Dr. Admir Softic_ presentation_Green Club_ENG.pdf

How BiH plans to respond to EU ETS/CBAM

1. Dr. Admir Softic, Assistant Minister, Ministry of
Foreign Trade and Economic Relations of Bosnia
and Herzegovina
How BiH plans to
respond to EU
ETS/CBAM

2. 3
TABLE OFCONTENTS
4
5
6
7
WHAT BIH HAS TO DO FOR CBAM UNTIL 2026?
IMPLICATION OF CBAM ON BIH ECONOMY
PROCES OF MRVA IN BIH– ROAD MAP
MRVA UNDER EU ETS
WHAT IS EU ETS AND CBAM?
8
THEMATIC PARLIAMENTARY ASSEMBLY OF BIH WITH EU4ENERGY AND
SESSIONS IN THE ENTITY PARLIAMENTS AND BD BIH
9
THE RELATION BETWEEN EU ETS AND CBAM
WHAT HAS BEEN DONE IN BIH SO FAR?
10

3. WHAT IS EU ETS?
➢The EU ETS is one of the main tools with which the EU hopes to
combat global heating and reduce GHG emissions cost
effectively.
➢The EU ETS is meant to apply the ‘polluter pays principle’,
meaning that the costs of pollution should be borne by those who
create it.
➢In 2013, the EU ETS covered approximately half of all EU’s GHG
emissions. That dropped to 36% in 2020 because EU ETS sectors,
in combination, are reducing their emissions faster than the rest of
the economy
➢In 2021, the EU ETS covered over 10,400 industrial plants and
power stations, as well as approximately 350 airlines, across the
27 EU member states, Iceland, Norway and Liechtenstein (there is
also a link with the Swiss ETS, and power plants in Northern Ireland
are covered even after Brexit).
➢The EU ETS has changed significantly since its launch in 2005. It
has gone through three phases, and the fourth phase kicked off in
2021.

4. EU ETS PROCESS
Source:ClimatePolicyInfohub,
adaptedfrom Energy Royd, 2013
EmissionCap
UnusedPermits
Company A
sells
permits
Company B
buys
permits
NeededPermits
To put itsimply

5. Whichsectorsare covered?
➢Initially, CBAM will cover directand indirect emissions of selected sectors:
iron and steel, cement,hydrogen, aluminum, fertilisers and electricity.
➢Indirect emissions (scope 2) will not be covered in the initial phase but can
be added after the transitional period and upon further assessment by EC
WHAT IS CBAM?
➢The CBAM is a new carbon regulation — a type of carbon pricing
— to help the EU fight climate change.
➢While the existing EU ETS covers EU countries, the CBAM will
apply to goods produced outside the EU
➢This addresses the problem of carbon leakage; that is, the situation
where companies move the production of goods to countries with
less stringent emissions policies, primarily to save costs associated
with carbon pricing.
ALU
FertilizersEnergy Hydrogen
Cement Iron & steelAluminium

6. Reporting
Declarants
Customs
authorities
Operatorsof
installations
National
Competent
Authorities
CBAM
Transitional
Registry
European
Commission
Outsidetheregistry
Viatheregistry
REPORTING IN THE CBAM TRANSITIONAL
REGISTRY

7. THE RELATION BETWEEN EU ETS AND CBAM
➢CBAM wasimplementedto avoidcarbonleakageand
protectindustrycompetitiveness
➢GATT and WTO rules require that if a regulatory burden is
faced, this should be equivalent for EU products and
imports
➢WhenCBAM isphased-in, thefreeallocationunderETS
needsto bephased-out
➢Note that CBAM is product-based and includes direct and
indirect emissions, while ETS is installation-based and
includes only direct emissions
ETS CBAM

8. WHAT BIH HAS TO DO FOR CBAM UNTIL 2026?
Establishment of
the MRVA system
as a prerequisite for
establishmentof ETS
Decarbonize
technologies
taking into account a just
transition
Excemptionfor
electricity
REGULATION (EU) 2023/956 of the
European Parliament and of the Council of
10 May 2023 on the establishment of a
Carbon Border Adjustment Mechanism
Art 2 (part7)
If a third country or territory has an electricity market and
there is no technical solution for the application of the
CBAM to the importationof electricity into the customs
territory of the Union from that third country or territory,
such importation of electricityfrom that country or territory
shall be exempt from the application of the CBAM.
Key conditions:
•Power exchange
•Electricity market coupling
•Establishment of ETS

9. WHAT BIH COMPANIES MUST DO UNTIL 2026?
•Invest in cleaner production by improving production
efficiency through digitalization andautomation,
enhancing energy efficiency in production processes,
and producing energy from renewable sources.
•Evaluate and improve the supply chain to enhance
competitiveness and minimize direct and indirect
exposure to CBAM.
•Establishment of energy management.
•Keeping track of emissions and reporting them
accurately and take steps to reduce them, potentially
reducing CBAM payments.

