Dóra Fazekas Carbon Market Implications for new EU - UniCredit ...

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Global Warming Potential GWP Grandfathering Green Investment Scheme GIS Greenhouse Gases GHG Host Country the impact a greenhouse gas has to global warming. By definition, CO2 is used as reference case, hence it always has the GWP of 1. GWP changes with time, and the IPCC has suggested using 100-year GWP for comparison purposes Method for allocation of emissions, where permits are allocated, usually free of charge, to emitters and firms on the basis of historical emissions. a fund to promote the environmental effectiveness of AAU transfers by earmarking revenues from these transfers for environmentally-related purposes in the seller countries. Gases that control energy flows in the Earth's atmosphere by absorbing infrared radiation. There are six GHGs covered under the Kyoto Protocol - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydro fluorocarbons (HFCs), per fluorocarbons (PFCs) and sulfur hexafluoride (SF6). CO2 is the most important GHG released by human activities where a JI or CDM project is physically located. A project has to be approved by host country to receive CERs or ERUs. Excess permits that have occurred due to economic collapse or declined production for reasons not directly related to intentional efforts to curb emissions Hot Air Hungarian Government GOH Hydrofluorcarbons HFC GWP: 150 - 11 700 IPCC was established by World Meteorological Organisation (WMO) and the United Nations Environmental Programme (UNEP) in 1988 to assess scientific, technical and socio- economic information relevant for the Intergovernmental understanding of climate change, its potential impacts and options for Panel on Climate adaptation and mitigation. It is open to all Members of the UN and of WMO Change IPCC ( www.ipcc.ch) Allows for transfer of AAUs across international borders or emission International allowances between companies covered. It is a general term often used for Emission Trading IET the three Kyoto mechanisms: JI, CDM and IET. A planned centralized database of all tradable credits under the Kyoto International Protocol and the application that verifies all international transactions and Transaction Log Japanese Voluntary Emissions Trading ITL their compliance with Kyoto rules and policies. Scheme JV ETS Cap-and-trade system in Japan a mechanism for projects financed by developed countries in other developed countries (including Central and Eastern European countries) and is tradable in Phase II. JI generates ERUs on the basis of emission reduction Joint Implementation JI Joint Implementation projects leading to quantifiable emissions reductions. Supervisory Supervises the verification of ERUs generated by JI projects following the Committee JISC verification procedure under the JISC. The Kyoto Protocol originated at COP-3 to the UNFCCC in Kyoto, Japan, December 1997. It specifies emission obligations for the Annex B countries and defines the three so-called Kyoto mechanisms: JI, CDM and IET. It Kyoto Protocol KP entered into force on 16 February 2005 LULUCF sector was included under the Kyoto Protocol to take into consideration certain human-induced activities that remove greenhouse gases from the atmosphere, also known as carbon sinks. (afforestation, Land Use, Land Use reforestation, deforestation, revegetation, forest management, cropland Change and Forestry LULUCF management and grazing land management. Decrease or increase of greenhouse gas-related benefits outside the Leakage boundaries set for defining a project's net greenhouse gas impacts that result 208
Linking Directive from project activities The EU Emissions Trading Directive 2003/87/EC and its amendment arrange the use of project credits in Phase I (2005-2007) of the EU ETS, as well as provisions relating to project approval processes and authorisation to participate in the flexible mechanisms. They also contain additional provisions relating to the establishment of the national emissions inventory. The marginal abatement cost in the context of the carbon market is the cost of reducing emissions with one additional unit. Aggregated marginal costs Marginal abatement over a number of projects or activities define the marginal abatement cost cost Marginal net private MAC curve benefit MNPB Represents the marginal profits to the firm with each additional unit of output Accords include the detailed modalities and procedures of the international climate change policy regime developed at COP-7 (seventh Conference of the Parties). Marrakesh Accords cover significant principles for technology Marrakesh Accords transfer, accounting, flexible mechanisms implementation etc MOP is the Supreme Body of the Kyoto Protocol. The first Meeting of Parties to the Kyoto Protocol firstly was held in Montreal in December 2005 Meeting of Parties MOP during the 11th Conference of Parties. Member State MS Countries of the European Union Agreement between two parties that aims to formally recognize a joint desire to ultimately conclude an agreement or to achieve goals jointly. MoUs Memorandum of between host and investor country are often used as a basis for CDM/JI understanding MoU projects. Methane CH4 GWP: 21 Collection and archiving of all relevant data necessary for determining the baseline, measuring anthropogenic emissions by sources of greenhouse gases within the project boundary of a project activity and leakage, as Monitoring applicable Allocation and establishing the rules to issue emission allowances at the national level to individual sites under the EU ETS. Public authorities and industrial companies calculate the expected emissions levels, defined on the basis of past emissions adjusted for achievable progress and the growth forecast for the coming period. The total quantity of allowances made National Allocation available by the Member State must correspond to the target assigned to it Plan NAP under the Kyoto protocol. National Competent Authority National Authorities and Designated National Authorities NCA (D)NA NCA monitor individual firms' accounts in order to monitor compliance with the overall national emissions reductions targets. (D)NA is the official body representing the Government, which takes part in the arrangement of CDM/JI projects. For JI host countries, the national authority approves the projects and issues the emission reduction units. For CDM host countries, the designated national authority issues a non-objection letter necessary for the project approval, if it agrees that a project is in line with its sustainable development objectives. Under the EU ETS each Member State establishes a national registry that links to the Community Independent Transaction Log (CITL) which in turn ensures a secure, compatible and smooth integration of all systems under one European umbrella. The sum of all registries together with the CITL is known as the 'Registries System' National Registries Nitrous-oxides NOX GWP: 310 signatories to UNFCCC that made no specific commitments other than to Non-Annex I cooperate with the process, particularly by assisting in the monitoring and countries measuring of GHG emissions. There are currently 148 non-Annex I 209
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PhD Program in Management and Busin
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List of figures Figure 1. Optimal l
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„If you want to understand today,
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Neither the theory nor the empirica
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Table 1. Installations receiving th
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oth on national and corporate level
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1. Climate Change Regulation The fi
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approaches, activities that are not
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In Europe the United Kingdom and De
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(2) Allocating emission rights is d
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Figure 2. The cap determines the ma
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Table 5. Tradeable certificates (ba
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value, sectoral and spatial coverag
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with their quantified reduction tar
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* * * Several authors (Hahn and Sta
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EU ETS Within the context of the UN
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establishing an international marke
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(c) Allowances can also be distribu
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• ETS in New Zealand; • Volunta
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emissions trading schemes, making i
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end of the pilot phase. Since Augus
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Figure 10. Distance to burden-shari
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Early attitude of companies towards
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high quality, differentiated produc
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investments needed in the industry.
