The case of Lithuania represents a good example of the assessment of the costs of compliance with EU legislation in CEECs that applied for EU membership. The time horizon for the implementation of the LCP Directive in Lithuania is 2010. There are 48 facilities that meet the 50 MW threshold of the LCP Directive. None of these are considered new sources as they were built before July 1987. There are a total of eleven sources that could be considered as potential new sources because of future development. This development is connected with the expected installation of two new gas turbine power stations and planned use of orimulsion as a fuel in two units of the Lithuanian and Vilnius power plants. Despite the fact, that orimulsion imported from Venezuela has a high sulfur content, the Lithuanian state power company applied for permits to use this fuel in the future. To date there has been substantial political support for such a use. Perhaps most difficult future development is the change over time in emissions from industrial sector, that largely depend on industrial development expected to grow. It is assumed that related growth of energy demand is in terms of use of gas and not other fuels. Finally, the future development is expected to be dramatically affected by the closure of Ignalina Nuclear Power Plant with a present output capacity of 3000 MW. According to the best available predictions done by Lithuanian Energy Institute (1996), one unit is expected to close in the year 2003 and the whole plant in 2008. This loss of capacity will at least partly be replaced by thermal power.

The main tool used for the calculations of the costs of complying with the LCP Directive and heavy fuel oil standards in Lithuania was the MOSES Model. This model - for a given set of source characteristics and time paths of emissions - optimally chooses technological and process changes to meet particular goals including estimation of the costs of meeting these goals. Scenarios were constructed with simulations for the years 1996, 2000, 2005 and 2010. The base period for the all analysis is 1996 because it is assumed that there is no abatement of pollutants covered by the Directive. This base case is then compared with the costs necessary to meet the requirements of the directive in the 2000, 2005 and 2010. Compliance costs are presented in two ways:

• Estimates of the total investment over the period 1996-2010 as a projection of the total stock of additional investment needed to achieve compliance;
• Estimates of annualized costs in particular year, including amortization of capital, interest payment, operational costs such as labor, energy and other costs. These costs are not limited to the government only, indeed, most costs will be born by private enterprises and the public at large.

According to the results of the study, total investment projected to allow Lithuania to meet all aspects of the LCP Directive and the proposed Directive on Heavy Fuel Oil are ECU 67.85 million over the period 1996-2010. Annual costs in 2010 are expected to be ECU 72.57 million, with most of that cost being attributable to SO₂ emissions reduction born by pollution abatement costs of the use of orimulsion as a fuel to the power plant. More than half of all investment will have to be made between 2005 and 2010 after the complete closure of Ignalina Nuclear Power Plant.

Jochem Jantzen, Randall Bluffstone: Report on Costs of Approximation of Lithuanian Legislation with Selected Components of the Air Pollution Environmental Acquis forthcoming as an Environment Discussion Paper of the Harvard Institute for International Development, International Environment Program, Harvard Institute for International Development, One Eliot Street, Cambridge, MA 02138, USA. Fax: +1-617-4968040.