You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


The objectives of the project as a whole are to stimulate technological and institutional changes to
demonstrate inter-fuel substitution and energy efficiency improvement as means to support the country
objectives. The total project aims at encouraging and introducing more rapid transition from coal to gas
and introducing more energy efficiency in residential buildings.

The total project has the following components:

a coal-to-gas conversion component, involving investments in about 30 non-industrial small to medium
size heat plants (boilers) for their conversion from coal to natural gas. The projects are for residential
houses and public buildings; the new technologies include gas fired cogeneration unit of heat and
electricity, condensing boilers as well as conventional gas fired boilers;

an energy efficiency component, involving investments in insulation of buildings and the installation
of energy efficient equipment in some hundred new residential units;

The AIJ component of the project is funded with a grant of 1.1 million USD from the Department of Natural
Resources and Environmental Affairs of the Government of Norway. Non-AIJ related financing of the project
includes grant of 25 million USD from the GEF and further 22 million USD from the Polish National Fund for
Environmental Protection and Water Management (National Fund, NF), Voivodeship Funds (VF), Environmental
Protection Bank (BOS) and private investors in Poland.

The portion of the project funded by the Government of Norway functions as an AIJ demonstration project
with the objective of assisting Parties to the UNFCCC in gaining experience on how the mechanism of AIJ
might work. The project is administered by the World Bank and is related to other Bank operations in
Poland. The GEF funding is separate from the AIJ financing.

The overall project has an estimated lifetime of 17 years and will give substantial reductions in
greenhouse gas emissions and at the same time reduce pollution. It has been planned in a manner consistent
with national priorities for sustainable energy development.

A. 2) Participants/actors:

The donor country is the Government of Norway, represented by the Royal Norwegian Ministry of Foreign
Affairs (RNMFA), Department of Natural Resources and Environmental Affairs. The host is the Government of
Poland, represented by the Ministry of Environment (MoE), Economic Department.

The entity responsible for co-ordination and reporting on AIJ activities in Poland is the National Fund for
Environmental Protection and Water Management (NF), JI-Secretariat. The implementing agency is the
Environmental Protection Bank (BOS). Within the World Bank, the Department for Central and Eastern Europe
is charged with management of the project, while the Global Environment Department assists in development
of the AIJ component.

The host investors are the private boiler owners, public entities and self-governments.

Please fill in one table for each participant/actor. For individuals fill in as from item
"Function within activity".

9 projects under Energy Efficiency in New Residential Buildings Component, updated 31st of December
1999,

4 projects under Coal to Gas Conversion Component are specified in list of "stand-by"
projects.

Item

Please fill in if applicable

General description:

Poland's energy economy is dominated by coal, which is domestically produced. The related
greenhouse gas emissions and air pollution problems are huge.

The share of coal was 77% in 1991, while the share of oil and gas was 21%, one of the lowest in
continental Europe. A shift towards an oil and gas share of 53 to 73% has been estimated by the
World Bank to lead to at least 50% reduction in the carbon dioxide emissions.

One of the reasons for the widespread use of coal is the use for space heating. The use of gas for
space heating was earlier prohibited and the use of oil was held back by various measures. The aim
was to limit foreign exchange expenditures on energy imports. Coal for space heating is used both
in district heating systems, block heating plants (heating several apartments) and in individual
heating in stoves. District heating companies own about 16 GW coal fired boilers, consuming about 6
million tons of coal per year. About 3,2 GW of this capacity is, by the World Bank, considered
suitable for replacement with gas fired boilers.

Removal of the direct regulation of fuel use will result in a shift from coal to gas or oil. Coal
will for reasons of price remain the preferred fuel for relatively large boilers, where economies
of scale offsets the higher costs of coal handling and emission control equipment. Also in small
boilers, coal has until recently been the preferred fuel for economic reasons, but higher coal
prices will reduce its use in the long term.

Environmental standards have been and will be further strengthened for sulphur, particulates and
nitrogen oxide, and effective enforcement will be phased in over many years. This will accelerate
the price-driven conversion of small boilers from coal to gas. The emission standards are
administered by local authorities and linked to these is a system of fees and fines. Emissions of
sulphur dioxide, nitrogen oxides and particulates, as well as carbon dioxide are taxed. The fees on
carbon dioxide are only of symbolic nature. The other fees could have some albeit small effects on
conversions from coal to gas.

