 2 Energy intensity is defined as TPES divided by GDP, while electricity intensity is total electricity generated plus net imports divided by GDP and expressed in kWh per dollar of GDP. 10 Turkey: Energy and Environment 1.19 Independent power producers (IPPs), which have existed in Turkey since the early 1 990s, consist of autoproducers, concessionary companies, and production companies. Autoproducers generate electricity for their own use and sell the excess back to the national grid; production companies sell the electricity they generate to TEAS; and concessionary companies have the right to generate, transmit, distribute, and sell to customers directly. In addition, there are four generation companies that are in affiliated partnerships with TEAS. These affiliated partnerships produce electricity and deliver directly to the interconnected system. The most recent breakdown of total production is given in Table 1-2. Table 1-2. Total Electricity Supply, by Source (1998) Source Generation (GWh) Contribution (%) Generator TEAS 78,581 70.8 Concessionary Companies 2,299 2.1 Production Companies 2,517 2.3 Autoproducers 10,131 9.3 Affiliated Partnerships 17.494 15.8 Total Generation 111,022 Imports Bulgaria 1,863 Georgia 459 Iran 170 Total Imports 2,492 Exports Azerbaijan 271 Total Exports 271 Total Domestic Supply 113,243 Source: World Energy council, Turkish National Committee, 1998, TEAS, 1999. 1.20 Each year, TEAS and TEDAS submit their investment plans to MENR for approval. These are then submitted to the State Planning Organization (SPO), which evaluates costs and the need for new power sector investments. In making final investment decisions, SPO also considers the issue of security of supply. Permission for autoproducers is granted by MENR. Due to a soaring electricity demand and existing capacity constraints, MENR has been encouraging new autoproducers, resulting in a large number of independent power production projects under evaluation. 1.21 Although the government does not formally set electricity tariffs, they are determineci by government policies. TEAS and TEDAS set the tariffs, which have to be approved by MENR. Private utilities can apply to MENR to sell directly to consumers at a negotiated price, while private distributors set tariffs based on TEDAS tariffs. Autoproducers can sell their excess to the grid at a price not to exceed 85 percent of the average selling price of distribution companies to end-consumers excluding taxes. 1.22 Tariff levels are similar for industry and the residential/commercial sectors; however, the latter have been increasing at a higher rate than the former. Lower tariffs (14 percent below countrywide tariffs) have been applied to certain under-developed regions in eastern Anatolia in order to encourage economic activity. However, current tariff levels are too Current Energy-Environment Situation 11 low for TEAS to cover its costs, make investments, and pay for its rapidly increasing purchases from private power plants. Higher tariffs are needed to finance (publicly or privately) the large investments in the power sector required to meet the increases in electricity demand. Moreover, lower tariffs lead to inefficient use of energy and to larger increases in electricity demand. Under the on-going restructuring program, the World Bank is helping the Turkish government improve the performance of state-owned power companies through reforming the tariff system and reducing energy losses. This involves, inter alia, monthly increases in tariffs, which may need to be accelerated. Household tariffs in particular need to be raised because they are low by OECD standards (see Table 1-3). Table 1-3. Electricity Prices for Households and Industry, 1997 (US cents/kWh) Industry Households Turkey 7.7 8.0 OECD Europe 6.5 13.2 Source: TEDAS, IEA. Pollution Associated with Energy Use 1.23 The key pollutants associated with the energy and transport sectors are total suspended particulates (TSP), sulfur dioxide (SO2), nitrogen oxides (NO,), and carbon dioxide (CO2). They are emitted by the burning of Turkey's three principal energy sources-lignite, oil products, and fuelwood-which are responsible for most ambient and indoor air pollution. Although particulate matter and SO2 levels have declined in some big cities owing mostly to switching of heating fuel from lignite to either imported coal or natural gas, overall emissions have been growing countrywide. SO2 has grown at an average annual rate of 5.6 percent to reach 2.3 million tons in 1995. The increase on NO, emissions has been even more dramatic: from 1990 to 1995 NO, emissions increased by 12.5 percent per year, reaching a total of 786' thousand tons in 1995. 1.24 A significant source of S02 emissions is the electricity industry. For coal-fired power plants, the S02 emission standard specified in the Air Quality Control Regulation is 1000 milligrams per cubic meter (mg/Nm3) for plants with a capacity of 300 MW or more. According to 1994 measurements, however, SO2 emissions by large thermal power plants routinely exceeded that standard. For example, SO2 emissions were 3000-6000 mg/Nm3 for the Yatagan plant, 4000-9500 for Afsin-Elbistan, 2000-4800 for Seyitomer, 800-5000 for Soma, 6000-9000 for Orhaneli, 600-1200 for Catalagzi, and 9800-12,000 for Kangal. (Some of these plants have now been fitted with flue gas desulfurization components, or FGDs.) For TSP, the Regulation limits emissions to 250 mg/Nm3 for retrofitted thermal power plants commissioned before the regulations were published (1986), and 150 mg/Nm3 for thermal power plants commissioned after the regulations were published. Emissions at some of the existing plants have exceeded these limits by substantial margins-for example, at Seyitomer, Kangal, and Catalagzi-B. 3 These are preliminary estimates by Argonne National Laboratory and TEAS. At this stage, they do not match the data provided by SIS in the 1998 National Climate Change Report; however, they will be updated in the course of TEAS's modelling work. 4 See footniote 3. 12 Turkey: Energy and Environment 1.25 With respect to global environmental issues, Turkey's CO2 emissions are still the lowest among OECD countries in terms of per capita emissions. Yet, they have been increasing rapidly. Between 1990 and 1997, Co2 emissions grew by 34 percent (4.3 percent per year), reaching 191.6 million tons of CO2. Coal use is responsible for half of Turkey's CO2 emissions, while the other half is largely due to oil (46 percent) and gas (4 percent) consumption. A sectoral breakdown of emissions is given in Table 1-4. Table 1-4. CO2 Emissions from Fossil Fuel Combustion by Sector Energy Other (including (residential, Per Power) Industry_ Transport agriculture) Total Capita % of Year Mt total Mt % Mt % Mt % Mt tons 1990 51.1 36 37.4 26 26.4 19 27.8 19 142.7 2.53 1992 56.3 37 39.1 26 25.9 17 30.6 20 151.9 2.62 1995 61.3 36 41.6 25 33.7 20 32.7 19 169.3 2.79 1997 71.1 37 50.3 26 34.3 18 35.9 19 191.6 3.07 Source: SIS, 1999. 1.26 The Turkish Air Quality Control Regulation of 1986 has set ambient air quality standards for four pollutants; these are compared to the WHO standards in Table 1-5. However, infoimation on air quality in Turkey is limited mainly to regular measurements of SO2 and particulate matter. Pilot studies on measurements of nitrogen dioxide (NO2) and ozone (03) have only recently begun in selected cities. Table 1-5. Turkish and WHO Air Quality Standards (j1g/M3) Turkish Standards WHO Standards Pollutant LTS STS a LTS STS SO2 1 450 400 50 125 NO2 100 300 - 150 PM10 (<1Op) 150 300 50 120 03 (in ppb) 110 - 100-200 - .g/m3: micrograms per cubic meter. LTS: long-term standards (maxirnum annual average). STS: short-term standards (maximum daily average). PM: particulate matter. ppb: parts per billion. - not applicable. a Turkey's ambient air quality standard for SO 2 on an hourly basis is 900 pg/m3. Soure: SIS. 1.27 According to measurements by the Refik Saydam Hygiene Laboratory under the Ministry of Health, ambient concentrations of SO2 and TSP have been declining in many cities since the early 1990s. This is most evident in Ankara, where low quality lignite has been replaced by natural gas as the residential heating fuel. Other large cities that have partially converted to natural gas (e.g., Bursa and Istanbul) are also experiencing declining concentrations of pollutants. However, in medium-size cities such as Yozgat, Kutahya, Erzurum, Afyon, Zonguldak, and Diyarbakir, concentrations are still high, often exceeding WHO standards and sometimes the Turkish standards, indicating that air pollution is still a critical problem in smaller cities (see Table 1-6). Current Energy-Environment Situation 13 1.28 According to the National Environmental Action Plan (NEAP),5 between 1990 and 1996 an estimated 15 million people in Turkish cities were exposed to levels of SO2 and TSP that exceeded WHO standards. This led to significant health problems associated with air pollution, including thousands of hospital admissions with respiratory problems, emergency room visits, and restricted activity days. Table 1-6. Winter Season Air Pollution Trends in Various Turkish Cities TSP (average pg/lm3) SO2 (average g/rM3) City 1990-91 1998-99 % Change 1990-91 1998-99 % Change Ankara 107 62 -42 218 37 -83 Istanbul 151 68 -55 315 64 -80 Izmir 82 - - 112 67 -40 Bursa 139 44 -68 329 81 -75 Yozgat 75 35 -53 186 181 -3 Kutahya 111 72 -35 283 277 -2 Erzurum 141 61 -57 262 149 -43 Zonguldak 130 132 +2 89 90 +1 Afyon 111 146 +24 114 149 +23 Diyarbakir 201 112 -44 285 111 -61 Source: SIS, Ministry of Health. Institutional and Regulatory Structure for Energy and the Environment 1.29 Turkey's environmental policies are based on the principle of carrying on the economic development agenda while protecting the environment. Consistent with this, a balance is sought between the projected increase in energy consumption and the environmental problems associated with it. 1.30 The main and highest coordinating body for environmental issues is the Ministry of Environment (MoE). It was established in 1991, and has been participating in all govermnent decisions on new energy investments since 1997. The ministry's duties include drafting laws, preparing rules and internal regulations, creating institutions (for example, village environment associations), coordinating environmental activities at national and international levels, monitoring compliance, and conducting training. 1.31 MENR is responsible for setting the key objectives for the entire energy sector, including objectives for the enviromnentally sustainable use of energy, energy efficiency, and renewable energy sources. It is also in charge of determining fuel specifications. Hydropower investments are coordinated by the State Hydraulic Works (DSI), and the Ministry of Forestry has oversight for fuelwood use for energy. Under MENR, the Energy Conservation Coordination Board (ECCB) coordinates government policies and measures to promote energy efficiency. Also under MENR, the Electrical Power Resources Survey and Development Administration (EIEI) has been in charge of studies on energy efficiency and renewable energy sources since 1981. Within EIEI, a National Energy Conservation Center (NECC) was established in 1992 to conduct studies, energy audits, and professional training. 5 Turkish Republic Prime Ministry (1997). 14 Turkey: Energy and Environment 1.32 The SPO, which reports directly to the Prime Minister, also takes into account energy efficiency policies when drafting economic, social, and environmental policies for the five-year development plans. 1.33 In the last 15 years, government energy polices have changed to reflect increasing awareness of energy-related environmental problems and the need for their management. For example, the Air Quality Control Regulations of 1986 set emission limits with penalties for power plants, and gave local Public Health Boards under the Ministry of Health the responsibility to monitor air quality in their areas and the authority to take measures if emissions exceed limits. Under the Air Quality Control Regulations, it is the Ministry of Health, including its local branches, that has the authority to monitor air quality and to enforce compliance by issuing warnings and, where necessary, stopping the activities of non-compliant entities. 1.34 In addition, all new lignite-fired power plants are required to have Flue Gas Desulfurization (FGD) units, and existing plants to be retrofitted with FGDs. During the same period, lignite, which was traditionally the main energy source for residential heating, was replaced with natural gas in Ankara, Bursa, parts of Istanbul, and most of Izmit and Eskisehir. In various other areas, some lignite was replaced by imported low-sulfur hard coal. 1.35 In transport fuels, the maximum sulfur content of diesel is being reduced from the current 0.7 percent mass on mass (m/m), and will be brought down to 0.2 percent m/m in 2005. As an incentive to phase out lead, unleaded gasoline has a lower tax than does leaded. In addition, a 1992 regulation calls for emissions testing for cars, trucks, and vans, and for penalties for non-compliance. On the transport planning side, the government has invested in partial subway systems in Ankara and Istanbul in order to reduce urban traffic and related air pollution. 1.36 A MoE regulation on Environmental Impact Assessment (EIA) was passed in 1993, and later revised in 1997, which requires that full Environment Impact Assessments be carried out for power plants of more thani 150 MW, and for transmission lines greater than 154 kV. However, if power plants and transmission lines have already been incorporated into investment plans pre-1997, they are exempt from the requirement. The EIA is the responsibility of the owner of the project, who often hires private consultants to do it. The review and approval process is transparent and involves local participation. MoE grants permission for investments depending on the results of the EIA, however, the majority of ELAs submitted are approved and very few power plant projects are stopped based on results of an EIA. 1.37 Finally, the preparation of a National Environmental Action Plan (NEAP) was proposed within the Seventh Five-Year Development Plan (1996-2000), and the NEAP was finalized in 1997, with assistance from the World Bank. The relevant ministries are expected to draw up action plans in their sectors, and MoE will be overseeing the overall implementation. 2 Environmental Impacts of the Energy Sector Expected Increases in Production, Imports and Consumption 2.1 In 1998, total primary energy production is estimated at 29 million tons of oil equivalent (Mtoe). According to the government's long-termn investment plans, production is projected to increase to 31 Mtoe in 2000, 53 Mtoe in 2010, and 80 Mtoe in 2020, with an average annual growth rate of 4.7 percent. Lignite, hydropower, and geothermal are the energy sources that are predicted to have the largest growth in production, Lignite production, currently at 57 million tons, is projected to more than triple (193 million tons) by 2020. 2.2 Meanwhile, total primary energy supply (TPES), at 77 Mtoe in 1998, is forecasted to grow to 91 Mtoe in 2000, to 175 Mtoe by 2010, and to 314 Mtoe in 2020, with an average annual growth rate of 6.6 percent. Per capita energy use is expected to increase from 1.2 tons of oil equivalent (toe) per year in 1998 to 3.5 toe in 2020. Oil and hydro will have smaller shares of TPES in the new millennium, in contrast with growing shares of natural gas and coal. 2.3 As evident from the above projections, domestic production will not be able to keep up with demand, leading to an increase in imports in order to meet Turkey's energy consumption. Inports, which provided 62 percent of energy consumption in 1998, will make up 66 percent of the energy supplies in 2000, 70 percent in 2010, and 75 percent in 2020. The share of oil in imports will decrease by one-half, while the shares of natural gas and hard coal will grow significantly. 2.4 The most dramatic increase in demand will be in electricity. Gross electricity demand was 115 TWh in 1998, which is projected to increase to 138 TWh in 2000, to 290 TWh in 2010, and to 547 TWh in 2020. This constitutes a 7.3 percent average annual growth for 22 years. In parallel, per capita electricity consumption is expected to grow from 1,764 kWh in 1998 to 6,100 kWh in 2020, or 5.8 percent per year. 2.5 These projections of energy consumption are driven partly by forecasts for population and GDP growth. Although the latest figures anticipate an estimated drop in GDP in 1999 of about 4 percent, growth is expected to resume thereafter, reaching 5-6 percent p.a. in 2000-2002. Population growth is also expected to continue, albeit at lower rates than in the past, falling from the current rate of about 1.5 percent p.a. to less than 1.2 percent p.a. by 2010. This 15 16 Turkey: Energy and Environment population growth rate compares with the 2 percent p.a. rate exhibited prior to 1992. In order to meet the projected demand in electricity, Turkish authorities anticipate that 43,000 MW of capacity will be needed by 2010, with another 44,000 MW to be added between 2010 and 2020. This translates to bringing on line an average 2,500 MW of new generation capacity every year for the next 10 years. The rough annual cost of such investments is estimated to be around $2.5 billion,6 including the accompanying investmnents in transmission and distribution (T&D). 