presentation - International Emissions Trading Association

presentation - International Emissions Trading Association

IETA workshop

“Cost effective carbon abatement for aviation and maritime sectors”

Mark Major

Philip Good


Brussels 4th March 2011

Mark Major and Philip Good

European Commission

DG Climate Action

European Commission: 1

Cancun Agreement


“recognizes that deep cuts in global greenhouse gas emissions are required …. With

a view to reducing global greenhouse gas emissions so as to hold the increase in

global average temperature below 2°C above pre-industrial levels, and that Parties

should take urgent action to meet this long-term goal….need to consider ……

strengthening the long-term global goal ….in relation to a global average

temperature rise of 1.5°C”

What does this new global agreement mean for international aviation /

international maritime emissions / climate impacts?


Least cost medium / long term trajectory?

Long term targets?

European Commission: 2

Cancun Agreement - questions

Fast growing sectors

Less effort in short term?

Role of access to emissions reductions


Cost in longer term?

Share of international transport emissions

in global GHG emissions ?

Need for broader balanced economic

evaluation of ‘least cost path’?

European Commission: 3

Necessary changes in emissions for

staying below 2°C

Global -50%

< 1990 by 2050

Global peak for all

emissions by 2020



to cut by 80-95%

< 1990 by 2050

European Commission: 4

Scale of shipping emissions

Scenarios for CO2 emissions from International Shipping

from 2007 to 2050 in the absence of climate policies

Doubling or tripling

of emissions by


IMO GHG Study 2009

CO2 emissions from ships (million tons CO2 / yr) '


















2000 2010 2020 2030 2040 2050

European Commission: 5

Aviation emissions are forecast to

continue to grow strongly

Mt CO eq.











Predicted Global Future Aviation Emissions Growth

(2006 baseline)


63% to 88%



290% to 667%



2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Source: ICAO GIACC/4-IP/1

European Commission: 6

Even with a range of policy measures, aviation

emissions will probably keep growing

Source: UK Climate Change Committee 2010 – Likely scenario

European Commission: 7

Maritime reduction measures = savings

European Commission: 8

Market Barriers to cost effective


Split incentive (traditional business

practices) – Virtual arrivals

Cost pass through

Information e.g.

Management attention

Incorrect calculation

Climate policy or economic policy?

European Commission: 9

Market based measures in IMO

‘Efficiency trading’ option (US)

Not as effective as ETS / Fund options

Limited reduction beyond EEDI

Will IMO drop this option?

Revenues from ETS / Fund

Used in most economically efficient way?

European Commission: 10

IMO Energy Efficient Design Index


Full EC and EU support for agreement on a

mandatory design index

Cost effectiveness not thoroughly assessed

Enough votes to adopt at MEPC 62?

EEDI could deliver – 20% from BAU by 2030

(+ 100% from 2010 levels)

But just one of the many measures needed to

deliver actual reductions

European Commission: 11

Global action - difficult to progress - IMO

Full EC/EU support to global measures

developed through IMO

No global baseline / target

No agreement on mandatory measures

EEDI ready for adoption (political issue)

Operational measures?

Technical measures for existing ships?

Market based measures? (10 years plus?)

European Commission: 12

Global action - difficult to progress - ICAO

Full EC/EU support for addressing aviation

emissions through ICAO – but:

no agreement on mandatory reduction targets

no agreement on mandatory market based measures


no agreement on how to address needs of developing


guiding principles for MBMs, but no consensus

intention to develop a framework for MBMs

feasibility study on global MBM

European Commission: 13

Discussions have been taking place for

many years in ICAO

“In its future work, CAEP will be identifying a range of

market-based options, assessing their limitations,

identifying their environmental effects, considering the

application of revenues or credits that might be accrued,

and considering the implementation mechanisms which

might be employed.

CAEP will also explore the scope for using emission

trading concepts in an aviation context.

The Assembly has requested that the development of

further guidance to be given to States on emission-related

levies be completed before the Assembly next meets in


ICAO Statement to COP/4 (November 1998)

European Commission: 14

Global action - difficult to progress - UNFCCC

EU position

Maritime and aviation emissions should be included in a post 2012 agreement

All Parties should take action

Clear and meaningful targets / -20% compared to 2005 by 2020.