There are several obstacles to conversions from coal to gas. They include lack of access to
financing, budgetary procedures of publicly owned heating companies, and lack of price incentives.
Cost savings in heat production are not felt by consumers because heat prices are subsidised. Only
the local authorities have a well defined interest in reducing costs but often lack the financial
means for investment.

For the immediate future, the conversion of coal to gas will not be financially attractive without
taking into account the global warming considerations and/or local pollution effects.The same

Description of the other Energy Efficiency Projects

Besides projects described in the Appendix III, for which BOS SA signed preliminary agreement on
applying for AIJ/GEF grant with developers. These developers are cooperating with Energy Auditor.
Energy Audits are expected to be completed soon.

Their projects are following:

10 multifamily buildings (75 apartments and area 4168,6 m2 totally) in Gdansk -
project of "Towarzystwo Inwestycyjne - Investing S.A." (the request covered 37
multifamily buildings of total amount 17553,83 m2 and 10 single family buildings - but
because of too late date of completion they can not be covered by GEF grant),

1 multifamily building (7-8 floors) with area of 5267 m2 and 94 apartments in
Wroclaw, Ciepla 15 Street - project of „ARCHICOM" firm.

c) Methodological work will be required to define lifetime of activities.

d) Methodological work will be required to determine for each types of activity what the minimum
data requirements are.

A. 4) Cost (to the extent possible):

The project has a 1.1 million USD grant from the Government of Norway, a contribution of about 22 million
USD from Poland and a 25 million USD grant from the GEF. The Polish sources for funding vary, but are most
often a package of funding from the boiler owners themselves, the National Fund for Environmental
Protection and Water Management (NF), Environmental Protection Bank (BOS) and provincial authorities.

Item

Year 1

Year 2

...

Year X

Cost of the project in USD:

48 mill

AIJ component in USD:

1.1 mill

USD per avoided ton of CO2 equivalent:

High efficiency gas boilers

Between 11 and 43

Condensing boiler

About 60

Housing projects

Between 90 and 120

Describe briefly how costs are determined:

The value of the amount granted to the individual project was calculated, in particular:

additional cost of investment and exploitation of boiler during 17 years in comparison with

cost of new coal boiler plus a difference of cost of new condensing gas boiler as well as

partial cost of modernisation of heating system.

The grant will allow the boiler owners to have a profitable percentage of return of the capital.the same

A. 5) Mutually agreed assessment procedures:

Describe the procedures, including name of organisations involveda):

5.1) General Agreement

The Government of Poland has received grant funds from the Government of Norway and from the GEF.

The World Bank is acting as Trustee of GEF Norwegian funds for the project.

On behalf of the Government of Poland, the Minister of EPNR&F is a grantee of this fund. The
MoE, through its Department of Ecological Policy, is responsible for: (a) overall co-ordination and
implementation of this project; and (b) monitoring and reviewing project activities and products to
assure that they are of a high quality and are accomplished in a cost- effective and timely manner.

Recognising the complexity of Joint Implementation Program, the Minister of EPNR&F has
established the Polish Secretariat for Joint Implementation in NF.

BOS is acting as the Implementing Agency for this project and as administrator of project
activities and funds to be used solely for the purposes of the project.

The sameA monitoring plan to provide data for evaluation of the quantity of greenhouse gas emissions as
well as other environmental benefits the operating costs and the energy savings have been established.

5.2.1) MONITORING OBJECTIVE

The objective of environmental monitoring for the coal-to-gas conversion component of the project is to
provide data for evaluation of pollutant emission reduction, to assess effectiveness of the operating costs
associated with conversion of coal fired boilers to natural gas ones and to evaluate energy saving.
Monitoring should ensure detailed evaluation of revenues and benefits to be reaped from the project’s
implementation.