2.6 Among the planned new power plants are 29 new lignite-fired units, 16 of which are in Elbistan, plus 22 operating on hard coal (18 of which will use imported coal), 33 on natural ,gas, and 16 on oil. This brings the total planned new thermal capacity to 47,800 MW by 2020. Il addition, 32 new hydroelectric power plants will have been commissioned, which by 2020 will bring another 17,400 MW of new capacity on line and hydropower generation will increase from 40.9 TWh in 1998 to 103.7 TWh in 2020. Finally, the government is planning to cornmission 10 nuclear power plants, the first of which (2 X 1,000 MW) could come on line as early as 2008. By 2020, nuclear power generation capacity is projected to reach 10,000 MW. However, if all of these plants were to be built, Turkey could have substantial excess capacity. Potential Environmental Impacts of the Energy Sector 2.7 The energy sector creates a wide range of potential environmental impacts that can occur at local, regional, and global levels. These impacts may be felt and perceived by different stakeholders in different ways. If decisionmakers can develop a better understanding of these different impacts and perceptions, their decisions and policies will be more likely to be accepted and supported in the community at large. Emissions of TSP, SO2, NOx, Lead, CO, and VOCs 2.8 As mentioned in Chapter 1, Turkey has had some success in dealing with air pollution in several provincial centers, at least as measured by TSP and SO2 . However, as indicated in Tables 1-5 and 1-6, concentrations in medium-size cities are still high by WHO standards, and for SO2 in some cities, even by Turkish standards. Furthermore, health problems have been associated with air pollution. 2.9 Of equal concern is the fact that the projected rapid growth in energy demand in the next decade is likely to result in large increases in energy-related pollution unless countermleasures are taken. As stated above, the combustion of domestic lignite, generally with high sulfur, is expected to increase threefold in the next 20 years. As a result, if no new controls were applied, annual TSP, SO2 and NOx emissions would nearly triple from 1995 to 2020, reaching approximately 31 million tons, 6 million tons, and 2.9 million tons, respectively. However, the government has introduced regulations and technological measures that are intended to reduce TSP and SO2. Figures 2-1 and 2-2 provide preliminary projections of SO2 and TSP, respectively, when enviromnental controls are applied (e.g., upgrading of electrostatic 6 All dollar amounts are U.S. dollars. These are preliminary estimates made by Argonne National Laboratory and MENR/TEAS in June 1999. At this stage, they clo not match the data provided by SIS in the 1998 National Climate Change Report. However, they will be updated in the course of further modeling work by MENR/TEAS. Environmental Impacts of the Energy Sector 17 precipitators [ESPs], installation of FGDs in both existing and new coal-fired power plants, and introduction of gas-fired power plants. More specifically, the following environmental control options are assumed: * All new units (hard coal and lignite) will have FGDs and ESPs * Cayirhan and Orhaneli have FGD in operation in 1999 * Yatagan has FGD in 2000 * Elbistan has new FGD in 2003 * Kemerkoy has FGD in 2001 * Kangal has FGD in 2000 * Yenikoy has FGD in 2000 * Seyitomer has FGD in 2001 * All existing coal/lignite and all new coal/lignite have ESPs. Figure 2-1. Controlled S02 Emissions, by Sector 4,000,000 3,500,000 3,000,000 - - 2,500,000 g 2,000,000 1,500,000 ' 1,000,000 4N 500,000 x 1995 2000 2005 2010 2015 2020 Years n Agriculture Residential *Industry Elec.+ Raf. Source: Argonne National Laboratory and MENR/TEAS. 8 These prelitninary estimates are also derived from the work by the Argonne National Laboratory and MENR/TEAS. 18 Turkey: Energy and Environment Figure 2-2. Controlled Particulate Emissions, by Sector 6,000,000 5,000,000 (A4,000,000 - Agriculture 3,000,000 - mE1ec1 R11 * 2,000,D0 -0 10(00,0(00 1995 2000 2005 2010 2015 2020 Year Source: Argonne Nabonal Laboratory and MENRITEAS. Impacts on Population, Land, Agriculture, Forestry, Biodiversity, and Tourism 2.10 Even though the share of hydroelectric power in the total energy mix is expected to decline in the future, it is projected. that 32 new hydroelectric power plants will be added by 2020, accounting for 17,400 MW of new capacity; and that hydroelectric power generation will increase from 40.9 TWh in 1998 to 103.7 TWh in 2020. Inevitably, the construction of hydroelectric plants on this scale could have potentially serious effects on human populations, land use, agriculture, forestry, biodiversity, and tourism. The NEAP expresses the view that large water management and hydropower projects, such as those in the GAP region, if poorly managed, can displace populations, alter the climate and disease vectors, damage cultural heritage and biodiversity, and create salination. The NEAP describes in some detail Turkey's richness in biodiversity and shows concern that dams, among other things, pose risks to ecologically significant areas. Currently, NGOs are campaigning strongly against the Ilusu hydroelectric project on the Tigris, which has a planned capacity of 1200 MW. Similar opposition (including a committee of expert witnesses and a group of local inhabitants) has developed to hydroelectric projects in northeastern Turkey (e.g., Dilek Guroluk, currently under construction at Firtina Deresi), on the grounds that they represent a serious threat to biodiversity. 2.11 Undoubtedly, each individual hydropower proposal must be studied in considerable depth to ensure that its benefits, such as power and irrigation, outweigh the high investment costs of these projects as well as the environmental and social costs often associated with them. Recognizing the complex balance of factors involved in evaluating hydropower projects, DSI carries out evaluations of their social and environmental impacts. For example, in Environmental Impacts of the Energy Sector 19 the case of the Ilusu hydroelectric project, DSI and the Research Center for Historic Environmental Assets at the Middle East Technical University (METU) have signed three protocols. The work is continuing under the supervision of the Ministry of Culture and is intended to take an inventory of all archaeological findings in the area of the reservoir lake and the environs of Ilusu dam planned in Batman and the Karkamis dam being constructed in Gaziantep. Additionally, the project will be monitored through sub-projects scheduled for completion during the seven years before the reservoir starts filling with water. 2.12 Finally, although official projections of energy consumption indicate that fuelwood use will soon stabilize, the deforestation problem is likely to continue in certain areas of the country, depending on the availability and cost of alternative energy sources. The NEAP identified unsound farming and fuelwood practices in forest villages as the major cause of erosion and deforestation, notably in Anatolia. According to the NEAP, less than one-half the fuelwood consumed in 1990 was harvested legally and, in some regions, all firewood was harvested illegally. More up-to-date infornation would be of great value in assessing the extent to which the problem continues. Unsustainable use of wood as an energy fuel not only adds to deforestation and soil erosion, but also (1) leads to a significant decline in an industrial raw material supply and (2) undermines the importance of forest resources as a carbon sink, to help reduce CO2 emissions from energy generation Waste Disposal 2.13 The waste disposal problems arising from power production in lignite plants and coal plants are relatively well known and predictable. Turkish lignite is high in ash-in the 30- 45 percent range, for example, at Yenikoy, Kemerkoy, Seyitomer, Soma-B, Tuncbilek-B, Cayirhan, and Catalagzi-B. The large volume of solid waste that results from the burning of high-ash fuel preempts land from other uses and has to be handled in an environmentally acceptable way. One method of ash disposal is through ash ponds, which can overflow and leach into groundwater sources. A notable incident occurred at the Seyitomer power plant in May 1997, when an ash and dust containment dam collapsed and contaminated 2,000 acres of productive farmland. 2.14 In contrast, the possible environmental impacts associated with the disposal of nuclear waste are uncertain. Turkey plans to construct up to 10 nuclear power plants by 2020, with a total capacity of 10,000 MW. Because these plants present potentially critical environmental issues, Turkey needs to establish a well-developed system to dispose of low- and high-level waste before embarking on such a nuclear power program. Risk of Accidents 2.15 As in the case of waste disposal, the potential environmental impacts of Turkey's proposed nuclear power program, in terms of accidents at nuclear power plants, are not readily identified. Experience from other countries shows that the risk of accidents, and consequent radiation hazards, although very low, is not zero, with the Chernobyl incident perhaps being the 9 14.5 million tons of ash were produced in 1998, a figure that could increase to 50 m-dillion tons by 2020. 20 Turkey: Energy and Environment best-known example. Furthermore, concern has been expressed about the possibility that some of the proposed sites for the nuclear power stations in Turkey may be prone to earthquakes. 2.16 On the other hand, the risk of accidents from the transport of crude oil and petroleum products is much more certain and well documented. According to the NEAP, about 140 cargo vessels and 1,000-1,500 passenger boats navigated the Bosphorus Straits and the Sea of Marmara each day in 1996, transporting a yearly average of 42 million tons of cargo. The NEAP estimated that 35 percent of the vessels were tankers and 38 percent of the total cargo was petroleum. From 1970 to 1991 there were between 3 and 35 oil spills a year, releasing from 50,000 to 700,000 tons of oil; and there have been 200 collisions in the Bosphorus during the past decade. A particularly bad accident occurring in 1979 was the Independenta-Evriali tanker collision in the Sea of Marmara, which killed 43 people and spilled 48,000 tons of crude oil. 2.17 Clearly, not all of this traffic is directly related to Turkey's own energy demand; rather, most of it represents international trade. The U.S. Energy Information Administration estimates that 1.4 million barrels/day of oil is shipped through the Bosphorus, of which three- quarters moves south from the forrmer Soviet Union countries to Europe.'0 Nevertheless, Turkey's need to import energy (in the form of coal, oil, and oil products) is part of the broader picture of an increasing scale of traffic in petroleum. Emissions of C02, CH4 and N20 2.18 Increases in the consumption of fossil fuels-imported coal, lignite, oil and natural gas-will continue to lead to rapid increases in CO2 and other GHG emissions. By 2010, all fossil fuels combined could account for close to 90 percent of the total primary energy supply. As Figure 2-3 shows, CO2 emissions from fossil fuel combustion increased from 143 million tons in 1990 to nearly 200 million tons in 1995, and are expected to increase to 400 million tons by 2010 and 700 million tons by 2020 (see Figures 2-3 and 2-4)." 2.19 Because the data required to make projections of CH4 and NO, in Turkey are seriously deficient, figures are generally lacking. However, as far as fuel combustion is concerned, emissions of CH4 could increase by 16 percent between 1990 and 2010 (from 150,000 tons to 174,000 tons); and emissions of N20 from the transport and energy sectors could more than double over the same period, from 3,000 tons to more than 6,000 tons. 10 lUnited States Energy Information Administration (EIA), Turkey (www.eia.doe.gov/emeu/cabs/turkey.html, Country Analysis Briefs at a Glance, July 1998). As in the case of Figures 2-1 and 2-2, these estimates are preliminary and are derived from the work of ANL, MENR and TEAS, as mentioned in footnote 7. 12 Ministry of Environment et al., Turkey: National Report on Climate Change (Ankara, Turkey, November 1998). Environmental Impacts of the Energy Sector 21 Figure 2-3. C02 Emissions, by Sector 800,000 000 700,000,000 800,000,000 500,000,000 c UAgriculture 1 400.000 000 OTransport 300.000 000 Elndustry 200,000 000 100.000,000 1995 2000 2005 2010 2015 2020 Years Source: ANUMENRITEAS. Figure 2-4. C02 Emissions, by Fuel 800,000,000 700,000,000 600,000,000 500,000,000 | 0Fuel Oil 400,000,000 1 1 i *Other Oi 300,000,000 * 3 *~~~~~~~~~~~~~~~~~~~~~~Natural Gas a I I I ~~~~~~LIHaredCoal 200,000.000 100,000,000 m I~iI~!i1I~h 1995 2000 2005 2010 2015 2020 Year Source: ANUMENR/TEAS. I I 3 Options for Mitigating the Environmental Impacts of the Energy Sector 3.1 Chapter 2 considered the widespread environmental impacts of the energy sector in Turkey and showed that these impacts could worsen in the future, given that coal, lignite, oil and hydroelectricity will continue to provide a major part of total primary energy supply, at least in the near-to-medium term. The picture may become further complicated by the possibility that Turkey will commit itself to a nuclear power program. According to IEA estimates, by 2010 the mix of fuels in the TPES could be as follows: coal and lignite 40 percent, oil 27 percent, natural gas 18 percent, and nuclear 2 percent. The balance would come from renewables (13 percent), which consists mainly of hydropower and biomass. 3.2 Nevertheless, Turkey has a list of options that can mitigate some of the environmental effects of energy supply, and that in certain cases may do so cost-effectively (i.e., some options may be "win-win"). However, some options may reduce certain impacts while exacerbating others. This chapter assesses, to the extent possible, the costs and benefits associated with each option. Chapter 4 considers how combinations of the options might be formed to help decisionmakers reach realistic target levels of mitigation. Improved Energy Efficiency Demand-Side Management 3.3 Demand-side management (DSM) measures include non-price initiatives taken to influence directly the consumption of energy. Efforts to rationalize energy prices, bringing them more into line with financial or economic costs, are normally regarded as the fundamental basis for encouraging energy conservation through the provision of appropriate incentives to consumers. Such efforts are discussed later in this chapter under "Institutional Reforms in the Energy Sector." 3.4 At an aggregate level, energy intensity of the Turkish economy (defined as TPES per unit of GDP), has been fairly stable over a long period at around 0.35 toe/$1,000 (1973- 1995). In OECD Europe during the same period, the figure fell steadily from about 0.25 to 0.2. 23 24 Turkey: Energy and Environment Turkey is thus not only out of line with the general downward trend in energy intensity in Europe; it is also using nearly twice as much energy per unit of GDP.13 3.5 These macroeconomic indicators must, of course, be interpreted with great caution. Aside from the usual problems associated with the comparison of GDP figures across countries, differences in economic structure, the economic costs of alternative fuels, and the geographic location of markets and factories will cause differences in energy intensity between countries that do not necessarily reflect underlying inefficiencies. For example, making adjustments only for PPP, the figure for Turkey appears to be well below that for OECD Europe. Nevertheless, investigations carried out in Turkey at the microeconomic level, covering individual firms and industries, strongly suggest that considerable scope exists in Turkey to improve energy conservation. For example, various studies by the Electrical Power Resources Survey and Development Administration (EIEI) and the National Energy Conservation Center (NECC), with the participation of the European Union, estimate the total energy savings potential for Turkey to be about 13.2 Mtoe per year. This figure roughly corresponds to the culTent final energy consumption in the transport sector. 3.6 The three largest consuming sectors, accounting for 92 percent of total final energy consumption in 1997, are industry (36 percent), residential/commercial (35 percent), and transport (21 percent). A 1993 survey by NECC estimated that the scope for energy conservation in industry and transport was about 30 percent. EIEI conducted a detailed study of 60 industrial facilities, concluding that annual savings of $1 billion might be available at a cost of approximately $2.3 billion-i.e., the payback period was less than 2.5 years. The biggest potential (35 percent) was in iron and steel and non-iron metals, although the potential for energy conservation was as high as 20-25 percent in glass, paper and cellulose, textiles, chemicals, and food. In the residential and commercial sector, a key area for energy conservation is housing; MENR studies here point to savings of 30 percent from investments in insulation, and a further 10 percent from simple housekeeping measures related to building usage and maintenance. These figures for savings potential are consistent with the macroeconomic data cited above, as well as extensive microeconomic studies of DSM potential in other countries. As a step toward increasing conservation in the housing sector, a Heat Insulation Standard for Buildings was finalized in April 1998, and issued by tlhe Turkish Standards Institute. 