IMO / ICAO should agree measures in 2011

Revenue from a global MBI could be used to tackle climate change in

Developing Countries

Little support from others in UNFCCC for


Climate financing will be required – maritime

and aviation are an option

Who does what / when?

European Commission: 15

Challenge for a global aviation or maritime

market based measure

Legal basis – new treaty required?

Decision making

must all 190 ICAO / 170 IMO states agree by consensus?

how would updates/improvements be agreed?

How long to ratify? (average in IMO is 7 years)

Scope – which activities included?

traffic from all countries?

Coverage – CO 2 only or all climate impacts?

Taxation or cap and trade?

Does ‘on the ground’ implementation capacity exist?

Role of UN bodies relative to States

European Commission: 16

Design issues with a global emissions trading

system - 1

Upstream or downstream?

Open to allowances/offsets from other sectors?

which ones?

how to manage linking?

Price caps / floors

How to allocate allowances?

Auctioning? Benchmarking?

Use of revenues

Maintaining environmental integrity

ensuring harmonised MRV


would all states enforce in the same way?

effective sanctions and penalties

Harmonised registry

European Commission: 17

Design issues with a global emissions trading

system - 2

National / regional legislation would be

required for many elements

Who would check states implement


What would be penalty for non-compliance?

Where would appeals / disputes be settled?

How to deal with non-ratifiers without

distorting competition?

European Commission: 18

Ways towards global measures


global agreement resulting in harmonised



linking of national and regional measures


European Commission: 19

EU policy towards aviation and climate


Comprehensive approach covering all

main policy levers

aviation technology;

infrastructure and air traffic management;

low carbon fuels; and

market based measures

Aviation CO 2 fully included in EU ETS,

responsible for emissions from 1 January


European Commission: 20

Aviation in the EU ETS

Significant first step towards global system?

Applied in 30 states

Possible to expand, or, model for others to use


35% of all aviation emissions

almost 60% of international aviation emissions

Open to discuss third country measures for

incoming flights

European Commission: 21

Aviation will be the second largest

sector in EU ETS in 2013

Source: Bloomberg New Energy Finance 2011

European Commission: 22

EU policy towards maritime transport

and climate change

Full support to developing global measures through IMO

Climate and Energy legislation (5/6/2009)

In the event that no international agreement which includes

international maritime emissions in its reduction targets through

IMO / UNFCCC has been approved by the 27 Member States by

31 December 2011, the Commission should make a proposal.

Measures should enter into force by 2013.

Such proposal should minimise any negative impact on EU

competitiveness, taking into account the potential environmental


European Commission: 23

Policy options - maritime

No European Commission preference at this


All options are open

For example:

IMO / UNFCCC / own initiative

Commitments / reporting / reductions measures

Technical / operational / market based


European Commission: 24

Scope of action – maritime

Which gases? – CO², refrigerant gases? VOC, Black Carbon?

Same scope all measures? – reduction commitments,

monitoring?, reduction measures?

Which ships? – all > 400 GT / 20,000 GT, certain categories?

Exemptions? Phase in?

Which emissions? – intra EEA voyages? all incoming

voyages? Last x months?

Which actors? – all ships visiting EEA ports? Flag? Manager?

Owner? EU Member State?

European Commission: 25

EC policy process – negotiation

Commission preparations in 2011

Roadmap for possible proposal in Commission work programme

Stakeholder consultations (broad ECCP process underway)

Impact Assessment

Policy selection

Participation in IMO processes

Possible Commission proposal in 2012

Co-decision 2013/2014 – (European Parliament and Council (27

MS) work takes place on basis of Commission proposal, often several years'

discussion, in parallel with continued participation in IMO processes)

Entry into force

Implementation / preparation 2015-2016

Earliest feasible date for full application – 2017?

European Commission: 26

Regional action -/+

- Less emissions

- Possible border effects

- Possible external criticism

European Commission: 27

Regional action -/+

+ Institutions / decision making rules in


+ Faster to agree and enter into force

+ More likely to focus on enhancing

regional competitiveness

+ First mover advantages

+ Leading the way?

European Commission: 28

EU action stimulating broader action?

Broader action is necessary to protect


Any European measures should

stimulate / have positive impact on action




Other states

European Commission: 29

Thank you for your attention!

Mark Major and Philip Good

DG Climate Action

European Commission


Brussels, Belgium

+32 2 295 0927

European Commission: 30

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