5.2.2) COURSE OF REALISATION

To ensure use of unified data collecting procedures and their analysis, there will be one contractor
selected by competitive bidding, responsible for preparation and carrying out monitoring all over the
country at the realisation stage of the coal-to-gas conversion component of the project. The above
mentioned contractor will implement the monitoring program under supervision of the Ministry of
Environmental Protection, Natural Resources and Forestry (MoE) represented by the State Environmental
Inspectorate (PIOS).

The latter's role will consist mainly in working out the rules for monitoring performance, approval of
a monitoring implementation plan for each facility, occasional inspection of work in progress, and
verification of all the reports submitted.

PIOS will supervise environmental monitoring for all the facilities involved in the project and will
evaluate results obtained in effect of individual implementation of fuel conversion projects. The role of
Environmental Protection Bank (BOS), which is the Implementing Agency for the project, will focus on
undertaking the necessary actions ensuring that monitoring of old boilers prior to the conversion can take
place before their modification and on administration and management of the pertinent activity.

5.2.3) SCOPE OF WORK

To attain the project’s objectives the contractor will undertake the following actions:

it will ensure taking all measurements in conformity with the Polish standards,

it will determine the detailed program of measurement, collecting and processing of the monitored data
in co-operation with the PIOS.

The program should contain in particular:

5.2.3.1) Technical monitoring plan

Technical monitoring of coal fired boiler rooms subject to conversion to gas fuel at the
implementation phase and following realisation.

Monitoring’s objective is an ecological economic and energy-wise evaluation of the effectiveness of
conversion of about 30 non-industrial coal fired boiler rooms of up to l5 MW output to gas fired high
efficiency boilers or combined heat and power generation facilities.

Technical monitoring includes evaluation of the technical state of boilers and their instrumentation,
auxiliaries, quantities of fuel and electrical energy used, fuel and water balance, quantity of thermal and
electric energy produced and efficiency of heat transmission and use by recipients.

5.2.3.2) Emissions monitoring plan

Ecological monitoring of the selected pollution emissions sources to determine effects of conversion
from solid to gas fuel.

The assumptions pertain to about 30 small and medium non-industrial boiler rooms (hereinafter to be
referred to as the facilities) with a thermal output of under 5MW per boiler unit presently using solid
fuel, predominantly coal.

The scope of these assumptions includes parametric identification of the above mentioned facilities in the
aspect of ecological change resulting from conversion from solid to gas fuel.

The ecological monitoring goal is evaluation of reduction of pollution emitted into the atmosphere by the
above mentioned facilities, which will be an effect of fuel conversion as well as equipment modernisation,
on the basis of technical and emission measurements prior to and following conversion.

Realisation of the goal as defined should take place in stages, also for reasons of effective control
supported by modern data collecting techniques.

5.2.3.3) Performance report format

In regard of contents of the report on realisation of conversion of coal fired boiler rooms
to gas fired ones.

The report should outline in a concise form progress of realisation of coal fired boiler rooms’
conversion to the gas fired ones inclusive of the realisation stages and guidelines offered in 5.2.3.1) and
5.2.3.2) to "MONITORING PLAN FOR COAL-TO-GAS CONVERSION PROJECT".

The report's content should include a brief description of individual events accompanying project
realisation illustrated with tables and diagrams.

It should end up with conclusions useful for improvement of realisation of the other projects of the same
type and for the final evaluation of ecological, economic and technical effectiveness achieved as a result
of boiler room reconstruction in connection with conversion from coal to gas fuel.

5.2.4) LOGISTICS

After the contract is effective, BOS and the Contractor will develop a mutually acceptable schedule for the
pre-conversion monitoring of old coal-fired boiler facilities selected for conversion to gas-firing under
the project, including a monitoring schedule of the heat distribution and transfer systems and the end-user
building facilities supplied by the old boilers.

Similarly, BOS and the Contractor will develop a schedule for the post-conversion monitoring of new
facilities and their associated heat distribution, transfer and end-use systems.

Such schedules (Preconversion Monitoring Schedule and Post-Conversion Monitoring Schedule) will include
organisational solutions guaranteeing the starting date for the pre-conversion and post-conversion
monitoring activities at each individual project site and the access of the contractor to the individual
project site to carry out such activities.

BOS will notify the Contractor at least 3 weeks prior to the proposed monitoring start date of each
individual project site.