3.7 Currently, the energy conservation activities of MENR/EIEI are focusing on: nImplementing more energy audits; * Strengthening energy conservation work in buildings; * Issuing new standards for buildings; * Preparing draft regulations for the labeling of refrigerators, washing machines, and air conditioners; and * Developing regulations for street lighting. 13 .International Energy Agency, Energy Policies of IEA Countries: Turkey 1997 Review (Paris, France: OECD/IEA, 1997). 14 IEA (I1997). Options for Mitigating the Environmental Impacts of the Energy Sector 25 Attention is also being given to energy consumption in government offices, because it is not regulated. 3.8 The data clearly suggest considerable potential for increased energy conservation, much of which is economically attractive as well as effective in reducing the pollution related to energy production. An important macroeconomic benefit often overlooked in discussions of DSM is that the competitiveness of the Turkish economy would be increased by reducing energy intensity in industries that are competing for export markets. Technical Efficiency Improving Power Generation Efficiency 3.9 Efficiency improvements are possible in power generation. New power plants (under construction or in the planning stage) could be designed to be more efficient than existing ones. Efficiency can be improved by building larger-size units at power plants, with higher efficiency specifications. 3.10 Currently, all units at coal-fired power plants are in the 150-340 MW range, and there is a preference for ordering new units of the same size as existing ones to reduce costs associated with inventory of spare parts and maintenance activities. Although control of operation and maintenance (O&M) costs is a key consideration in selecting the most appropriate size for new units, additional factors should be considered such as improved economics and environmental benefits due to higher efficiency. For example, units at supercritical power plants in the 500-700 MW size range will have a net plant efficiency of 39-41 percent on a high heating value (HHV) basis, instead of 35-37 percent for small units (150-350 MW range) at subcritical plants. Such efficiency improvement (4 percentage points) would require only 3-8 percent higher capital costs (on a $/kW basis) and would result in a 10-15 percent reduction of all pollutants (particulates, S02, NO,, C02, and ash). 3.11 Of course, the optimum unit size will be dictated also by the demand growth rate (high demand can accommodate larger units more easily), the availability of adequate fuel supply at the site under consideration, and the fuel costs (higher fuel costs justify increased investment in higher efficiency plants). All these factors should be considered in updating the least-cost plan for the power sector, which would be revised to include larger and more efficient units at power plants. 3.12 In addition, cogeneration (the simultaneous generation of heat/steam and power) is an attractive option for Turkey, as it is considerably more efficient than power generation alone and allows industrial enterprises to participate in power generation investments. Currently, Turkey has tax incentives encouraging "inside the fence" generation, but there is great potential for further expanding the use of this type of facility. Reducing Transmission and Distribution Losses 3.13 Currently, transmission and distribution losses amount to approximately 21.2 percent of gross power generation. This consists of 26 Turkey: Energy and Environment * 2.5 percent transmission losses, which is consistent with OECD country practices; * technical distribution losses of approximately 10 percent; and * 8.7 percent non-technical distribution losses. 3.14 Assuming this breakdown is accurate, it would be possible to reduce technical distribution losses from 10 percent to 7-8 percent, non-technical distribution losses from 8.7 percent to 4-5 percent, and total distribution losses from 18.7 percent to 11-13 percent. This is a rather conservative estimate because many distribution enterprises and affiliated companies of TEDAS have already managed to bring losses down to 11-13 percent. (Some have even reduced losses to less than 10 percent.) On the other hand, many distribution enterprises have recorded more than 30 percent losses, but these seem to be relatively small ones supplying power to rural areas that have low net electricity consumption per capita. Of course, it would be necessary to look into these areas with unusually high losses and to identify the cause of losses and loss reduction measures; however, loss reduction efforts in these areas may not contribute very much to total loss reduction. It would be more cost-effective to focus first on the areas with relatively high losses and large sales volume. Reducing Technical Losses 3.15 According to TEDAS's annual report for 1997, there are about 224,200 km of medium-voltage (MV) lines (mainly 31.5-kV lines) and 359,000 km of low-voltage (LV) lines. The length of LV seems excessive compared to that of the MV, which may be one of the dominant causes of the technical losses. Meanwhile, there are 122,890 distribution transformers with 32,100-megavolt-ampere (MVA) capacity. The average capacity is 260 kilovolt-amperes (kVA) per transformer. Annual energy purchase (i.e., input to MV system) was 74.8 billion kWh and net consumption (i.e., sales) 60.8 billion kWh. Assumning an average load factor of 0.6 (a rough estimation from the hourly load curve for the peak day), the average transformer utilization ratio is estimated at around 45 percent, which seems too low even if there is high demand growth by residential customers. This means TEDAS has installed larger capacity trarnsformers than required. Therefore, relatively high no-load loss (iron loss) in distribution transformers may be another dominant cause of the technical losses. It would be necessary to look into TEDAS's system configuration standards and reinforcement criteria to assess whether they are based on appropriate economic and technical justifications. Most likely, many MV feeders or transforrners could be reconfigured. 3.16 It is difficult to determine the amount of required funding without a detailed analysis of loss reduction programs and loss reduction benefits (e.g., long-term marginal cost for kW loss reduction), but it may be wrorthwhile to roughly estimate an economically viable investment level. The reduction of technical losses by 2 percent means a savings of about 4 trillion TL in energy costs, assuming t]hese are about one-third of the energy sales price. If the required investment is about 20 trillion TL to reduce technical losses by 2 percent and the project period is 10 years, the IERR is 15 percent. Reducing Non-Technical Losses 3.17 In general, non-technical loss reduction does not require much physical investment. It does, however, require improvement in management systems (e.g., customer management, meter management, billing management) and business procedures/practice (e.g., Options for Mitigating the Environmental Impacts of the Energy Sector 27 new connection, wire investigation). Although systematic analysis in sample areas and a review of business procedures are required, the rate of return of a non-technical loss reduction program is usually very high because it directly yields a revenue increase based on sales price rather than purchase price. Although not all the non-technical loss reduction will be reflected in reduced power generation (power is being used in many cases even though it is not recorded as "power sold"), paying for power is expected to result in some savings. 3.18 Possible measures for reducing non-technical losses include: * improvement in meter investigation (especially for MV customers) and calibration systems, adoption of insulated wires, oss estimation in distribution systems (MV line, transformer, LV line, service wire and meters), * improved meter reading, and * computerized customer information and billing systems. It may be possible for TEDAS to reduce non-technical losses by 2 percent with at most $2-3 million in technical assistance and investment. 3.19 To design a comprehensive loss reduction program, detailed examinations would be required in some sample areas (e.g., typical urban, suburban, and rural areas). They should include: e power flow analysis, * loss estimation in distribution systems (MV line, transforiner, LV line, service wire and meters), e identification of cause of losses, and * loss reduction measures. However, a very rough estimate would be possible using more aggregated data of the TEDAS distribution system. In general, these loss reductions would have a high economic rate of return and reduce energy related pollution. Improving Technologies and Practices 3.20 Improved technologies and practices in mining, power generation, and environmental control, if applied appropriately, have the potential to reduce environmental pollution. Such options include improved coal mining practices, such as the improved restoration of open cast surface areas, through reforestation and rehabilitation, selective coal mining, and coal washing; clean coal technologies, such as efficient electrostatic precipitators (ESPs), flue gas desulfurization (FGD), selective catalytic reduction (SCR), circulating fluidized bed (CFB), pressurized fluidized bed combustion (PFBC) and integrated gasification combined cycle (IGCC); and improved ash disposal practices and utilization of flyash. 28 Turkey: Energy and Environment Improved Coal Mining Practices 3.21 Coal (hard coal and lignite) is the largest domestic energy source in Turkey. Coal production reached 59.9 million tons (Mt) in 1997, of which 2.5 Mt was hard coal and 57.4 Mt lignite. As these levels indicate, hard coal represents a very small percentage of coal production. It is produced from underground mines and is thus more expensive than lignite, which is extracted from open-cast (open-pit) mines. Estimated reserves of hard coal (mainly in the Black Sea region) are approximately 1.1 billion tons, with 0.4 billion tons proven. 3.22 Lignite represents more than 90 percent of the coal production in Turkey and comes mainly from open cast mines. :[t has a very low calorific value and high content in sulfur and ash. About 75 percent of the reserves have a calorific value below 2,500 kcal/kg and less than 10 percent have more than 3,000 kcal/kg. Elbistan, the largest mine in Turkey, represents 45 percent of Turkey's total lignite reserves and produces lignite of average calorific value of 1,100 kcal/kg. Recoverable lignite reserves are estimated at 8,100 Mt, from which 7,300 Mt are open cast and 800 Mt underground lignite. 3.23 Because lignite production is projected to increase to 136 Mt by 2010 (more than double the production level of 1997), issues such as deforestation caused by open cast mining deserve special attention. Mine reclamration laws exist, but it is not clear how effective they are and whether further measures are needed. 3.24 Another option that could significantly improve coal utilization and reduce environmental damage is beneficiation of coal through selective mining and coal washing (cleaning). Currently, there are three washeries processing 8 Mt per year in Turkey, but the coal they process is utilized mainly in industrial and residential applications. The only power plant that uses washed sub-bituminous coal is the Soma A (2 X 22 MW) plant. The suitability of coal washing for other coal mines depends on the washability characteristics of the coal (sulfur reduction through coal washing is not effective for all coals) and the benefits derived from washing. For example, improved coal quality (increased heating value and reduced ash and sulfur content) may be valuable in a case where coal is transported over a long distance to reach a power plant for which performance and reliability are affected significantly by coal quality changes. The opposite is true for mine-mouth power plants, especially if they are designed to accommodate coal quality fluctuations. Clean Coal Technologies 3.25 Clean coal technologies target the reduction of local and regional pollutants, especially particulates, SO2, and NC)X. However, in some cases (e.g., PFBC and IGCC) significant CO2 reduction can also be achieved. 3.26 For the reduction of paiticulates, Turkey is already utilizing ESPs in all its new power plants. However, the ESP efficiency of some older plants (e.g., Seyitomer, Kangal, and Catalagzi B) falls significantly below world standards. Furthermore, Turkey's environmental standards require particulates to be limited to 150 mg/m3, while multilateral banks, including the World Bank Group, require particulates to be below 50 mg/m3. Options for Mitigating the Environmental Impacts of the Energy Sector 29 3.27 For S02 removal, Turkey has installed or plans to install FGDs in all the major coal-fired power plants. Two of these plants (Cayirhan and Orhaneli) already have been retrofitted with FGDs and four more (Kemerkoy, Yatagan, Wamgal, and Yenikoy) are under construction. 3.28 Alternative SO2 control options include the following: * "Simplified" FGDs, which are less efficient at removing SO2 but are significantly less costly; * SO2 averaging, where compliance with a total annual SO2 release limit (expressed in tons per year) can be achieved through over-compliance by some power plants combined with under-compliance by others; and * Switching to imported coal or natural gas, if applicable for any power plants. 3.29 NO, control options include the following: * Boiler tuning and optimization (such techniques can provide 5-40 percent NO, reduction at a very low cost, i.e., less than 1 $/kW); * Modifications of existing burners (capital costs: 1-6 $/kW); * Retrofit of low NO, burners (cost: 5-20 $/kW); - Gas reburming; Selective noncatalytic reduction (SNCR); and * Selective catalytic reduction (SCR). 3.30 Circulating fluidized bed (CFB) plants may provide an attractive option for Turkey for the following reasons: CFB technology is ideally suited for poor quality coals such as Turkey's lignite, and the technology can accommodate fuel quality fluctuations; CFB reduces simultaneously all local and regional pollutants -(TSP,_O2, and NO.); A preliminary review suggests that Turkish coals have a high content of calcium, which could act as a sorbent to eliminate or reduce the amount of additional sorbent needed for SO2 control; During the last 2-3 years, prices of CFB plants have declined significantly making them competitive with pulverized coal plants fitted with FGDs; and If Turkey continues to prefer relatively small power units (in the 150 to 300 MW range), CFB may have a clear advantage. 3.31 Turkey has recently started utilizing this technology by awarding a contract to build a CFB plant consisting of two 160-MW units. 3.32 Other technological options should also be evaluated, including PFBC and IGCC. Although these options are not fully commercial and may be more expensive than pulverized coal with FGD or CFB, they achieve higher levels of emission reduction. Furthermore, they reduce CO2 emissions through higher net plant efficiency. 30 Turkey: Energy and Environment Improved Ash Disposal Practices and Utilization of Flyash 3.33 The disposal and utilization of flyash represents a significant challenge for Turkey. In 1998, 14.5 Mt of ash were generated by power plants alone (not including industry and other coal utilization applications,>. By the year 2020, ash production is expected to reach 50 Mt per year, with an additional 2-3 Mt of FGD sludge or gypsum. Currently, most of the ash is disposed of close to the power plant, except for Elbistan, which disposes part of it back in the coal mine. One plant is disposing of the ash in the sea. Only a very small percentage of the ash (less than 1 percent) is being utilized fDr construction applications. Inter-Fuel Substitution High Quality Imported Coal for Power and Industry 3.34 Imported low-sulfur coal has been used to replace local lignite in industrial and residential applications, contributing to a significant reduction of particulates and sulfur emissions in certain cities in Turkey. It is the government's policy to make more extensive use of natural gas, and there will be some replacement of both imported and domestic coal by gas; however, many cities and rural areas will not have access to gas and will continue to benefit from replacing lignite with imported coal. 3.35 Currently there are no power plants burning imported coal, but this will change in the year 2003, when the 1210-MW Iskenderun plant will start operation. More plants burning imported coal are planned for the following years. According to the government's preliminary projections, imported coal will increase from the current level of 5-6 Mtoe to 25.8 Mtoe in 2010 and 63 Mtoe in 2020. 