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3.2. Emission Trading in the new EU
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environmental benefits at a relativ
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well below their Kyoto target (EEA,
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lawsuits against the Commission for
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The most active countries to host J
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Figure 14. Hot air as supply for AA
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There have been three proposals on
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transparency of AAU transfers; redu
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Figure 18. Tradeable Hungarian AAU
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“Think Globally, Act Locally” I
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At the same time, this relatively f
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processes on the whole act a sink,
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directly from CO2 emissions are ess
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1.2. A Review of the Hungarian Lite
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2. Introducing the EU ETS in Hungar
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databases containing common data el
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instances where inconsistent decisi
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emissions each calendar year Non-tr
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is found to be in order, they may s
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economy to a market economy, as is
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the EU ETS. Many observers believe
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Emissions allowances to be allocate
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2005 2006 2007 Installation Alloc.
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Finance is putting much of the reve
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conclusion. It is safe to conclude
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allowance surplus, and then increas
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agent. 23 Denmark sold 2,762 thousa
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and Water prepared its proposal on
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What was the reason for this anomal
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considered a “transfer.” Apart
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When allowances are recognized as g
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provision is to be formed against t
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the model shall be supplemented wit
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Participants of the Hungarian EU ET
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program, full sets of emissions dat
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Figure 27. The Concentration of the
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Figure 30. The Hungarian EU ETS mar
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Figure 32. Positions of Hungarian E
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Figure 40 below shows the allocatio
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3.2. The Impact of the EU ETS on Hu
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interviews, that companies looked u
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neither emissions-reduction targets
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was considered, since they all obta
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spillover effect; this, however, co
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During the pilot period, Hungarian
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to comply shall have their names pu
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eact efficiently to regulations. Th
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ensuring great enough profit, it sw
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combined with an internal price tha
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Were Emissions Actually Reduced? Co
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column) and the verified emissions
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Figure 38. Hungarian reference peri
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* * * The effects of the EU ETS on
Page 157 and 158: (2) Transfer account of allowances,
Page 159 and 160: In an EU-context, Hungary held its
Page 161 and 162: installations the author spoke to w
Page 163 and 164: Companies, which were certain of th
Page 165 and 166: Figure 42. Hungarian transactions d
Page 167 and 168: phase. CITL Data The transaction da
Page 169 and 170: International Transfers The author
Page 171 and 172: Based on these numbers, it may be c
Page 173 and 174: The two right-hand side columns in
Page 175 and 176: sales, and how much was accounted f
Page 177 and 178: the CITL only contains data on wher
Page 179 and 180: approximately two-fifths of the vol
Page 181 and 182: (3) Installations that had shut dow
Page 183 and 184: production, one-fifth represented t
Page 185 and 186: IV. EXPERIENCES OF THE EU ETS PILOT
Page 187 and 188: starting in 2012, the European Unio
Page 189 and 190: originally allocated. Based on thes
Page 191 and 192: economic development rather than as
Page 193 and 194: Hungary has still to learn to opera
Page 195 and 196: Appendix I. - Questionnaire 3.c. Cl
Page 197 and 198: Had surplus but did not sell EUAs ,
Page 199 and 200: Appendix III. - Accounting Aspects
Page 201 and 202: Appendix V. - Overview and main fea
Page 203 and 204: Appendix VII. - Foreign emission al
Page 205 and 206: Hungária Cementipari Rt. 2006 HU 5
Page 207: Reductions Clean Development Mechan
Page 211 and 212: VII. REFERENCES Ahman, M. - Burtraw
Page 213 and 214: Burtraw, D. - Palmer, K. - Bharvirk
Page 215 and 216: EEA (2006): Greenhouse gas emission
Page 217 and 218: Hahn, R. - Stavins, R. (1999): What
Page 219 and 220: Kaderják, P. (1997): Economics for
Page 221 and 222: Montero, J. P. (1997): Marketable P
Page 223 and 224: Philibert, C. (2006): Certainty ver
Page 225 and 226: Tietenberg, T. (1992): Relevant Exp
Page 227 and 228: Woerdmann, E. (2003): Developing ca
Page 229 and 230: Hungarian law - Hungarian governmen
Page 231 and 232: Oxford University Press, USA http:/
Page 233: Author’s Publications related to
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