5.2.5) REPORTING

Within 6 weeks after the contract is effective, the Contractor shall develop a standard form, acceptable to
PIOS, for reporting pre-conversion and post-conversion monitoring activity and results for individual
conversion project, including a standard environmental report form.

The Contractor together with the Boiler Owner and the Boiler Owners' Representative shall prepare and
submit to BOS a monitoring report in accordance with the above mentioned standard form, for each individual
project realised.

BOS will ensure timely distribution of the individual reports to the concerned authorities.

5.2.6) VERIFICATION

Verification of the individual monitoring reports will be done by PIOS with use of its field branches and
the team of experts participating in the Monitoring Program. PIOS will establish a system of verification
procedures which should be applied once a year to all the projects and for some, at random.

PIOS will prepare for the Ministry of Environmental Protection, Natural Resources and Forestry a report on
verification of each individual project and the GEF Program in as entirety.

The Secretariat-JI will send the above mentioned reports to the World Bank, the Norwegian Government and
the UNFCCC - Secretariat.

B. Governmental acceptance, approval or endorsement

B.1) Letters of endorsement will be sent accordingly.

B. 2) This report is a jointjoint report:

X Yes, this project has been endorsed by the following parties: the Polish Ministry of
Environmental Protection, Natural Resources and Forestry and the Norwegian Ministry of Foreign Affairs,
signed on 30 September 1993.The same

B. 3) General short comment by the government(s) if applicable:

The items of the report describing the project, its implementation and its effects, have been completed by
the Government of Poland. The investor specific items have been completed by the Government of Norway. The
World Bank, as the project administrator, has provided assistance and advice in the preparation of the
joint report. The same

C. Compatibility with and supportiveness of national economic development and socio-economic and
environmental priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national
economic development and socio-economic and environment priorities and strategies.

Poland seeks energy security through stable energy deliveries at socially acceptable prices and
with a minimal damage to the environment. Among the priority actions are to diversify the primary
energy supplies and to comply with international environmental agreements to reduce air pollution
and greenhouse gas emissions. This project is designed to be fully-integrated and consistent with
the goals and development strategies of the government of Poland.

AIR PROTECTION

This is based on:

the "Implementation Program of the National Environmental Policy till the year to
2000",

The aim of the undertakings concerning the air pollution control is to achieve reductions of
pollutant emissions into the atmospheric air by both improving the fuel quality parameters and
replacing fuel, by installing equipment that reduces the flue gas emissions of pollutants, by
modernising and replacing technologies and by conserving energy.

1) Directions:

Support for the undertakings leading to reductions of the emissions into the atmospheric air of
gas and particulate pollutants, by means of the modernisation and upgrading of the fuel production
and burning technologies.

Support for the undertakings related to the rationalisation of heat systems, including the
recovery of heat, national production of highly efficient heating equipment, combined with the use
of unconventional energy sources.

2) Selection criteria for projects in the field of air protection

elimination of low-stack emissions;

supporting projects connected with the construction of systems supplying gas and district
heating to spas, tourist destinations and protected areas;

improving heating efficiency, especially linked to the elimination of household stoves and
existing local boilers with low efficiency and poor technical condition through a comprehensive
modification of heating systems;

control of gaseous and ash emissions from power generation and large hard and (lignite) brown
coal-fired energy cogeneration plants, especially having an impact on Poland's international
commitments;

improving energy efficiency;

modification of industrial processes in order to improve energy efficiency and reduce harmful
emissions;

promoting non - conventional energy source projects;

supporting modern technical solutions limiting the environmental impact of and transport, in
particular city transport, in the context of exhaust fumes, noise and vibration emissions including
support in equipping monitoring services;

controlling non-ionising electromagnetic radiation. the same

D. Benefits derived from the activities implemented jointly project

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantitative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental benefits in detail:

The sameAnticipated global benefits of the total project include a 65 % reduction in CO2
emissions by converting small coal fired boilers to gas firing, and a 28 % CO2 reduction
by increasing efficiency in new residential buildings. Local benefits include virtual elimination
of sulphur dioxide (SO2) and particulates and significant reduction in nitrogen oxides
(NOx) emitted by the converted boilers.