3.36 Although coal has some disadvantages in terms of environmental impacts, imported coal has advantages compared to local lignite, and is a viable energy resource for Turkey for the following reasons: The supply is abundant and multiple supply sources provide a very high level of security of supply; Coal prices have declined and are not projected to increase in real terms in the foreseeable future because of a worldwide oversupply of coal and increased competition; and * High quality coal (i.e., coal containing less than 1 percent sulfur and 10 percent ash) is readily available on the export market, and a further reduction of environmental impacts can be accomplished through the utilization of commercially available environmental control options, such as efficient ESPs, low NOx burners, FGD, and SCR. 3.37 The utilization of imported coal in subcritical and supercritical power plants with appropriate environmental control equipment, as well as circulating fluidized bed boilers (CFB), are options that should be considered further. Options for Mitigating the Environmental Impacts of the Energy Sector 31 Natural Gas 3.38 Natural gas is a strategic option for Turkey both as an energy resource and as a means to mitigate environmental impacts. Currently, Turkey has a number of contracts with Algeria, Iran, Nigeria, Turkmenistan, and Russia to provide gas via pipeline or as liquefied natural gas (LNG). Table 3-1 shows the build-up of existing contracts up to the year 2015. Table 3-1. Build-up of Existing Contracts, 2000-2015 (bcm/year) Country 2000 2005 2010 2015 Algeria (LNG) 4.0 4.0 4.0 4.0 Russia 10.5 25.0 30.0 30.0 Nigeria (LNG) 1.2 1.2 1.2 1.2 Iran - 9.0 10.0 10.0 Turkmenistan - 10.0 15.0 15.0 Total 15.7 49.2 60.2 60.2 Source: MENR, BOTAS 1999. 3.39 Turkey currently receives gas from Russia through a pipeline via Ukraine, Moldova, Romania, and Bulgaria. The capacity of the pipeline is 8 bcm/yr and is expected to be expanded to 14 bcen/yr by 2001. Another contract, known as the "Blue Stream," has been negotiated with Russia, and envisages adding a further 12 bem/yr in 2005, rising to 16 bcm/yr by 2010. The Blue Stream will require the construction of a new pipeline under the Black Sea. Not included in Table 3-1 are the quantities of piped gas and LNG covered by the memoranda of understanding (MOU) that Turkey has signed or is negotiating with other countries such as Azerbaijan, Kazakhstan, Iraq, Egypt, Qatar, and Yemen. The possible build-up of these additional quantities is presented in the Table 3-2. Table 3-2. Possible Build-up of Additional Gas Supplies Reflecting MOU Being Negotiated (bcm/yr) Country 2000 2005 2010 2015 Iraq - - 10.0 10.0 Qatar 1.0 1.0 1.0 1.0 Egypt - 4.0 4.0 4.0 Yemen - 2.6 2.6 2.6 Total 1.0 7.6 17.6 17.6 Source: BOTAS. 3.40 The domestic production of natural gas cornmenced in 1976 and reached a maximum of 0.25 bcnt/yr in 1995. Although there are prospects for additional finds in the Sea of Marmara and the Black Sea, the total production is expected to stabilize slightly above the current minimal level (0.3 bcm/yr). 3.41 The existing gas pipeline infrastructure in Turkey, both in transmission and distribution, is still quite limited. It serves only around 20-25 percent of the population, leaving a number of large cities, such as Izmir and Adana, and most rural areas without gas. The existing main transmission line brings Russian gas from Turkey's border with Bulgaria to Ankara by way of Istanbul, Izmit, Eskisehir, and Bursa. In addition, there is a lateral line under construction to Izmir on the Aegean Coast. Five cities have gas distribution systems: Istanbul, Izmit, Bursa, Eskisehir, and Ankara. 32 Turkey: Energy and Environment 3.42 The govermment plans to expand the national gas transmission and distribution network to serve new cities and areas. The major transmission lines that are planned or under construction include the following: The Aegean transmission line, which is completed as far as Can, will link Bursa, which is on the main line, to Izmir on the coast); The Southern transmission line, which will run from Ankara to Iskenderun in the South, with laterals to Kayseri, Konya, and Adana, three large towns which are not currently being senred (in the process traversing the provinces of Malatya, Gaziantep, K. Maras, Aclana, and Mersin); * The Eastern Line, which will bring Iranian and Turkmen gas to Turkey, will pass through several Turkish Cities, including Erzurum, Konya, Sivas, Kayseri, Aksaray, and Erzincan; The Black Sea Extension, which currently goes to Eregli but will be extended to Karabuk; The Western Pipeline, which will pass through Konya, Denizli, Usak, Aydin, and Izmir; and * The Samsun-Ankara pipeline, which will pass through Amasya, Orum, and Kirikkale. 3.43, Although there are greal uncertainties associated with the amount and timing of gas to be provided by new contracts and the pace of construction of gas infrastructure, it is clear that natural gas will play an important role as an energy resource in the future and will have a beneficial impact on the environment. Official estimates envisage that natural gas could satisfy as much as 37 percent of energy demand by 2010. However, it must be strongly emphasized that, to evaluate the role of gas in Turkey rmore systematically, better information is needed on the following: i The most likely build-up of natural gas supply, considering the availability of gas, ability to finance fuel contracts and required infrastructure, and schedule constraints; The likely price of gas in the major consuming centers (e.g., large cities) and to the key sectors (power, industry, residential, and transportation); and * The potential demand for gas, considering the potential for inter-fuel substitution. 3.44 Nevertheless, it can already be expected that the main areas for gas utilization would be the following: * Power generation and cogeneration plants, which can be expected to utilize most of the available gas; * Industry, where there are further opportunities for gas to replace liquefied petroleum gas (LPG) and oil beyond the 185 industrial customers already supplied by BOTAS, mainly in Istanbul and Izmir; * Fertilizer production, because Turkey has built a new fertilizer plant and gas may be a suitable feedstock (although fertilizer imports from Russia and elsewhere seem to be more cost-effective); and * Heating in the residential sector, especially large cities. Options for Mitigating the Environmental Impacts of the Energy Sector 33 3.45 Some preliminary projections of natural gas demand in these sectors are shown in Table 3-3. Table 3-3. Sectoral Breakdown of Natural Gas Demand Projections (bcm) Electricity Fertilizer Other Industry Residential Total 1996 4.1 0.8 1.5 1.4 7.7 2000 11.7 0.8 3.1 3.7 19.3 2005 30.0 0.9 8.8 6.6 46.3 2010 34.9 0.9 11.0 8.4 55.2 Source: BOTAS, [EA. 3.46 The environmental benefits of gas utilization are well documented. As gas replaces high-sulfur petroleum fuels and lignite-fired power plants, it will reduce particulate and sulfur dioxide emissions, especially in the cities. For example, the average sulfur dioxide concentration in Istanbul dropped from 315 4g/m3 to 64 1Lg/m3 in 1990-91 to 1998-99 mainly because of the introduction of natural gas. In the same period, particulate levels dropped from 151 jig/M3 to 68 jig/M3 (see Table 1-6 in Chapter 1). Reductions of a similar magnitude were experienced in Ankara and Bursa, while a smaller reduction was observed in Eskisehir and Izmit. Furthermore, because gas contains far less carbon than lignite or petroleum fuels, its use will reduce carbon dioxide emissions. It is also more efficient to use. 3.47 Altogether, natural gas is an excellent energy option for Turkey, if the security of supply issues can be resolved. Nuclear Power 3.48 Turkey plans to build two nuclear power plants, each having an output of 1000 MW, by 2008. Although 9,129 tons of domestic uranium reserves have been identified, nuclear. fuel is expected to be imported. Whether Turkey will expand its nuclear capacity beyond these two units is uncertain, although official plans show 10 plants totaling 10,000 MW could be in operation by 2020. These plants will provide base load electricity with considerable fuel supply security. Also, compared to thermal power plants, they have the advantage of not emitting pollutants such as S02, NO,, particulates, and CO2. However, they have major, well-established risks and environmental impacts. For this reason, no new nuclear power plants are being built in most industrialized countries, and some existing ones have been or are being decommissioned. Hydroelectric Power 3.49 As of 1997, the installed capacity of hydroelectric plants reached 9,935 MW or about one-half of total electricity generating capacity, and generation was about 35 TW, or about 35 percent of the country's total electricity production. Total hydropower potential (see Table 3- 4) has been estimated at nearly 125 TWh per year for average rainfall. This potential is concentrated in 22 basins, the Euphrates and Tigris rivers representing 45 percent of the total. 34 Turkey: Energy and Environment Table 3-4. Hydroelectric Energy Potential, End 1996 Average Firm Capacity Capacity Generation Energy Status (MW) (9%.) (GWh) (GWh) In operation 9,935 28 36,341 28,225 Under construction 3,394 10 10,924 6,775 Feasibility study completed 5,383 15 16,508 10,264 Feasibility study under preparation 344 1 1,125 956 Planning study completed 4,879 14 17,326 9,626 Planning study under preparation 1,561 4 5728 3,362 Master plan completed 3,811 11 14,141 8,272 Pre-evaluation completed 5,752 16 21,706 12,232 Total 35,059 100 123,799 79,712 Source: Argonne National Laboratory and TEAS, 1999. 3.50 Current expansion plans call for an additional 3,514 MW of hydropower capacity by 2002. Of this total, 1,440 MW would be privately owned and operated and 2,074 MW would be owned and operated by the government. Other Renewables 3.51 Turkey is rich in renewable energy resources. Currently, renewable energy production and use account for about 1'i percent of TPES, about triple the IEA country average. However, it should be borne in mind that 70 percent of these resources are wood and dung, while the remaining 30 percent are large-scale hydropower. Other renewable energy sources (e.g., wind, solar, geothermal, and small hydropower) have not yet been developed, and thus have the potential to contribute more to the generation mix. A more detailed assessment of both the energy resource potential and cost-effectiveness of these options is needed. 3.52 Following is a very preliminary assessment of the potential for wind, solar, geothermal, and biomass energy. Wind Energy 3.53 Even though it is clear that many locations in Turkey have excellent wind regimes, the extent of wind resources has not been measured adequately. For example, an adequate wind atlas of Turkey has not yet been prepared because of a lack of funding and technical equipment; and its absence constitutes a major barrier to further development of wind power. Preliminary estimates suggest that the annual average wind speed is 2.5 m/sec., with an annual wind power density of 2.4 W/m2. The Aegean, Marmara, and Southeast Anatolian regions seem to be the most favorable locations for wind projects. 3.54 There is considerable interest in wind projects, as demonstrated by the following examples: * Since February 1998, Demlirel Holding, an IPP, has been operating a wind farm in Cesme, near Izmir, with a capacity of 1.5 MW. Thirty-one firms have applied to MENR for build-operate-transfer (BOT) wind schemes for a total of 700 MW capacity. One of them was granted a permit to set Options for Mitigating the Environmental Impacts of the Energy Sector 35 up a 7.2 MW wind farm in Alacati, also near Izmir, and has already started generation in the spring of 1999. 3.55 However, these initial wind farms are an expensive source of electricity for the country, although it is assumed that over time wind power prices will fall. Solar Energy 3.56 Turkey has significant solar energy potential, although the cost-effectiveness for power generation (through photovoltaics or thermal solar energy) has not been well established. The average solar irradiation density is 3.6 kWh/M2 per day and average sunshine duration is 2,640 hours per year while the maximum density is 8.5 kWhIm2 per day and maximum sunshine duration is 3016 hours per year. This resource is being exploited already for water heating, but not for electricity production. Turkey is a major producer of flat plate collector systems, producing some 400,000 square meters per year, most of which is used domestically and some exported to the European Union. A survey carried out by the EIEI documents 3-3.5 million m2 of collector capacity in operation, saving 100,000 toe per year. Geothermal Energy 3.57 Turkey's considerable geothermal potential is estimated at 4500 MW for electricity production and 31,100 MW for greenhouse and district heating applications. The first geothermal power plant (20 MW installed capacity) was placed in operation in 1984 in Denizli Saraykoy (the West Anatolia region). It is estimated that this site has enough geothermal potential for an additional 20 MW. Aydin-Germencik is another site with approximately 100 MW potential. 3.58 As of 1996, approximately 90,000 toe of geothermal energy were used in heating applications, including 50,000 households, tourist establishments, and greenhouses. The Ministry of Environment believes that 1 million homes could be heated with geothermal energy. 3.59 The problem with the development of geothermal district heating has been the initial investment outlays, which amount to about $2,000 per standard dwelling (100 square meters). However, operating costs are minimal once the systems are installed, and the Ministry of Environment estimates the payback period as six years. Furthermore, the pollution reduction due to the replacement of lignite or heating oil by geothermal heating is considerable. The Ministry of Environment estimates that switching one standard dwelling from fuel oil to geothermal heating reduces annual carbon dioxide emissions by 14 tons and sulfur dioxide emissions by 0.26 tons. Biomass Energy 3.60 Biomass currently accounts for about 13 percent of Turkey's total final energy consumption. Comprising mostly wood and dung for heating and cooking, it is mainly used in rural areas. The energy forecasts produced by MENR indicate that the total biomass energy used should remain relatively constant at about 7-8 Mtoe. Stabilization of traditional biomass use through the greater penetration of commercial fuels should (1) make an important contribution to mitigating the deforestation problem in Turkey and (2) underpin the importance of forest 36 Turkey: Energy and Environment resources as a carbon sink helping to reduce CO2 emissions from energy generation. Although some scope may exist for developing energy plantations (e.g., for dendrothermal power plants), experience elsewhere indicates that close attention must be paid to issues of sustainability, management, and cost, and the contribution to Turkey's long-term energy requirements would be modest. Nevertheless, taking biomass potential in aggregate, it appears that Turkey could increase its renewables usage significantly-in addition to the current extensive exploitation of hydropower resources using larger hydropower plants. Electricity Trade 3.61 Electricity trade with neighboring countries does not represent a substantial percentage of domestic electricity supply, but it might increase in the future. Turkey has interconnections with the following coumtries: * Azerbaijan (34.5-kV and 154-kV lines) * Arnenia (a 220-kV line)l * Bulgaria (a 400-kV line) i Georgia (a 220-kV line) Iran (a 1 54-kV line) Iraq (a 400-kV line) Syria (a 66-kV line). 3.62 Furthermore, it plans 400-kV interconnections with Greece, Iran, Iraq, and Syria. However, the Turkish system is not integrated for synchronous operation with the neighboring systems. 3.63 In 1998 Turkey exported 271 GWh of electricity to Azerbaijan (see Table 1-2). However, electricity trade seems to be an option for imports mainly from Bulgaria, Georgia, and Turkmenistan (the latter through Iran). In 1998, Turkey imported 1,863 GWh from Bulgaria, 459 GWh from Georgia, and 170 GWh from Iran. In addition, Turkey and Bulgaria have signed an agreement for Bulgaria to sell 33.7 TWh over the next 10 years (starting in 1999). Similarly, there are on-going negotiations to purchase power from Turkmenistan. On the whole, imported electricity is a good option for Turkey because it is generally less expensive than domestically produced electricity from new thermal plants (3-3.5 US cents per kWh versus around 5 US cents per kWh, respectively) and security of supply is perhaps greater than for imported natural gas. Improved Fuel Quality for the Industrial, Residential, and Transportation Sectors 3.64 Currently, the residual fuel oil produced in Turkey has a sulfur content of 3-3.5 percent, with a maximum allowable content of 4 percent. Heating oil, which is used primarily by industries and the residential sector, has a maximum sulfur content of 1.5 percent. The sulfur content of these fuels could be lowered through the installation of fuel oil desulfurization equipment in the refineries or the increased use of low-sulfur crude oil instead of the higher- sulfur crude oils now used. There are currently no plans to do this, however, because the government expects fuel oils to be replaced over time by natural gas. Nevertheless, because this replacement will be gradual, there would be significant benefits, at moderate costs, from Options for Mitigating the Environmental Impacts of the Energy Sector 37 reducing the sulfur content of fuel oils in the next few years. A study of this issue quantifying benefits and costs should be undertaken. 