10. IMPLICATION OF CBAM ON BIH ECONOMY
Optimal scenario - Applied ETS
factors, CBAM price aligned with
EU ETS, and applied exemption
for electricity
Period 2026-2030 forallindustries Optimalscenario
Loss of income, BAM in millions 2.186,51
Loss of quantity, kg in millions 2.079,61
Loss of quantity, MWh in millions 0,00
Jobloss, employee 418
CollectedthroughCBAM, BAM in millions 379,14
CollectedthorughETS, BAM in millions 290,59
Collected ETS+CBAM forelectricity, BAM in millions 0,00
KM 380 milKM 290 mil
ETS CBAM

11. 2024 April June 2024 July-Dec 2025 Jan- June
Phase I: Planning & preparing
MILESTONE:Country’sall
levelsof Authority become
awareof MRVA regime
2025 July-Dec 2026 Jan- June 2026 July-Dec
Mapping of BiH
operators likely to
be subject to ETS
MRVA
Assessment of the expected
Competent Authority/ies
workload
MILESTONE:Relevant
Operatorsidentified
Suitable legal basis
selected and agreed
Agree on the creation of the
suitable institutional framework
Introduce MRVA into
Country’s legal system
(adoption of framework
legislation)
MILESTONE:MRVA
introduced in BiH legal
system(framework
legislation)
Competent authorities start
engaging with operators
MILESTONE:Installations
& AOs identified
Awareness raised
BiH engage with BATA
and promote accreditation
of verifiers
Develop MRVA secondary legislation
(appointing and regulating the MRVA
institutional framework-Competent
Authoritiy/ies) at all levels of Authority
MILESTONE:MRVA legislation fully in place,
CAs operative
MILESTONE:Country chooses CAs set-up
and has a clear understanding of human
and technical resources needed
Phase II: Setting up & implementing
2027 Jan-June 2027- 2028
MILESTONE:MRVA started
All actors involved and have the chance
to become acquainted with the system
Start a MRVApilot stage:
give both CA(s) and regulated entities
opportunity to get familiar with the
system→train, inform, practice, raise
awareness
MILESTONE:MRVA improved
CAs provided with more effective
implementing tools
Enhanced accessibility for operators
Strengthened CA-Operators interaction
Deploy means to make MRV fully
fledged and effective: adopt
automated system
Institutional

A thorough understanding of
the applicable EU legislation
and requirements
Establishment
of the WG
Legislation &
Regulatory

Information
Technology
Development of ETS
measures and tools
MILESTONE:
Country has a clear understanding on the
means to introduce MRVA in all levels of
Authoritys’ legal systems
Road Map for ETS MRVA in BiH

12. MRVA UNDER EU ETS
MRVA under EU ETS
COMPETENT AUTHORITY
Stationary installations operators:
➢Electricity and heat generation
➢Energy-intensive industry sectors (oil, refineries, steel works,
production of iron, aluminium, metals, cement, glass, pulp,
paper, cardboard, acids and bulk organic chemicals)
➢Productionofnitric, adipic, glyoxylic, acidsandglyoxal
AircraftOperators:
➢AviationwithinEuropean EconomicArea(EEA)
AnnexII EU ETS, as amended:
AnnexI EU ETS, as amended:
Which gases
are reported?
Reporting of emissions
➢??????�
??????, CH4
➢�
??????�, HFCs
➢PFCs, ????????????
??????

13. WHAT HAS BEEN DONE IN BIH SO FAR?
➢Draft NECP BiHby2030.
➢ETSMRVAproposalforBiH.
➢Draft Design Options for the National
Emissions Trading Scheme in Bosnia and
Herzegovina.
➢Analysis of the impact of CBAM and ETS on 6
selected sectors in BiH (iron, cement,
fertilizer, aluminum and electricity).
➢LegalGapanalysis.
➢Workshop on ETS/CBAM.
➢RoadMapforBiHMRVA
PLANNED ACTIVITIESWORK DONE SO FAR
➢1st WG meeting on ETS and MRVA,
discussion of the ETS MRVA Road
Map.
➢Adoption of the ETS MRVA Road Map.
➢Preparation of the legislative basis.

14. THEMATIC PARLIAMENTARY ASSEMBLY
OF BIH WITH EU4ENERGY AND SESSIONS
IN THE ENTITY PARLIAMENTS AND BD BIH
Proposal for organisation of a thematic
parliamentary assembly of BiH with EU4Energy
and sesssions in the entity parliaments and BD
BiH
Mainobjectives:
•Increaseawarenessamongparliamentarians
abouttheimportanceandimplicationsoftheEU
EmissionsTradingSystem(ETS)andtheCarbon
BorderAdjustmentMechanism (CBAM)
regulationsforBiH.
•Facilitatediscussionsandconsultationstoalign
BiH'slegislativeframeworkwithEUETSand
CBAMregulations.
•StrengthencooperationwiththeEUandother
internationalpartnerstoensuretheeffective
implementationofETSandCBAMregulationsin
BiH.

15. Mr. Admir Softic, Assistant Minister, Ministry of
Foreign Trade and Economic Relations of Bosnia
and Herzegovina
Thank you.