E. Calculation of the contribution of activities implemented jointly projects that bring about real,
measurable and long-term environmental benefits related to the mitigation of climate change that would not
have occurred in the absence of such activities

The project cost-effectiveness expressed in the size of the grant per ton of CO2 equivalents is
for the typical high efficiency gas-fired boiler between 11 and 43 USD, while the cost of avoided emissions
from a condensing boiler would be about 60 USD. For the housing projects, the costs would seem to vary
between 90 and 120 USD per ton of CO2 equivalents. As new practices and energy saving equipment
become more common in Poland, prices are expected to drop considerably and thus help fulfil the objective
of the project more cost-effectively.

Uncontrolled emissions from black coal mines in Poland are assumed to average 20-25 m3 per ton
of coal produced. The advantage of reduced emissions of methane from coal mining is not included in the
calculations of emission benefits. Also the lifetime of the new gas-fired boilers has in the calculation of
emission benefits conservatively been estimated to last for 17 years.the same

E. 1) Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

The sameIn the absence of the total project, reengineering and replacement of existing coal fired boilers
only at the end of their service life would be the most common choice of boiler owners due to a low
investment price and the familiarity with coal technology. A shift to new coal fired boilers was chosen as
the baseline knowing that this is a conservative choice for calculating the probable emission saving. The
abatement effect is thus the difference in emissions between new coal-fired boilers and new gas-fired
boilers.

E. 2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

The sameFor both the reference case and the "with project" cases, CO2 emissions were
estimated based on: (a) annual heat demand (which is the same for the with project and reference cases);
(b) efficiency of heat supply facilities (coal-fired boilers, gas-fired condensing boilers or cogeneration
units); (c) unit emission factors for gas, LFO and coal; (d) share of heat produced by the cogeneration
unit and the peak boilers. Additional CO2 emission credits were attributed to the cogeneration
units, resulting from the displacement of the electricity now generated from coal in the national power
system at 34 percent efficiency.

F. Bearing in mind that the financing of activities implemented jointly shall be additional to financial
obligations of Parties included in Annex II to the Convention within the framework of the financial
mechanism as well as to current official development assistance flows, please indicate

The same

Source of project funding

including pre-feasibility stage

(For each source one line)

Amount

(converted to US dollars)

Government of Norway1

1.1 mill USD

GEF

25 mill USD

Poland (NFEP&WM, VFEP&WM, BOS, owner’s contribution)

22 mill USD

1The contribution of the Government of Norway is provided from a separate budget line, the
Norwegian Climate Fund, which has been established separate from, and in addition to, the development
assistance accounts and will not be reported as part of Norway's ODA. This contribution is provided in
addition to meet Norway's financial commitments under UNFCCC.

The Norwegian co-financing was provided in addition to the Norwegian contribution to the GEF in 1993. The
availability of extra Norwegian co-financing served to expand the project scope beyond what would have been
undertaken in the absence of this funding. Specifically, the extra Norwegian resources resulted in an
increase in the targeted number of boiler installations to be converted by the project. In effect, the
Norwegian co-financing is covering the non-GEF financed portion of the (expanded) total incremental cost
financing requirement and is additional to the financial obligations under the Convention and to regular
development financing. The Norwegian government is not seeking emission credits from its investment in the
project.

G. Contribution to capacity building, transfer of environmentally sound technologies and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties.

The sameDescribe briefly the transfer of environmenally sound technology and know-how including where
appropriate the type of technology, terms, education, capacity building, etc.

The introduction of improved technologies would facilitate the Government's efforts to pursue its
environmental priorities and standards aggressively and to take full advantage of the macroeconomic
conditions and other incentives that induce energy efficiency and conservation.

With largely decontrolled coal prices, a proper gas pricing policy, rising labour costs, and proper set-up
and enforcement of environmental fees and fines that reflect the true costs of environmental damage,
coal-to-gas conversion would become a financially attractive and self supporting option. The activity could
be made more self-sustaining if support were provided to develop an independent power market based on small
gas-fired cogeneration systems, high-efficiency boilers and advanced energy-efficient building equipment -
insulation, glazing, lighting and appliances - that are widely available.