3.65 The improvement of fuel quality in the transport sector is especially important because of its contribution to urban air pollution. Although emissions from the transportation sector have not been well documented, the key factors affecting the level of pollution are the following: Although the sulfur content of diesel fuel was reduced from 1 percent to 0.7 percent in 1998, it remains significantly above OECD country standards (e.g., the EU specifies that a maximum of 0.05 percent should be achieved by 2005), and nearly one-half of the vehicles in Turkey are diesel; Lead emissions are high because, although unleaded gasoline has been introduced, it still represents less than 20 percent of total consumption; and * Few cars have catalytic converters, which results in high VOC emissions. Lower-Sulfur Diesel Fuel 3.66 The government has outlined plans to reduce the sulfur content of diesel fuel by adding desulfurization units to three major refineries, although the construction of the desulfurization units by TUPRAS (the state-owned company that operates four of the country's five refineries) seems to be behind schedule. More specifically, desulfurization units are planned at Izmit (8500 m3/day), Izmir (3180 m3/day), and Kirikkale (4500 m3/day). 3.67 It is understood that diesel fuel with a sulfur content of 0.05 percent will be produced only after 2007, once the necessary investments have been completed; and that until that time diesel fuel containing 0.7 percent sulfur will continue to be used. Unleaded Gasoline 3.68 Utilization of unleaded gasoline is a key option for reducing urban pollution. Currently, the lead content is 0.4 grams/liter in premium gasoline and 0.15 grams/liter in regular. Unleaded gasoline has been introduced in Turkey, but only in a limited number of cities. 3.69 In 1993, the MoE and the automobile manufacturers reached a voluntary agreement under which all imported and locally-produced automobiles in all motor capacities would be equipped with catalytic converters. Already, locally produced foreign brands such as Toyota and Opel are mostly so equipped. Thus, as the fleet is gradually shifted to converters, VOC emissions will decline. 3.70 In addition, the government: * . plans to reduce gradually the amount of lead allowed in regular gasoline by upgrading existing refineries, although this would require the addition of hydrocracking and isomerization units; plans to switch to 100 percent unleaded gasoline by 2005; has provided a small tax incentive to reduce the retail price of unleaded gasoline. 38 Turkey: Energy and Environment TlJPRAS has been spending roughly $1 billion per year to improve conversion rates and fuel quality. 3.71 All the motor vehicles used in international transport comply with EUJRO-I and EURO-II norms of the EU. Conversion of Vehicles to CNG/LPG 3.72 Converting vehicles from gasoline to LPG is another option to reduce pollution from the transport sector and approximately 80 percent of the taxis in Ankara and Istanbul have been converted from gasoline to LPG. Although the conversion costs about $700 per vehicle, LPG was priced 60 percent below gasoline, resulting in rapid payback. Also, 150 buses in Ankara and some in Istanbul have been converted to natural gas. Institutional, Legal, and Regulatory Measures Improvements in Environmental Management 3.73 Responsibility for managing the environmental impacts of the energy sector is highly fragmented in Turkey. Not;ably, key responsibilities lie with the Ministries of Environment, Agriculture, Forestry, fHealth, Energy and Natural Resources, and Industry and Trade. Although the Ministry of Environment (MoE) drafts legislation and issues regulations, it is a' relatively new Ministry with limited resources, and it plays a marginal role in monitoring and enforcement. The Ministry of Health (MoH) is involved more in air pollution and air quality matters: it monitors TSP and SO2 levels, issues permits to industries (including power plants), checks that emissions at the plant level do not exceed standards, and warns violators. The MoH also has the power to levy fines and close down plants in non-compliance with the laws and regulations (although power plants cannot be fined, in extreme cases they can be shut down). The MoE, in contrast, lacks the technical staff and resources to carry out these monitoring and enforcement functions. 3.74 Neither the MoH nor the MoE seems to play any role in managing pollution caused by transport, although some of the air quality measurements taken by the MoH cover transport emissions. Since the Ministry of Transport appears to play no part in the environmental management of the energy sector, there is evidently a notable weakness in the management of the environmental impacts of transport. To some extent this is compensated for by the activity of the Ministry of Industry and Trade and some municipalities-for example, Istanbul in the arena of vehicle testing; and MENR's Directorate of Petroleum Affairs in establishing the specifications for petroleum products, such as the sulfur content of gasoline and diesel. 3.75; Environrmental managerrment could be improved by clarifying the responsibilities for monitoring and enforcement and perhaps strengthening the role of MoE, to promote better integration of environmental factors in planning. Consideration should also be given to introducing more stringent standards, wvhich currently fall short of WHO standards and those recommended by the World Bank in matters of air quality. Options for Mitigating the Environmental Impacts of the Energy Sector 39 3.76 Furthermore, experience in other countries has shown that a stronger participation by other stakeholders in the environmental management process can lead both to a more rigorous application of existing laws and regulations and to a careful reexamination of the adequacy of those laws and regulations. Such stakeholders include business interests, consumer groups, academics, research institutes, and NGOs. For example, as underlined by the NEAP, environmental NGOs, although numerous in Turkey, have had a limited impact in helping to improve the environment. Although the reasons for this are no doubt complex and beyond the scope of the present report, it is clear that the NGOs and other stakeholders can play a vital role in raising the awareness of civil society at large, and government officials in particular, to the importance of recognizing the environmental impacts of the energy sector. The participatory process can be greatly reinforced by providing good access to relevant information, conducting environmental education and training, and making the decisionmaking process transparent and responsive. 3.77 A commendable effort to improve environmental management has been underway since 1997 through a project to help TEAS and MENR improve their environmental analysis. The project has been supported by the World Bank and the Argonne National Laboratory (ANL) of the United States. The project has four components. The first three will provide technical support to TEAS to conduct environmental assessments of the Turkish power system; analyze issues related to energy pricing, market allocation, and the environment; and analyze planning- related issues associated with the Turkish electric generating system. The fourth will enable TEAS and MENR to analyze the transferability and effects of alternative environmental regulatory mechanisms. When the project is complete, it should help MENR and TEAS to bring about a much better integration of environmental issues in energy planning, thereby advancing the methodology and practice of internalizing environmental costs in the decisionmaking process. Institutional Reforms in the Energy Sector Privatization 3.78 Although most of the energy sector in Turkey is still state-owned, considerable progress has been made in reforming and restructuring the state-owned enterprises to bring about greater competition, commercialization, and privatization. As described in Chapter 1, the most progress to date has been made in the power sector, where distribution has been unbundled from generation and transmission; plans exist to privatize (on a TOOR basis) much of the assets of TEAS and TEDAS; and private sector participation has already taken place in generation and distribution, albeit on a limited scale. The lignite and hard-coal sectors are still dominated by state enterprises (TKI and TTK, respectively), as are petroleum production and exploration (TPAO), refining (TUPRAS), and petroleum product distribution (Petrol Ofisi), although some foreign operators are active in exploration and private investment has taken place in refining and (even more so) in distribution. 3.79 BOTAS, the government-owned gas company, is currently the monopoly importer of natural gas; it also owns the transmission system and two of the five distribution companies. The government has in the past indicated that it would like to reduce BOTAS's role in the gas sector, attract private capital to the sector, and make the sector more competitive. It is 40 Turkey: Energy and Environment expected that this private participation would lead to greater investment and accelerate the expansion of gas usage. Thus the government has been working on a plan to restructure the sector involving (1) the creation of an independent regulator for natural gas and (2) the unfbundling of BOTAS into supply, transport, and distribution entities, some of which would be privatized. The revisions to the petroleum law required to implement sector restructuring should be available in early 2000. Once passed by Parliament, they would establish a framework for the restructured sector, although they would have to be implemented through more-detailed regulations. 3.80 Improved operational efficiency and fewer pricing distortions tend to be an important outcome of privatization and competition and a more commercial approach toward energy supply. For example, the larger TEAS thermal power stations, which are being privatized under a TOOR basis, will have a considerable incentive to improve their operating performance because they would sell power to TEAS at a fixed price. Such incentives exist in most power purchase agreements. Plant rehabilitations with the objective of extending operating life and improving efficiency, reliability, and operating costs are expected. Although the costs and benefits of such rehabilitations are site-specific, 1-3 percentage points efficiency improvement are achievable for plants that continue to use the same fuel. In case of fuel switching, either to a higher-quality coal or to natural gas, more-significant improvements are possible. The high level of transmission and distribution losses has been noted earlier; typically, private concession agreements lead to declines in technical and non-technical losses because they clearly affect adversely the profitability of the concession. In general, increased private sector involvement and comrpetition should lead to greater efficiency and less pollution. Pricing 3.81 Distortions in energy pricing appear to be less pronounced in Turkey than in man.y other developing countries. Hard coal prices and petroleum product prices are largely set at or above import parity prices; and the main issue then is whether or not adequate provision has beien made to reflect enviromnental externalities, as discussed later in the context of market- based instruments. Natural gas prices are also supposed to be cost-based, but political influences are apparent in some instances (e.g., to provide discounts to fertilizer factories); and data for 1997 show that industry and households in Turkey received natural gas at much more favorable rates than in OECD Europe. 3.82 In the electricity sector, there is universal metering of energy (kWh), some maximum demand metering, charging for reactive energy (to penalize poor power factors), and limilted time-of-day pricing. On the other hand, there is no seasonal component in the electricity tariff and, as in the natural gas sector, there is a widespread policy of uniform national tariffs within individual consumer categories. The former may not be a major distortion in light of the reasonably high power system load factor; but the latter can lead to incorrect economic signals to consumers in high-cost areas. The variations in the cost of supply for different consumers in different locations can be considerable, especially allowing for distribution costs. The situation is aggravated by the tariff concessions extended to special development areas (about 10 percent for residential and industrial consumers in April 1999) and to agricultural consumers (the average tariff for irrigation was 3.63 cents/kWh in April 1999). Options for Mitigating the Environmental Impacts of the Energy Sector 41 3.83 Even if it is argued that some subsidies and cross-subsidies in energy prices are warranted on social and developmental grounds (e.g. in the "special areas"), they should be as transparent as possible and applied only with great caution, given the potential for over- stimulating demand to high-cost consumers and the detrimental environmental consequences. 3.84 The average residential tariff of 8.0 cents/kWh in 1997 (including all taxes) was well below the OECD Europe average (13.2 cents/kWh); and the overall average of about 5.5 cents/kWh (excluding taxes) for all consumer categories in 1998 would probably not cover the long-run marginal cost of supply. 3.85 Finally, given the likely need to raise average electricity prices in Turkey in the next few years (to fund the large planned expansion in generating capacity), it would probably be appropriate, from an economic standpoint, to increase residential prices for electricity more than industrial prices since it costs more to supply households than to supply industry. Market-Based Instruments 3.86 Like most other countries, Turkey has relied mainly on "command-and-control" (C&C) measures for environmental management rather than on market-based instruments (MBIs); although the Environmental Act of 1983 embodies "the polluter-pays principle." There is strong evidence from elsewhere that a judicious use of MBIs can reduce the cost of meeting a society's environmental goals, compared with C&C. MBIs could include a range of energy and emissions taxes or fines, as well as emissions trading. Clearly, a first step toward MBIs is to try to ensure that energy pricing covers the economic and financial costs of energy supply; and in that regard Turkey's performance, as discussed above, has been, on average, relatively good. Therefore, it may be efficient to consider the use of taxes, subsidies, fines, and other levies to internalize the externalities associated with energy production, transmission, distribution, and use. 3.87 Currently, Turkey applies a value-added tax of 15 percent to the consumption of all energy products except for natural gas, which is taxed at 8 percent. That exception can be seen as an economic instrument to encourage the use of a less-polluting fuel, the benefits of which have been remarkable (i.e., air quality has improved rapidly in major population centers). Additionally, certain petroleum products are taxed heavily. Leaded and unleaded gasoline is taxed at 300 percent and 290 percent respectively, and this slight advantage in favor of unleaded gasoline has been instrumental in encouraging a switch toward this less-polluting fuel. Similarly, the very low excise taxes on LPG (about 1 percent) has prompted the taxi fleet in Ankara and Istanbul to convert from gasoline or diesel to LPG, so that the great majority of the taxis in those cities are now fueled with LPG, using gasoline only for back up. (The cost of switching to LPG is estimated at around $700 per taxi but it has a very rapid payback, given the much lower excise taxes on LPG.) 3.88 Government policy has also encouraged wind energy. For example, Demirel Holding, an IPP, has been operating a wind farm in Cesme, near Izmir, and was able to sell electricity directly to TEDAS at a price of about 8 US cents/kWh, which is more than twice the price that TEDAS pays for most of the electricity it obtains from TEAS. However, it is important to emphasize that the costs and benefits of using taxes and subsidies as MBIs must be carefully 42 Turkey: Energy and Environment quantified: there is a case in principle for internalizing externalities in this way, but there is also a danger that the instrument may be used as a device to promote uneconomic energy sources. It is also worth noting that taxes are typically intended to provide general budget support to the government rather than promote environmental policy, although the Environmental Pollution Fund receives some of the proceeds of imotor vehicle inspection fees and sales taxes. 3.89 In addition to taxes on energy products, Turkey employs a system of fines to penalize activities that cause excessive pollution. However, these fines do not reflect the magnitude of the violation; that is, they do not increase in line with the extent to which the polluter exceeds allowable limits. For exarnple, a system of emissions fines should make polluters pay successively more as emissions progressively increase beyond a baseline. Furthermore, monitoring and enforcement are weak and sometimes non-existent; and the impact of the fines tends to be eroded by inflation. 3.90 Emissions trading is currently not employed in Turkey, although experience in the United States with the trading of sulfur emission permits has been good. For this reason, to reduce the cost of meeting certain environmental targets, Turkey might consider setting up at least a limited form of internal trading arrangements in pollutants. For example, rather than requiring new coal-fired power plants (which use low-sulfur coal) to have FGDs, it could be economically more efficient to allow the plants to meet their obligations by funding the reduction of sulfur emissions by other power plants or companies. The current legal status of such trading mechanisms (or "bubbles") is ambiguous, however, and a review of the existing regulations to permit some form of trading could save the country substantial sums of money without necessarily compromising environmentail objectives. 