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

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The first is the overall purpose of GIS, to facilitate environmental improvements using the revenues from emissions trading although allowing an increase in other countries’ emissions. The second issue concerns the difficulty of proving the additionality of projects, moreover if all risks were accounted for several projects would be rendered unprofitable. Therefore the first feature of GIS is its broader scope than JI. A second key issue is the origin of AAUs used and whether revenues should be restricted to GHG emissions reduction projects. GIS involves less complicated procedures compared to JI. For instance, the rules for baselines and monitoring are simpler. Table 13. gives an overview of the differences between GIS and JI projects. JI GIS Kyoto Protocol Rules No Kyoto Protocol rules Direct “GHG reduction/ ERU” link No direct “GHG reduction/ AAU traded” link Project by project Programmatic/sector wide ERUs issued after physical GHG reduction AAUs can be traded ahead of physical GHG reduction Government and private sector market Market mainly governments ERU full fungibility AAU limited fungibility Direct transaction between seller and buyer Financial intermediary or fund structure used No conditionality on revenue use Scope and terms of revenue use negotiated bilaterally Payment on ERU delivery Flexible financing schemes Revenue stream to 2012 Revenues possible post-2012 Large number of projects already implemented Less experience Table 13. JI Projects vs. GIS Source: Vayrynen, 2007 * * * New MSs of the EU differ from old MSs in the following: (1) possession of significant surpluses over the pilot phase (except for Slovenia), (2) no measures needed for meeting Kyoto targets, (3) eligibility for hosting JI projects, (4) possibility of revenue generation for the government by selling surpluses. Albeit neither JI projects, nor AAU sales were relevant in the pilot phase, these years were indispensable for new MSs to establish their systems for JI and GIS. Hungary was the first among MSs not only to develop a GIS and sell AAUs but also to link its Registry to ITL. After reviewing Eastern specificities, which may cause the EU ETS to be different in the new EU Member States, let us know focus on EU ETS in Hungary. 68
“Think Globally, Act Locally” III. EMISSIONS TRADING IN HUNGARY 1. An Overview of Hungary-Specific Features 1.1. Hungarian Greenhouse Gas Emissions 1.2. A Review of the Hungarian Literature 2. Introducing the EU ETS in Hungary 2.1. The Institutional Background of the EU ETS in Hungary 2.2. The EU ETS Allocation Process in Hungary 2.3. Auctioning During the EU ETS Pilot Phase 2.4. Accounting of Emissions Allowances in Hungary 3. The Operation of the EU ETS in Hungary 3.1. An Overview of the Hungarian EU ETS Market 3.2. The Impact of the EU ETS on Hungarian Participants 3.3. The Market Activity of Hungarian EU ETS Participants 4. A Summary of Emissions Trading in Hungary 69 David Brower, Founder, Friends of the Earth
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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
Page 17 and 18: In Europe the United Kingdom and De
Page 19 and 20: (2) Allocating emission rights is d
Page 21 and 22: Figure 2. The cap determines the ma
Page 23 and 24: Table 5. Tradeable certificates (ba
Page 25 and 26: value, sectoral and spatial coverag
Page 27 and 28: with their quantified reduction tar
Page 29 and 30: * * * Several authors (Hahn and Sta
Page 31 and 32: EU ETS Within the context of the UN
Page 33 and 34: establishing an international marke
Page 35 and 36: (c) Allowances can also be distribu
Page 37 and 38: • ETS in New Zealand; • Volunta
Page 39 and 40: emissions trading schemes, making i
Page 41 and 42: end of the pilot phase. Since Augus
Page 43 and 44: Figure 10. Distance to burden-shari
Page 45 and 46: Early attitude of companies towards
Page 47 and 48: high quality, differentiated produc
Page 49 and 50: investments needed in the industry.
Page 51 and 52: 3.2. Emission Trading in the new EU
Page 53 and 54: environmental benefits at a relativ
Page 55 and 56: well below their Kyoto target (EEA,
Page 57 and 58: lawsuits against the Commission for
Page 59 and 60: The most active countries to host J
Page 61 and 62: Figure 14. Hot air as supply for AA
Page 63 and 64: There have been three proposals on
Page 65 and 66: transparency of AAU transfers; redu
Page 67: Figure 18. Tradeable Hungarian AAU
Page 71 and 72: At the same time, this relatively f
Page 73 and 74: processes on the whole act a sink,
Page 75 and 76: directly from CO2 emissions are ess
Page 77 and 78: 1.2. A Review of the Hungarian Lite
Page 79 and 80: 2. Introducing the EU ETS in Hungar
Page 81 and 82: databases containing common data el
Page 83 and 84: instances where inconsistent decisi
Page 85 and 86: emissions each calendar year Non-tr
Page 87 and 88: is found to be in order, they may s
Page 89 and 90: economy to a market economy, as is
Page 91 and 92: the EU ETS. Many observers believe
Page 93 and 94: Emissions allowances to be allocate
Page 95 and 96: 2005 2006 2007 Installation Alloc.
Page 97 and 98: Finance is putting much of the reve
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Page 101 and 102: allowance surplus, and then increas
Page 103 and 104: agent. 23 Denmark sold 2,762 thousa
Page 105 and 106: and Water prepared its proposal on
Page 107 and 108: What was the reason for this anomal
Page 109 and 110: considered a “transfer.” Apart
Page 111 and 112: When allowances are recognized as g
Page 113 and 114: provision is to be formed against t
Page 115 and 116: the model shall be supplemented wit
Page 117 and 118: 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
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(2) Transfer account of allowances,
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In an EU-context, Hungary held its
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installations the author spoke to w
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Companies, which were certain of th
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Figure 42. Hungarian transactions d
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phase. CITL Data The transaction da
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International Transfers The author
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Based on these numbers, it may be c
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The two right-hand side columns in
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sales, and how much was accounted f
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the CITL only contains data on wher
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approximately two-fifths of the vol
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(3) Installations that had shut dow
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production, one-fifth represented t
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IV. EXPERIENCES OF THE EU ETS PILOT
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starting in 2012, the European Unio
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originally allocated. Based on thes
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economic development rather than as
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Hungary has still to learn to opera
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Appendix I. - Questionnaire 3.c. Cl
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Had surplus but did not sell EUAs ,
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Appendix III. - Accounting Aspects
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Appendix V. - Overview and main fea
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Appendix VII. - Foreign emission al
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Hungária Cementipari Rt. 2006 HU 5
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Reductions Clean Development Mechan
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Linking Directive from project acti
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VII. REFERENCES Ahman, M. - Burtraw
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Burtraw, D. - Palmer, K. - Bharvirk
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EEA (2006): Greenhouse gas emission
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Hahn, R. - Stavins, R. (1999): What
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Kaderják, P. (1997): Economics for
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Montero, J. P. (1997): Marketable P
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Philibert, C. (2006): Certainty ver
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Tietenberg, T. (1992): Relevant Exp
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Woerdmann, E. (2003): Developing ca
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Hungarian law - Hungarian governmen
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Oxford University Press, USA http:/
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