The scope for using innovative technologies such as high-efficiency gas-fired boilers and packaged
gas-fired cogeneration units and for integrating improvements in heat energy supply, distribution, and
transfer systems and in end-use efficiency in buildings to improve the cost- effectiveness of the abatement
of CO2 emissions needs to be demonstrated through pilot investments. Although the technologies
are well-established, their development in Poland and in other Central and Eastern European countries has
so far been limited.

The present activity is designed as a catalyst to stimulate self-replicable technological and institutional
changes that would promote coal-to-gas conversion in small and medium-size boilers and induce more
energy-efficient practices in the architectural design and operation of new residential buildings. The
techniques, once successfully demonstrated in Poland, are replicable in the large number of
coal-dependent/intensive transition economies that have access to gas supplies.

Institutional Strengthening. The proposed project would contribute to a strengthening of Poland's
capacity, at the national and local levels and in the areas selected for project-supported conversion
activities, to: (a) plan and implement, on a national basis, the innovative and cost-effective types of
environmental improvement activities being supported under the proposed project; (b) develop experience
with the design, installation and operation of interventions to improve the heat supply system; (c) create
an institutional capability to assess global externalities such as CO2 emission abatement in
project analyses; and (d) improve the implementation of public awareness programs for energy efficiency and
conservation.

H. Additional comments, if any, including any practical experience gained or technical difficulties,
effects, impacts or other obstacles encountered

Fill in as appropriate:

H. 1) Any practical experience gained:

1) MANAGEMENT AND PROGRAM EXECUTION

a) Information concerning STAP performance:

BOS SA used the temporary consultations of STAP during the stated period;

The meeting of STAP members was held on 29th November 1999. The following projects: Debno Lubuskie,
Kudowa Zdroj, Zielona Gora and Jarocin have been recommended for AIJ/GEF grant financing as stand-by
projects.

a working meeting of all STAP members took place between 26 - 29 August 1996. STAP members reviewed 25
applications for funding aimed at boiler houses modernisation. 15 applications were approved for
Implementation (including 12 high efficiency boilers and 3 cogenerations). The report was made and
submitted to BOS and MoE,

the report of energy auditor relating to energy efficiency improvement in new residential buildings was
approved by 3 STAP members (1 foreign among them), within the framework of the energy efficiency for new
residential buildings component.

b) Description of consulting services and contractors:

contract with energy auditor (NAPE) has been supervised;

contract with COWI Consulting Engineers and Planners (Denmark), acting as boiler owners'
representative, has been supervised;

contract with the new consultants (boiler owners’ representative) - Energoprojekt Katowice
(acting as a new boiler owners' representative) has been supervised;

the financial audit covering the fiscal year 1998 by the company Pricewaterhouse Coopers has been
performed with positive result;

consultations of the experts accepted by WB, were carried out during evaluation of the tender documents
for the modernization boiler houses.

a contract with consultant for preparation of TOR for energy auditor has been concluded,

TAG members have been asked to give their opinion on funds allocation (27 applications) aimed at boiler
houses modernisation,

energy auditor has been chosen - the National Energy Conservation Agency (NECA) and contract with this
firm has been signed within the framework of the energy efficiency for new residential buildings component,

a bidding documents have been prepared and 5 firms have been chosen (agreed with the World Bank) and
these firms have been asked to submit their offer for boiler owner representative.

c) Description of the marketing plan implementation:

organisational entities of BOS SA were dealing with marketing under the current activity of central and
regional bank's entities using previously prepared materials - rules and procedures for getting AIJ/GEF
grant applications and leaflets informing on AIJ/GEF project;

the leaflet on efficient use of energy in new residential buildings was distributed among habitants
(containing advises how to use house’s equipment). This material contains guidelines how to use the
house devices to reduce the consumption of heat, electricity and water;

under a cooperation with journalists from Dziennik Baltycki (popular newspaper at the north of Poland)
the articles on the Subcomponent „Energy Efficiency in new residential buildings" were
published:

in „Przegl¹d Targowy” on June 22, 1999;

in the supplement „Rynek budowlany" to the Dziennik Baltycki (number from September 1999);

marketing activities including mass-media (interviews on AIJ/GEF Project and certain individual
projects) were undertaken during ceremonies of signing the „turn-key" contracts.

organisational entities of BOS were dealing with marketing under the current activity of central and
regional bank's entities using previously prepared leaflets informing about this project, and contacts
with environmental protection departments of Voivodeship Authorities and the National Fund of Environmental
Protection.