4 Alternative Scenarios for Environmental Impact Mitigation 4.1 Chapter 3 discussed a wide range of options for mitigating the harmnful environmental impacts of energy production and consumption. Viewing these options realistically in terms of costs, potential, and practical implementation problems, it appears unlikely that any single option can be expected to reduce substantially the environmental impacts of the increment in total energy consumption that is likely to occur under Turkey's existing energy strategy. The challenge for decisiomnakers is therefore to choose and implement a combination of options that offers a likely reduction in impacts sufficient to meet Turkey's environmental goals, and to do so at reasonable cost. That choice will involve difficult decisions about (1) the level of environmental impacts that is acceptable to society at large and (2) the level of cost it is reasonable for the economy to bear without reducing economic growth. 4.2 Decisionmakers will be greatly assisted in making the trade-offs between costs and environmental impacts if analyses can be prepared to indicate the orders of magnitude of the incremental costs and the incremental impacts of different combinations of options. Such analyses should include environmental impact reduction scenarios, as well as carefully selected special studies; and the trade-offs should be exhibited clearly by using presentations such as Multi-Attribute Trade-Off Analysis (MATA). 4.3 The scenarios would emphasize different key policy objectives and would comprise packages of options selected to achieve those objectives realistically and at reasonable or least cost. The special studies would be investigations of specific topics, designed primarily to generate additional information and, in some instances, lead to investments. The proposed scenarios were discussed, along with the list of special studies, at the Energy and Environment Workshop held in Ankara on November 12, 1999. Scenarios 4.4 The scenarios would quantify the impacts of the option packages in terms of the differences in (1) the present value of their total costs, (2) their selected environmental attributes (e.g., GHG emissions and local pollution), and (3) the associated investments (including specific 43 44 Turkey: Energy and Environment projects, where possible). The workshop discussions confirmed that the following four scenarios should be considered: * The Reference Scenario would trace the environmental and cost impacts of implementing Turkey's existing energy strategy. The ongoing work by MENR/TEAS, assisted by ANL, has generated most of the information needed for this scenario. * A scenario to reduce greenhouse gas (GHG) emissions, notably CO2 and methane, could include transmission and distribution (T&D) loss reduction, the more aggressive use of demand-side management (DSM) and MBIs (e.g., carbon taxes), and a greater pe:netration of non-traditional renewables such as wind and small hydropower. It could also, quantify the change in costs (including decomnmissioning costs) and GHG emissions caused by various levels of the nuclear power program A scenario to reduce local and regional environmental impacts would consider a package of options targeted to reduce, for example, lead, TSP, NOx, S02, waste disposal, population displacement, and the loss of agricultural land and scenic amenity. The scenario would again include T&D loss reduction, MBIs (e.g., energy taxes), DSM, and non-traditional renewables, along with clean coal technologies and certain technical approaches aimed at TSP, S02, waste disposal, and lead reduction. A Reform Scenario would see how these environmental and cost impacts would change if Turkey moves ahead more aggressively with implementing reform in the energy sector. Such reform would be characterized by vertical and horizontal unbundling, full commercialization of the state-owned enterprises, and more extensive privatization in each sector. The key variations from the Reference Scenario would manifest themselves in improvements in the underlying efficiency parameters in the sector, notably those discussed in Section 3.6.2 (e.g., heat rates and the level of technical and commercial losses in the transmission and distribution of electricity); and a closer alignment of energy prices and costs, in terms of both level and structure. 4.5 To help put together the packages of options included in the scenario to reduce local and regional environmental impacts, and the scenario to reduce GHG emissions, it will probably be desirable to carry out a prior screening of the individual options. Such a screening would help to identify the most cost-effective packages and could proceed, for example, by quantifying the effect of each option separately and in turn on the Reference Scenario. Special Studies 4.6 Based on the workshop discussions, nine special studies appear to be warranted: * A study of energy demand forecasting would attempt to cast further light on the scope for energy efficiency and the potential impact on the growth in energy demand. A "top down" approach is envisaged that would complement the existing Alternative Scenarios for Impact Mitigation 45 "bottom up" work being conducted by EIEI. The study would draw on international experience to examine the relationship between energy demand and GDP, looking at other countries that have already reached a stage of development similar to Turkey. Examples might include Portugal and Greece. A study of transmission and distribution (T&D) losses would provide more information on the shares of technical and non-technical losses, the true potential for reducing both types of losses, the costs of reaching that potential, the highest priority geographical areas for T&D loss reduction, and the likely optimum level of T&D loss reduction. * A study of the coal/lignite mining subsector would identify the likely reserves that can be economically exploited, the potential for the utilization of coal-bed methane, issues related to mine reclamation and the economics of coal washing in the specific conditions of Turkish coal/lignite. * A study of emissions from the non-power sector would review and, where possible, improve existing baseline data and projections for GHG emissions and local pollutants such as SO2 and particulates. The study would focus particularly on emissions from the residential sector, industry, and transport, where current information is scarce or non-existent. In particular, it is difficult to enter into a successful discussion of GHG reduction targets without an agreed baseline figure, and a greater knowledge of the underlying emissions sources, to make more reliable projections of the likely consequences of different options. For example, the efficiency of industrial boilers may be very low and may contribute disproportionately to emissions in the non-power sector. There is also need for more information related to the transport sector. Particularly important are data on the composition of the existing vehicle fleet, including its fuel usage, age distribution, efficiency, emissions, and so on. Also, now that experience has been gained with the conversion of taxis and buses to LPG, a cost-benefit study should be considered to evaluate the economic costs and the environmental benefits. Such a study would guide policymakers in deciding whether or not to pursue further conversions and, if so, at what pace. * A study of renewable energy resources would review existing work on wind energy (including the effect of the siting of wind measurement stations on the available data and the need for a national wind atlas), solar energy, geothermal resources, and small hydropower. The study may also point to possible projects. * A study of cogeneration would provide further information on where the real scope for cogeneration might lie in Turkey, including the extent to which there could be more combined heat and power plants. It would also analyze the current system of incentives and disincentives for cogeneration. * The disposal of ash and slag from coal-fired power stations and gypsum from FGD plants is in the "category of wastes which have special importance to be considered" in the existing Regulation on Hazardous Waste Control (August 1995). It is foreseen that MoE will define the measures for the proper disposal of these wastes. Even so, the environmental analysis of the energy sector would gain 46 Turkey: Energy and Environment from a study of solid waste management and utilization to establish a greater understanding of the magnitude of the problem, evaluate existing practices, and identify the scope for additional utilization of ash and gypsum. If a special study in this area identifies opportunities for improving existing disposal practices and for additional utilization, projects could be considered. A study of the institutional, legal, and regulatory framework in Turkey would underpin the analysis of the options facing decisionmakers. Particular attention could be given to possible changes in environmental legislation and regulations, for example with regard to energy efficiency standards, current air quality and emission standards, institutional reforms, and the implementation of market-based instruments. * A study of fuel oil quality would look at the options for reducing the sulfur content of fuels, especially for use in the industrial sector. Various options to be considered would include an increase in low-sulfur fuel oil imports, the use of low sulfur crude oils, and firther investment in desulfurization equipment, along with the benefits of these options. In the same way, given the investments that will be necessary for desulfurization units at the refineries, there is an opportunity to assess the costs and benefits of alternative levels of sulfur content in diesel and other petroleum fuels (e.g., 0.05, 0.1, 0.2, and 0.5 percent). These fuel quality and conversion studies could logically lead to projects with a solid economic foundation, incorporating environmental externalities. Annex Turkey and the Climate Change Issue A.1. Turkey's Position with Respect to the UNFCCC Climate change has become a significant foreign policy issue for Turkey as it continues to press its case for removal from Annexes I and II of the United Nations Framework Convention on Climate Change (UNFCCC).15 Turkey has not signed the UNFCCC because it is objecting to being included in Annexes I and II of the Convention. Turkey's position is that it is considered a developing country according to criteria used by the United Nations, the World Bank, the Montreal Protocol, UNCTAD, GATT, and the OECD. As such, Turkey has chosen not to become a Party to the Convention because it objects to being on the same list as industrialized countries that have agreed to work toward reducing greenhouse gas (GHG) emissions to 1990 levels. Although Turkey agrees with the UNFCCC's overall objective of stabilizing GHG concentrations in the atmosphere, it defends the principle of "differentiated responsibilities," arguing that each country should bear the burden of reducing emissions in a way that reflects its own level of development. Turkey maintains that although it is a member of the OECD, its development and emissions patterns correlate more with those of non-Annex I, developing countries. (See Table A-1.) Table A-1. CO2 Emissions Per Capita in Various Countries (tons) Country 1990 1995 Annex I average 12.02 11.18 Non-Annex 1 average 2.42 2.29 United States 19.64 19.88 Republic of Korea 5.40 7.87 Mexico 3.58 3.46 Turkey 2.53 2.79 Source: MoE et al., Turkey: National Report on Climate Change, 1998. At the Fourth Conference of the Parties to the UNFCCC in Buenos Aires in early November 1998, Turkey repeated its petition for removal from the Annexes and backed it by submitting a National Report on Climate Change prepared jointly by the MoE, MENR, SPO, SIS, and the Ministries of Forestry, Agriculture, Industry and Transport.16 The purpose of the report was to demonstrate the strides Turkey has taken so far, and will take in the near future, in reducing its GHG emissions in a business-as-usual scenario based on energy consumption patterns in 1992. 15 Annex I of the UNFCCC consists of OECD countries and Economies-in-Transition, which have emissions reduction commnitments under the Convention, whereas Annex 2 includes only OECD countries, which also have financial obligations. Turkey was included in these Annexes when the UNFCCC was drafted in 1992 based on its membership in OECD as opposed to other relevant criteria such as total and per capita greenhouse gas emissions. Ministry of Environment et al. (1998). A-1 A-2 Turkey: Energy and Environment Submission of such a report was not a requirement for Turkey because it only has observer status under the UNFCCC. Still, the government regarded it as a valuable exercise in developing a national inventory of GHG emissions and demonstrating to the UNFCCC Parties the measures Turkey has taken in recent years to address climate change issues in its development planning (although the report fell short of developing alternative scenarios for emissions based on various mitigation measures). In addition, Turkey will require analyses of this sort when preparing its negotiating position under the UNFCCC and the Kyoto Protocol, if it decides to become a Party. Decisionmakers at the relevant government agencies, who are aware of the need to develop emnissions scenarios and to estimate the costs of mitigation measures, see these as a key potential contribution that the ESMAP-funded ]Energy-Environrnent Review could make. A.2. The UNFCCC and the Kyoto Protocol: Commitments vs. Opportunities To better understand Turkey's current position on the UNFCCC and to identify alternative policy options, it is important to first examine the stipulations of both the UNFCCC and the Kyoto Protocol. The overall objective of the UNFCCC is to stabilize concentrations of GHGs so as to avoid dangerous levels of anthropogenic emissions that would adversely affect the climate system. Recognizing the historical and current responsibility of developed countries for generating the largest share of GHG emissions, the UNFCCC dictates that developed countries should take the leazd in combating climate change while all Parties should work toward the objective of the Convention in accordance with their "common but differentiated responsibilities." Developed countries and Economies-in-Transition are listed in Annex I of the UNFCCC and, as such, have agreed to take on commitments that reflect their historical and current responsibilities mentioned above. Being an OECD member country, Turkey was included in this Annex when the Convention was drafted in 1992. Alt;hough the UNFCCC does not specify emissions reduction targets for Annex I countries, it states that policies and measures instituted by these countries should aim at individually or jointly returning their anthropogenic emissions of GHGs back to their 1990 levels. OECD- member Annex I countries are also included in Annex II, which requires them to provide financial resources and environrnentally-sound technology and expertise to developing-country Parties to help them with the incremental costs of implementing the measures stipulated by the UXICC'C. In December 1997, the Third Conference of the Parties to the UNFCCC adopted the Kyoto Protocol to the Convention, which brought more-specific quantified emissions limitation and 17 Countries undergoing the process of transition to a market economy that are also Parties to the UNFCCC and the Kyoto Protocol are as follows: Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia, Slovenia, and Ukraine. Annex: Turkey and the Climate Change Issue A-3 reduction commitments. The key objective of the Protocol is for Annex B countries to achieve reductions of six GHGs by at least 5 percent below 1990 levels between 2008 and 2012. Developing countries do not yet have binding emissions-reduction commitments, or even a "commitment to commit." Given the stipulations of the Convention and the Protocol, following are four ways in which Turkey could participate in the international legal framework on climate change. (1) Become Party to the UNFCCC as an Annex I country and Party to the Kyoto .Protocol. If Turkey signs and ratifies the UNFCCC as an Annex I and II country, it will come under the following important, but legally non-binding, commitments: Adopt national policies and measures to limit its anthropogenic GHG emissions with the objective of returning to 1990 emissions levels; * Periodically communicate detailed informnation on these policies and measures, as well as national inventories of GHG emissions, to the UNFCCC Secretariat; and Provide financial resources, including technology transfer, to help non-Annex I countries meet the costs of complying with their Convention obligations. If Turkey becomes a Party to the UNFCCC as an Annex I country and ratifies the Kyoto Protocol as well, it will automatically be included in Annex B of the Protocol and, as such, will have to negotiate a "quantified emission limitation or reduction commitment." As an Annex B Party to the Protocol, it will then come under legally binding obligations to limit or reduce its GHG emissions by the amount it negotiates, with a view to the ultimate goal of reducing overall Annex B emissions by at least 5 percent below 1990 levels in 2008-2012. This could be very difficult for Turkey. On the other hand, being a Party to the Convention and the Protocol would have significant benefits for Turkey. First, it would finally be able to receive grants and other assistance from the Global Environment Facility (GEF), to which it has contributed funds since 1994. Although Annex I countries are ineligible for grants where the GEF acts as the financial mechanism of the UNFCCC, the GEF can also make grants and other assistance available to those countries that are eligible to borrow from the World Bank by acting outside its role under the UNFCCC. Economies-in-Transition listed in Annex I have received and currently do receive GEF grants under this provision. Using the precedents set by them, Turkey could negotiate directly with the GEF to obtain grants and other assistance in meeting its obligations under the Convention and the Protocol. 