MoE has prepared the environmental monitoring program (approved by the World Bank),

all activities concerned with bidding procedure to select a company responsible for technical and
environmental monitoring of the boilers have been commenced by the GEF Project Office.

e) Training program implementation:

The staff of GEF Project Office has been provided the BOS SA branches' employees, local experts,
TAG members and investors with an updated information.

training of specialists under the GEF project did not take place,

the employees of GEF project office BOS have been providing the bank branch workers, local experts and
TAG members with up-to-date information.

f) Characteristics of the management system:

AIJ/GEF Project is implemented under the existed BOS SA structure, which consists of the GEF Project
Office in the headquarters and the experimented local branches of the Bank. GEF Project Office co-operates
with MoE - Economic Department, the projects are co-financed by National Fund and Voivodeship Funds.
Implementation of the projects is realised in direct co-operation with two consulting companies acting as
boiler owners’ representatives: COWI from Denmark and Energoprojekt Katowice. GEF Office co-operate
with the representants of the World Bank.

Minister has assigned his plenipotentiary and an Economic Department to supervise the implementation of
the GEF Project instead of Ecological Policy Department. GEF Project is implemented under the existing BOS
structure which consists of the GEF project office in the headquarters and the local branches of the Bank.

Under the „Coal-to-Gas Conversion" component, in reporting period, the five investments were
completed, i.e. Piotrkow Trybunalski (grant amount 718,000 USD), Sopot (80,000 USD). There is a few
investments being at the last stage of realisation, i.e. Siemianowice Slaskie (1,304,000 USD), Pruszcz
Gdanski (216,000 USD) and Ciechanow (555,000 USD). The investment in Ostrow Wielkopolski has just started -
first project of cogeneration. A grant agreement has been signed with Krakow, Prabuty, Wabrzezno and Tarnow
(total grant amount 3,074,000 USD), it were projects from the reserve list. STAP has approved for
realisation the following projects: Debno Lubuskie, Kudowa Zdroj, Zielona Gora, Jarocin. Funds being in
reserve and funds saved after a bid process and savings as a result of changes in the exchange rates are
going to be spent on the investments mentioned above. The projects of cogeneration are priority;

Planned expenditures on the modernisation of high efficiency boilers in relation to modernised seemed
to be satisfactory (90%). All funds planned to be spent on the high efficiency system will be disbursed.
The low level of disbursement in generally resulting from a very low expenditures spent on cogeneration
systems. Amount of disbursement are going to be changed in the future, because four cogeneration projects
are at the different stage of implementation (the next projects are prepared). Two projects are most
advanced: after contract signing in Ostrow Wielkopolski and after bid evaluation in Swiebodzice disbursed
circa 40 % of planned expenditures on Cogeneration Systems;

In the frame of the component „Energy Efficiency in New Residential Buildings" the
investment in Czestochowa has been completed in the reporting period and the money has been disbursed (87,6
USD);

Under the category of consulting services, money was spent only for the representative of the boiler
owners` representative (COWI and Energoprojekt-Katowice);

Moreover, on the monitoring (14% of the contract amount) and on the financial
audit-PricewaterhouseCoopers, money was disbursed;

BOS SA was paid a fee of 6% of the total amount in the reporting period.

A contract between MPEC and BOS concerning modernisation of the boiler house in Cracow, at Œw. Jana
street has been signed under the pilot project. A turn key bidding invitation has been published.

H. 2) Technical difficulties:

Organisational and investment problems arose:

Financial schedule of the implementation of projects with high efficiency gas boilers was performed.

Succeeding projects are being in reserve. These projects will be implemented at the beneficiary’s
risk connected with the change of exchange rate. GEF Project Office updated financial and disbursement in
connection with the use of contingency funds schedule for the implementation of these projects.

Realisation of this plan with the monitoring program can be completed till March 31, 2002.

In connection with mentioned above and previous coordination (of Economic Department, MoE, with
representatives of the World Bank), Minister of Environment asked for the extension of Closing Date to
September 30, 2002 (6 months after completion date of the project).

an execution of the pilot project at the Polytechnic University in Cracow is under threat. It is impossible
to publish an invitation for a bid aimed at an investment realisation due to the insufficient financial
resources supplementary to the grants (the National Fund was unable to determine whether it could allocate
its financial resources to the project).

preliminary valuation shows that providing small boiler houses (below 1.0 MW) with the grants is
uneconomical from the National Fund's effectiveness point of view (costs of servicing per each
individual project - e.g. hiring the boiler owner representative are higher than the granted amount).
Additionally, the complex and time-consuming procedure is troublesome to an investor who has to operate
with domestic inflation still running high, and grant's value is small. Due to this fact, 2
applications approved by STAP would probably not be effected.

the complex and time- consuming procedure resulted in the resignation of prevailing part of the boiler
owners from GEF grant approved by STAP.

modernisation of any boiler house is impossible in 1997 without an efficient reconciliation system of
the needed documents between the World Bank and the Polish partner and without taking into account the
specific of the Polish economy. The prompt selection of the firm which would carry out the environment
monitoring is also essential in order to conduct a modernisation of any boiler house in 1997.

H. 3) Negative impacts and/or effects encountered:

The same

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantitative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental negative impacts/effects in detail:

Do quantitative data exist for evaluation of environmental negative impacts/effects?

no

Describe social/cultural negative impacts/effects in detail:

Do quantitative data exist for evaluation of social negative impacts/effects?

no

Describe economic negative impacts/effects in detail:

Do quantitative data exist for evaluation of economic negative impacts/effects?

no

H. 4) Other obstacles encountered: n/a

H. 5) Other: n/a

Appendix I

Coal to Gas Conversion Component

Descriptions of 2612 IpProjects recommended by STAP and BOS S.A. and approved by Minister of
Environment for funding from AIJ/GEF grant. Projects are in different phases of implementation i.e. from the
signing of grant agreements to the investment realisation.Updated 30th of November 1999

7. Installation of gas- oil boiler house above the cost of installation of boiler house with
capacity of 90%.

1. Financing plan

GEF – 5.5%, Own means – 94.5%

2. Project costs

1 187 000 USD

3. Accomplishment of:

- orders

- expenditures

Energy Auditor verified all documents connected with the procurement of energy efficiency measures,
submitted by the developer and established the final AIJ/GEF grant amount at 65 296.40 USD.

4. Project Implementation performance

The building is completed and commissioned. The final AIJ/GEF grant amount (65 296.40 USD) was
calculated by Energy Auditor and reimbursed to the Developer. Monitoring report is being prepared
by Energy Auditor.

Energy Auditor verified all documents connected with the procurement of energy efficiency measures,
submitted by the developer and established the final AIJ/GEF grant amount at 43 707.20 USD.

4. Project Implementation performance

The building is completed and commissioned. The final AIJ/GEF grant amount (43 707.20 USD) was
calculated by Energy Auditor and reimbursed to the Developer. Monitoring report is being prepared
by Energy Auditor.

1. Improvement of the roof's insulation level to U=0.17 W/(m2K) – additionally
enlargement of an insulation with a thickness of 12 cm;2. Improvement of the basement floor's
insulation level to U=0.27 W/(m2K) – additionally enlargement of an insulation
with a thickness of 9cm;

Energy Auditor verified all documents connected with the procurement of energy efficiency measures,
submitted by the developer and established the final AIJ/GEF grant amount at 43 933.89 USD.

4. Project Implementation performance

The building is completed and commissioned. The final AIJ/GEF grant amount (43 933.89 USD) was
calculated by Energy Auditor and reimbursed to the Developer. Monitoring report is being prepared
by Energy Auditor.

5. Project cost-effectiveness

98.0 USD/tCO2

6. Planned environmental benefits

30 tCO2/year

Project nr. 4

Item

Please fill in if applicable

General description:

Housing Estate "ZIELONKI" composed of 21 single family buildings, built as 5 range
buildings