18 Annex I countries under the IUNFCCC are included in Annex B of the Kyoto Protocol, which lists each of their quantified emission limitation or reduction commitments. However, because Turkey is not a Party to the UNFCCC, it is not listed in Annex B of the Protocol even though it is in Annex I of the UNFCCC. 19 These are carbon dioxide (CO2), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). 20 Annex I countries that are Economies-in-Transition were able to negotiate base years other than 1990 for implementing their conmitments. A-4 Turkey: Energy and Environment Second, as a Party to the Kyoto Protocol, Turkey would be able to participate in the Kyoto Protocol mechanisms (also known as "flexibility mechanisms") such as Joint Implementation (JI) and emissions trading. JI would allow Turkey to meet part of its commitments by either investing in GHG reduction and sink enhancement (e.g., afforestation and reforestation) projects in other Annex I countries where the marginal cost of abatement is lower than in Turkey, or by hosting such projects implemented by another Annex I Party. Whether it is an investor or a host for JI projects, Turkey would receive credits against its comnuitments under the Protocol. In addition to JI, Turkey would also be, able to participate in the potential carbon markets as an Annex B country eligible for emissions trading under the Protocol. Although the modalities of this mechanism have not yet been deliberated, in its basic fonn, it would allow Turkey to buy or sell emissions allowances on the open market. (2) Become Party to the UNFCCC as an Annex I country but not Party to the Kyoto Protocol. Although being an Annex I Party automatically makes Turkey an Annex B country with a lirnitation/reduction commitment under the Kyoto Protocol, Turkey would still have the choice of whether or not to ratify the Protocol. Even after the Protocol enters into force, the commnitments specified in it would not be legally binding for Turkey until it ratifies the Protocol. In the meantime, Turkey could still benefit from the opportunities arising from being a Party to the UNFCCC, without yet coming under legally binding emission limitation conmmitments under the Kyoto Protocol. Moreover, many analysts have speculated that the likelihood of the Kyoto Protocol entering into force in its current form is slim. Its entry-into-force requires ratification by at least 55 countries whose collective CO2 emissions in 1990 accounted for at least 55 percent of the world total. This means entry-into-force without ratification by the United States is, while technically possible, politically unlikely. The United States, on the other hand, has stated that "meaningful participation" by developing countries in the Protocol process is a precondition for its ratification. (3) Become Party to the UNFCCC as a non-Annex I country. If Turkey's petition for removal from Annex I is accepted and it becomes a Party to the UNFCCC as a non-Annex I country, it will not yet have to limit or reduce its emissions, although it wmill assume certain commitments. These mainly consist of * developing and disseminating national inventories of GHG emissions; * implementing programs containing measures to address emissions and to facilitate adaptation to climate change; * taking climate change into account in national economic and environmental plans; and * promoting and cooperating in technology transfer, exchange of information, and education/training/public awareness related to climate change. At the same time, being a non-Annex I developing country, Turkey would benefit from technology and financial resource transfers to be provided by Annex I countries through various mechanisms including Joint Implementation; GEF project funding; and various capacity building programs offered by UN agencies, bilateral donors, and multilateral development banks. Annex: Turkey and the Climate Change Issue A-5 (4) Become Party to the UNFCCC as a non-Annex I country and Party to the Kyoto Protocol. If Turkey's petition for removal from Annex I is accepted such that it accedes to the UNFCCC as a non-Annex I country, and ratifies the Kyoto Protocol, it will not have a binding commitment to limit or reduce its emissions at this point. However, it is expected that, if and when the Kyoto Protocol enters into force, developing countries will eventually be expected to take on future emission limitation commitments, particularly given the pressure placed on them by industrialized countries (e.g., Australia, Canada, EU countries, Japan, and the United States) for engaging in a "meaningful participation." Meanwhile, as a non-Annex B developing country, Turkey would be eligible to participate in the Clean Development Mechanism (CDM) as a host to emission mitigation projects, in which Annex B countries would invest. The benefits of hosting such projects are technology transfer and a share of the resource rent arising from the difference in marginal abatement costs between the investor and the host country. Table A-2 summarizes these four options. Table A-2. Key Commitments vs. Opportunities for Turkey's Participation in Climate Change Conventions Under Various Options Options Commitments Opportunities * Negotiate and implement quantified * Receive GEF assistance "NFoo A I II ~emissions limitation or reduction UNFCCC Annex 1,11 commitments . Participate in JI as an "investor" and cmimnsor a "host" KPannex . * Provide financial resources and o a "host" KP Annex B technology transfer to non-Annex I * Participate in Emissions countries Trading * Limit GHG emissions to 1990 UNFCCC Annex 1, 11 levels by 2000 (non-binding) . Receive GEF assistance but not . Provide financial resources and . Participate in JI as "investor," Party to KP technology transfer to non-Annex I but without credits countries UNFCCC non-Annex I * Develop national GHG inventory * Receive GEF assistance but not . Integrate climate change into . Receive capacity building and Party to KP national development plans other TA UNFCCC non-Annex I * Develop national GHG inventory * Receive GEF assistance and a Integrate climate change into * Preicivae aaity buiDin andhst Party to KP national development plans o Receive capacity building and other TA A.3. Possible Approaches for Turkey on the UNFCCC and the Kypto Protocol In light of these options, Turkey has several possible approaches from which to choose. Although four of these are identified here, they should not be viewed as an exhaustive list. (1) Current Approach Turkey could continue to petition for removal from the Annexes I and II of the UNFCCC. The Parties to the UNFCCC discussed Turkey's petition at the Fifth Conference of the Parties (COP- A-6 Turkey: Energy and Environment 5) in Bonn, Germany, in October 1999. However, the Parties were unable to reach a consensus on the issue and deferred the decision to COP-6, which will be held in the Netherlands in November 2000. If its petition is accepted, Turkey would presumably sign and ratify the UNFCCC and the Kyoto Protocol. Should its petition be rejected, Turkey could choose to stay out of the international legal framework on climate change by maintaining its non-Party status. However, there are various negative implications of this. For example, although Turkey has contributed funds to the Global Environment Facility (GEF), because it is not a Party to the UNFCCC, it is not eligible for GEF grants for projects that mitigate emissions. Turkey's non-Party status also prohibits it from participating in future carbon off'set markets and emissions trading. (2) Accession to the UNFCCC Turkey could opt to become a Party to the IJNFCCC as an Annex I country, but not sign or ratify the Kyoto Protocol. If it could be maintained in the face of political pressure from other Annex I countries, Turkey would benefit froml the opportunities available to a Party to the Convention, but not come under difficult constraints on emissions the Protocol would likely bring for Turkey. (3) Phased Approach to Implementing the Measures Alternatively, Turkey could sign the ILJNFCCC as an Annex I country but, in view of its lower development and emissions trends compared to the rest of Annex I, it could propose to phase-in the emission limitation measures under the Kyoto Protocol over time (as was done by Spain and Portugal within the EU "bubble"). Turkey could either negotiate to become a part of this arrangement, or negotiate another bubble arrangement with other Parties. Based on the results of on-going modeling work, Turkey would identify a least-cost strategy to control emissions. This would also incorporate plans to participate in the nascent carbon markets through flexibility measures such as JI and emissions trading, which would help reduce the overall costs of implementing mitigation measures. (4) Accession to the UNFCCC as a Non-Annex I Country with Voluntary Commitments A group of non-Annex I countries including Argentina, Kazakhstan, Mexico, and South Korea have been recently pursuing the adoption of "voluntary commitments" under the UNFCCC and the Protocol. With their relatively high economic growth and emissions patterns, these countries differ from the majority of non-Annex I members. In anticipation of future binding emission linmitation or reduction targets for non-Annex I countries (particularly for those that are more developed) and in response to a certain amount of international political pressure, these countries are now working to identify emissions mitigation options that would minimize the costs of abatement to their economies, which options they would adopt voluntarily. Indeed, at COP-5 Argentina announced its adoption of a voluntary target of 2 to 10 percent in GHG emissions reductions below a "business-as-usual" scenario in the 2008-2012 period. Turkey's development and emissions indicators are very comparable to those of this "voluntary commitment" group. Therefore, one possible option would be for Turkey to negotiate accession to the UNFCCC and the Protocol as a non-Annex I country in exchange for voluntarily adopting commitments of its own choosing. To determine its commitment level, Turkey would identify a Annex: Turkey and the Climate Change Issue A-7 near-future GHG emissions baseline, over which it could reduce emissions at lowest cost within a specified timeframe. The on-going modeling work by TEAS and MENR and the scenario work proposed in Chapter 4 would contribute to the identification of such a baseline. As another alternative, Turkey could negotiate a voluntary commitment based not on absolute emissions reductions, but on lowering the carbon intensity of the economy. Carbon intensity, expressed as total carbon emissions divided by GDP in PPP, has been recently proposed as a more suitable indicator of participation by developing countries in working toward the goals of the Protocol. In contrast with reducing overall emissions, lowering the carbon intensity of the economy does not necessarily imply slowing economic development; instead, it is a result of the more efficient and cleaner use of energy in economic activities. I References Baumert, K., R. Bhandari, and N. Kete. "What Might A Developing Country Climate Commitment Look Like?" Climate Notes, World Resources Institute, (www.wri.org), May 1999. Black Sea Regional Energy Centre (Sofia, Bulgaria) and the Energy Charter Secretariat. Black Sea Energy Review: Turkey. Brussels, Belgium, October 1997. Deneri, A., K. Candangil, and N. Tamer. "Hydroelectrical Energy in Turkey." SHP News, Winter 1998. Global Environment Facility. Instrument for the Establishment of the Restructured Global Environment Facility. Washington, D.C., 1994. Guven, S. "1970-2010 Yillari Arasindaki Turkiye Sera Gazi Emisyonlarinin Istatistiksel Degerlendirilmesi." Ankara, Turkey: Cevre Istatistikleri Sube Mudurlugu, Devlet Istatistik Enstitusu Baskanligi (State Institute of Statistics), April 1999. International Energy Agency. Energy Efficiency Policies 1999: Cornerstone for a Sustainable Energy System. Paris, France: OECD/IEA, 1999. - . Energy Policies of lEA Countries: Turkey, 1997 Review. Paris, France: OECD/IEA, 1997. MoE, MENR, SPO, SIS, and the Ministries of Forestry, Agriculture, Industry and Transport. Turkey: National Report on Climate Change. Ankara, Turkey, November 1998. "Petroleum Activities in 1997." In T C. Petrol Isleri Genel Mudurlugu Dergisi, No. 42. Ankara, Turkey, 1997. State Institute of Statistics. Environmental Indicatorsfor Turkey: 1970-1995. Ankara, Turkey, 1998. . 1997 Statistical Yearbook of Turkey. Ankara, Turkey, 1998. Turkish Electricity Generation and Transmission Company. Electricity Generation: Transmission Statistics of Turkey: 1997. Ankara, Turkey, 1998. Turkish Republic Prime Ministry, State Planning Organization. Seventh Five-Year Development Plan (1996-2000). Ankara, Turkey, 1996. . Turkey: National Environmental Action Plan. Ankara, Turkey, 1997. "Ulusal Cevre Eylem Plani: Enerji Sektorunden Kaynaklanan Hava Kirliligi." In TC. Basbakanlik Devlet Planlama Teskilati. Ankara, Turkey, 1997. "Ulusal Cevre Eylem Plani: Hava Kalitesinin Korunmasi." In T. C. Basbakanlik Devlet Planlama Teskilati, Ankara, Turkey, 1998. United Nations Environment Programme Information Unit for Conventions. United Nations Framework Convention on Climate Change. Chatelaine, Switzerland, 1992. UNFCCC Secretariat. Kyoto Protocol to the United Nations Framework Convention on Climate Change, FCCC/CP/1997/L.7/Add.1, 10 December 1997. Kyoto, Japan. United States Energy Information Administration. Turkey. Country Analysis Briefs at a Glance, http://www.eia.doe.gov/emeu/cabs/turkey.html, July 1998. World Energy Council Turkish National Committee (Dunya Enerji Konseyi Turk Milli Komitesi). Turkey Energy Report 1997. Ankara, Turkey, 1998. A-9 Joint UTNDP/World Bank ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) LIST OF REPORTS ON COMPLETED ACTIVITIES Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Losses in Africa (English) 08/88 087/88 Institutional Evaluation of EGL (English) 02/89 098/89 Biomass Mapping Regional Workshops (English) 05/89 -- Francophone Household Energy Workshop (French) 08/89 -- Interafrican Electrical Engineering College: Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomass Assessment and Mapping (English) 03/90 -- Symposium on Power Sector Reform and Efficiency Improvement in Sub-Saharan Africa (English) 06/96 182/96 Conmmercialization of Marginal Gas Fields (English) 12/97 201/97 Commercilizing Natural Gas: Lessons from the Seminar in Nairobi for Sub-Saharan Africa and Beyond 01/00 225/00 Angola Energy Assessment (English and Portuguese) 05/89 4708-ANG Power Rehabilitation and Technical Assistance (English) 10/91 142/91 Benin Energy Assessment (English and French) 06/85 5222-BEN Botswana Energy Assessment (English) 09/84 4998-BT Pump Electrification Prefeasibility Study (English) 01/86 047/86 Review of Electricity Service Connection Policy (English) 07/87 071/87 Tuli Block Fanns Electrification Study (English) 07/87 072/87 Household Energy Issues Study (English) 02/88 -- Urban Household Energy Strategy Study (English) 05/91 132/91 Burkina Faso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/86 052/86 Urban Household Energy Strategy Study (English and French) 06/91 134/91 Burundi Energy Assessment (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11185 046/85 Energy Assessment (English and French) 01/92 9215-BU Cape Verde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central African Republic Energy Assessement (French) 08/92 9898-CAR Chad Elements of Strategy for Urban Household Energy The Case of N'djamena (French) 12/93 160/94 Comoros Energy Assessment (English and French) 01/88 7104-COM Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 C6te d'Ivoire Energy Assessment (English and French) 04/85 5250-IVC Improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (English) 12/87 -- Power Sector Efficiency Study (French) 02/92 140/91 - 2 - Region/Country Adivity/Report Title Date Number C6te d'Ivoire Project of Energy Efficiency in Buildings (English) 09/95 175/95 Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 Agricultural Residue BriquLetting Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12/86 063/86 Cooking Efficiency Project (English) 12/87 -- Energy Assessment (English) 02/96 179/96 Gabon Energy Assessment (English) 07/88 6915-GA The Gambia Energy Assessment (English) 11/83 4743-GM Solar Water Heating Retrofit Project (English) 02/85 030/85 Solar Photovoltaic Applications (English) 03/85 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 Ghana Energy Assessment (English) 11/86 6234-GH Energy Rationalization in the Industrial Sector (English) 06/88 084/88 Sawmill Residues Utilization Study (English) 11/88 074/87 Industrial Energy Efficiency (English) 11/92 148/92 Guinea Energy Assessment (English) 11/86 6137-GUI Household Energy Strategy (English and French) 01/94 163/94 Guinea-Bissau Energy Assessment (English and Portuguese) 08/84 5083-GUTB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/90 Power and Water Institutional Restructuring (French) 04/91 118/91 Kenya Energy Assessment (Englishl) 05/82 3800-KE Power System Efficiency Study (English) 03/84 014/84 Status Report (English) 05/84 016/84 Coal Conversion Action Plan (English) 02/87 -- Solar Water Heating Study (English) 02/87 066/87 Peri-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English) 11/87 -- Power Loss Reduction Study (English) 09/96 186/96 Lesotho Energy Assessment (English) 01/84 4676-LSO Liberia Energy Assessment (English) 12/84 5279-LBR Recommended Technical Assistance Projects (English) 06/85 038/85 Power System Efficiency Stady (English) 12/87 081/87 Madagascar Energy Assessment (English) 01/87 5700-MAG Power System Efficiency Study (English and French) 12/87 075/87 Environmental Impact of Woodfuels (French) 10/95 176/95 Malawi Energy Assessment (English) 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauritania Energy Assessment (English and French) 04/85 5224-MAU Household Energy Strategy Study (English and French) 07/90 123/90 Mauritius Energy Assessment (Enghsh) 12/81 3510-MAS Status Report (English) 10/83 008/83 Power System Efficiency Audit (English) 05/87 070/87 Bagasse Power Potential (El glish) 10/87 077/87 Region/Country Activity/Report Tide Date Number Mauritius Energy Sector Review (English) 12/94 3643-MAS Mozambique Energy Assessment (English) 01/87 6128-MOZ Household Electricity Utilization Study (English) 03/90 113/90 Electricity Tariffs Study (English) 06/96 181/96 Sample Survey of Low Voltage Electricity Customers 06/97 195/97 Namibia Energy Assessment (English) 03/93 11320-NAM Niger Energy Assessment (French) 05/84 4642-NIR Status Report (English and French) 02/86 051/86 Improved Stoves Project (English and French) 12/87 080/87 Household Energy Conservation and Substitution (English and French) 01/88 082/88 Nigeria Energy Assessment (English) 08/83 4440-UNI Energy Assessment (English) 07/93 11672-UNI Rwanda Energy Assessment (English) 06/82 3779-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Strategy (English and French) 08/86 059/86 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Energy Assessment (English and French) 07/91 8017-RW Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12/91 141/91 SADC SADC Regional Power Interconnection Study, Vols. I-IV (English) 12/93 - SADCC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 -- Sao Tome and Principe Energy Assessment (English) 10/85 5803-STP Senegal Energy Assessment (English) 07/83 4182-SE Status Report (English and French) 10/84 025/84 Industrial Energy Conservation Study (English) 05/85 037/85 Preparatory Assistance for Donor Meeting (English and French) 04/86 056/86 Urban Household Energy Strategy (English) 02/89 096/89 Industrial Energy Conservation Program (English) 05/94 165/94 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Energy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO South Africa Options for the Structure and Regulation of Natural Republic of Gas Industry (English) 05/95 172/95 Sudan Management Assistance to the Ministry of Energy and Mining 05/83 003/83 Energy Assessment (English) 07/83 4511-SU Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English) 07/87 073/87 Swaziland Energy Assessment (English) 02/87 6262-SW Household Energy Strategy Study 10/97 198/97 Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102/89 Remote Sensing and Mapping of Woodlands (English) 06/90 -- Industrial Energy Efficiency Technical Assistance (English) 08/90 122/90 Power Loss Reduction Volume 1: Transmission and Distribution SystemTechnical Loss Reduction and Network Development (English) 06/98 204A/98 - 4 - Region/Country Activity/Report Title Date Number Tanzania Power Loss Reduction Volume 2: Reduction of Non-Technical Losses (English) 06/98 204B/98 Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency Inprovement (English and French) 12/87 078/87 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiency in Tobacco Curing Industry (English) 02/86 049/86 Fuelwood/Forestry Feasibility Study (English) 03/86 053/86 Power System Efficiency Situdy (English) 12/88 092/88 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02/89 097/89 Tobacco Curing Pilot Project (English) 03/89 UTNDP Terminal Report Energy Assessment (English) 12/96 193/96 Rural Electrification Strategy Study 09/99 221/99 Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02/89 093/88 Energy Strategy Study (Eng"lish) 02/89 094/88 Urban Household Energy Strategy Study (English) 08/90 121/90 Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Power Sector Management Institution Building (English) 09/89 -- Petroleum Management Assistance (English) 12/89 109/89 Charcoal Utilization Prefeasibility Study (English) 06/90 119/90 Integrated Energy Strategy Evaluation (English) 01/92 8768-ZIM Energy Efficiency Technical Assistance Project: Strategic Framework for a National Energy Efficiency Improvement Program (English) 04/94 -- Capacity Building for the National Energy Efficiency Improvement Progranmme (NEEIP) (English) 12/94 Rural Electrification Study 03/00 228/00 EAST ASIA AND PACIFC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Forestry Preinvestrnent Study (English) 12/89 105/89 Strategic Options for Power Sector Reform in China (English) 07/93 156/93 Energy Efficiency and Pollution Control in Township and Village Enterprises (TVE) Industry (English) 11/94 168/94 Energy for Rural Development in China: An Assessment Based on a Joint Chinese/ESMAP Study in Six Counties (English) 06/96 183/96 Improving the Technical Efficiency of Decentralized Power Companies 09/99 222/999 Region/Country Activity/Report Title Date Number Fiji Energy Assessment (English) 06/83 4462-FIJ Indonesia Energy Assessment (English) 11/81 3543-IND Status Report (English) 09/84 022/84 Power Generation Efficiency Study (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestmnent Study Vols. I & II (English) 12/90 124/90 Prospects for Biomass Power Generation with Emphasis on Palm Oil, Sugar, Rubberwood and Plywood Residues (English) 11/94 167/94 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Institutional Development for Off-Grid Electrification 06/99 215/99 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87 Gas Utilization Study (English) 09/91 9645-MA Myanmar Energy Assessment (English) 06/85 5416-BA Papua New Guinea Energy Assessment (English) 06/82 3882-PNG Status Report (English) 07/83 006/83 Energy Strategy Paper (English) Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 Philippines Commercial Potential for Power Production from Agricultural Residues (English) 12/93 157/93 Energy Conservation Study (English) 08/94 -- Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979-SOL South Pacific Petroleum Transport in the South Pacific (English) 05/86 -- Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English) 09/85 044/85 Accelerated Dissemination of Inproved Stoves and Charcoal Kilns (English) 09/87 079/87 Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02/88 083/88 Impact of Lower Oil Prices (English) 08/88 -- Coal Development and Utilization Study (English) 10/89 -- Tonga Energy Assessment (English) 06/85 5498-TON Vanuatu Energy Assessment (English) 06/85 5577-VA Vietnam Rural and Household Energy-Issues and Options (English) 01/94 161/94 Power Sector Reform and Restructuring in Vietnam Final Report to the Steering Committee (English and Vietnamese) 09/95 174/95 Household Energy Technical Assistance: Improved Coal Briquetting and Commercialized Dissemination of Higher Efficiency Biomass and Coal Stoves (English) 01/96 178/96 Western Samoa Energy Assessment (English) 06/85 5497-WSO SOUTH ASIA (SAS) Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program (English) 05/83 002/83 Status Report (English) 04/84 015/84 -6 - Region/Country Activity/Report Title Date Number Bangladesh Power System Efficiency Study (English) 02/85 031/85 Srnall Scale Uses of Gas Prefeasibility Study (English) 12/88 -- India Opportunities for Commercialization of Nonconventional Energy Systems (English) 11/88 091/88 Maharashtra Bagasse Energy Efficiency Project (English) 07/90 120/90 Mini-Hydro Development on Irrigation Dams and Canal Drops Vols. I, II and III (English) 07/91 139/91 WindFarm Pre-Investment Study (English) 12/92 150/92 Power Sector Reform Seminar (English) 04/94 166/94 Environmental Issues in the Power Sector (English) 06/98 205/98 Enviromnental Issues in the Power Sector: Manual for Enviromnental Decision PMaking (English) 06/99 213/99 Household Energy Strategies for Urban India: The Case of Hyderabad 06/99 214/99 Nepal Energy Assessment (English) 08/83 4474-NEP Status Report (English) 01/85 028/84 Energy Efficiency & Fuel Substitution in Industries (English) 06/93 158/93 Pakistan Household Energy Assessment (English) 05/88 -- Assessment of Photovoltaic Programns, Applications, and Markets (English) 10/89 103/89 National Household Energy Survey and Strategy Formulation Study: Project Terminal Rteport (English) 03/94 -- Managing the Energy Transition (English) 10/94 -- Lighting Efficiency Improvement Program Phase 1: Commnercial Buildings Five Year Plan (English) 10/94 Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 Industrial Energy Conservation Study (English) 03/86 054/86 EUROPE AND CENTRAL ASIA (ECA) Bulgaria Natural Gas Policies and Issues (English) 10/96 188/96 Central and Eastern Europe Power Sector Reform in Selected Countries 07/97 196/97 Eastern E;urope The Future of Natural Gas in Eastern Europe (English) 08/92 149/92 Kazakhstan Natural Gas Investment Study, Volumes 1, 2 & 3 12/97 199/97 Kazakhstan & Kyrgyzstan Opportunities for Renewable Energy Development 11/97 16855-KAZ Polind Energy Sector Restructuring Program Vols. I-V (English) 01/93 153/93 Natural Gas Upstream Policy (English and Polish) 08/98 206/98 Energy Sector Restructuring Program: Establishing the Energy Regulation Authority 10/98 208/98 Portugal Energy Assessment (English) 04/84 4824-PO Romania Natural Gas Development Strategy (English) 12/96 192/96 Slovenia Workshop on Private Particiipation in the Power Sector (English) 02/99 211/99 Turkey Energy Assessment (English) 03/83 3877-TU Energy and the Environmenit: Issues and Options Paper 04/00 229/00 -7 - Region/Country Activity/Report Title Date Number MIDDLE EAST AND NORTH AFRICA (MNA) Arab Republic of Egypt Energy Assessment (English) 10/96 189/96 Energy Assessment (English and French) 03/84 4157-MOR Status Report (English and French) 01/86 048/86 Morocco Energy Sector Institutional Development Study (English and French) 07/95 173/95 Natural Gas Pricing Study (French) 10/98 209/98 Gas Development Plan Phase II (French) 02/99 210/99 Syria Energy Assessment (English) 05/86 5822-SYR Electric Power Efficiency Study (English) 09/88 089/88 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Syria Energy Efficiency Improvement in the Fertilizer Sector (English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 -- Power Efficiency Study (English and French) 02/92 136/91 Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Renewable Energy Strategy Study, Volume I (French) 11/96 190A/96 Renewable Energy Strategy Study, Volume II (French) 11/96 190B/96 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English) 02/87 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 LATIN AMERICA AND THE CARIBBEAN (LAC) LAC Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 -- Elimination of Lead in Gasoline in Latin America and the Caribbean (English and Spanish) 04/97 194/97 Elimination of Lead in Gasoline in Latin America and the Caribbean - Status Report (English and Spanish) 12/97 200/97 Harmonization of Fuels Specifications in Latin America and the Caribbean (English and Spanish) 06/98 203/98 Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 -- La Paz Private Power Technical Assistance (English) 11/90 111/90 Prefeasibility Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 National Energy Plan (Spanish) 08/91 131/91 Private Power Generation and Transmission (English) 01/92 137/91 Natural Gas Distribution: Economnics and Regulation (English) 03/92 125/92 Natural Gas Sector Policies and Issues (English and Spanish) 12/93 164/93 Household Rural Energy Strategy (English and Spanish) 01/94 162/94 Preparation of Capitalization of the Hydrocarbon Sector 12/96 191/96 Brazil Energy Efficiency & Conservation: Strategic Partnership for Energy Efficiency in Brazil (English) 01/95 170/95 Hydro and Thermal Power Sector Study 09/97 197/97 Chile Energy Sector Review (English) 08/88 7129-CH Colombia Energy Strategy Paper (English) 12/86 -- Power Sector Restructuring (English) 11/94 169/94 - 8 - RegioWlCountry Activity/Report Itle Date Number Colomnbia Energy Efficiency Report for the Commercial and Public Sector (English) 06/96 184/96 Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recormnended Technical Assistance Projects (English) 11184 027/84 Forest Residues Utilization Study (English and Spanish) 02190 108/90 Doninican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assessment (Spanish) 12/85 5865-EC Energy Strategy Phase I (Spanish) 07188 -- Energy Strategy (English) 04/91 -- Private Minihydropower Development Study (English) 11192 -- Energy Pricing Subsidies and Interfuel Substitution (English) 08/94 11798-EC Energy Pricing, Poverty arnd Social Mitigation (English) 08/94 12831-EC Guatemala Issues and Options in the Energy Sector (English) 09/93 12160-GU Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041/85 Household Energy Strategy (English and French) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Jarnaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11/86 061/86 Energy Efficiency Building Code Phase I (English) 03/88 -- Energy Efficiency Standards and Labels Phase I (English) 03/88 -- Management Infornation System Phase I (English) 03/88 -- Charcoal Production Project (English) 09/88 090188 FIDCO Sawmill Residues tJtilization Study (English) 09/88 088/88 Energy Sector Strategy and Investment Planning Study (English) 07/92 135/92 Mexico Improved Charcoal Production Within Forest Management for the State of Veracruz (English and Spanish) 08/91 138/91 Energy Efficiency Managemaent Technical Assistance to the Coniision Nacional para el Ahorro de Energia (CONAE) (English) 04/96 180/96 Panama Power System Efficiency Study (English) 06/83 004183 Paraguay Energy Assessment (Englishi) 10/84 5145-PA Reconmmended Technical Assistance Projects (English) 09/85 -- Status Report (English and Spanish) 09/85 043/85 Peru Energy Assessment (English) 01/84 4677-PE Status Report (English) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 Eniergy Strategy (English and Spanish) 12/90 -- Study of Energy Taxation anid Liberalization of the Hydrocarbons Sector (English and Spanish) 120/93 159/93 Reform and Privatization in the Hydrocarbon Sector (English and Spanish) 07/99 216/99 Saint Lucia Energy Assessment (English) 09(84 51 11-SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 5103-STV Sub Andean Environmental and Social Regulation of Oil and Gas Operations in Sensitive Areas of the Sub-Andean Basin (English and Spanish) 07/99 217/99 - 9 - Region/Country Activity/Report Title Date Number Trinidad and Tobago Energy Assessment (English) 12/85 5930-TR GLOBAL Energy End Use Efficiency: Research and Strategy (English) 11/89 -- Women and Energy--A Resource Guide The International Network: Policies and Experience (English) 04/90 -- Guidelines for Utility Customer Management and Metering (English and Spanish) 07/91 Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 Long-Term Gas Contracts Principles and Applications (English) 02/93 152/93 Comparative Behavior of Firms Under Public and Private Ownership (English) 05/93 155/93 Development of Regional Electric Power Networks (English) 10/94 -- Roundtable on Energy Efficiency (English) 02/95 171/95 Assessing Pollution Abatement Policies with a Case Study of Ankara (English) 11/95 177/95 A Synopsis of the Third Annual Roundtable on Independent Power Projects: Rhetoric and Reality (English) 08/96 187/96 Rural Energy and Development Roundtable (English) 05/98 202/98 A Synopsis of the Second Roundtable on Energy Efficiency: Institutional and Financial Delivery Mechanisms (English) 09/98 207/98 The Effect of a Shadow Price on Carbon Emnission in the Energy Portfolio of the World Bank: A Carbon Backcasting Exercise (English) 02/99 212/99 Increasing the Efficiency of Gas Distribution Phase 1: Case Studies and Thematic Data Sheets 07/99 218/99 Global Energy Sector Reform in Developing Countries: A Scorecard 07/99 219/99 Global Lighting Services for the Poor Phase II: Text Marketing of Small "Solar" Batteries for Rural Electrification Purposes 08/99 220/99 A Review of the Renewable Energy Activities of the UNDP/ World Bank Energy Sector Management Assistance Programmne 1993 to 1998 11/99 223/99 Energy, Transportation and Enviromnent: Policy Options for Environmental Improvement 12/99 224/99 Privatization, Competition and Regulation in the British Electricity Industry, With Implications for Developing Countries 02/00 226/00 Reducing the Cost of Grid Extension for Rural Electrification 02/00 227/00 4/30/00 The World Bank 1818 H Street, N\N Washington, DC 20433 USA Tel.: 1.202.458.2321 Fax.: 1.202.522.3018 Internet: www.worldbank.org/esmap Email: esmap@worldbank.org A joint UNDP/World Bank Programme