Emissions Trading Worldwide

More documents

Recommendations

Info

The EU ETS Preparing for Phase Four Maja-Alexandra Dittel, Johannes Enzmann & Dalwon Kim The European Commission Background The EU’s Emissions Trading System (EU ETS) is a cornerstone of the EU’s policy to fight climate change. It covers more than 11,000 installations in 31 countries (28 EU Member States, as well as Norway, Iceland and Lichtenstein) including airlines performing aviation activities between EEA airports, and has created a functioning market infrastructure and a liquid market. Phase Four Revisions In July 2015, the European Commission submitted a legislative proposal to the Council and European Parliament to make the EU ETS fit to enter Phase Four (2021–2030). The proposal is in line with the political agreement of the European Council of October 2014, to reduce greenhouse gas emissions by at least 40% domestically by 2030. Cap In order to contribute to the 2030 greenhouse gas emission reduction target, the sectors covered by the EU ETS have to reduce their emissions by 43% compared to 2005. Therefore, the overall number of emission allowances will decrease at an annual rate of 2.2% from 2021 onwards, compared to 1.74% in Phase Three (2013–2020). This means an annual reduction of 48 million tons CO 2 e amounting to an additional aggregate reduction of 556 million tons CO 2 e in Phase Four compared to continuing the current provisions. Allocation and Carbon Leakage In view of the decision of the European Council not to reduce the share of auctioning, 57% of allowances will be auctioned in Phase Four. It is expected that around 6.3 billion allowances will be allocated for free in Phase Four. The proposal fully acknowledges the need to maintain the competitiveness of European industry. For this reason, it is proposed free allocation to sectors exposed to the risk of carbon leakage continues. However, the proposal aims at a more streamlined and targeted list of sectors that should benefit from free allocation under the carbon leakage provisions. Under the proposed measures, the carbon leakage list may be considerably reduced and finally only encompass around 50 sectors. In the light of the positive experience with benchmark-based free allocation, and the fact that the ambition level of the existing benchmark values would decline over time due to technological progress, the proposal foresees that the 54 benchmark values be updated twice during the period 2021–2030 based on a methodology that rewards innovative and fast moving sectors. “The proposal fully acknowledges the need to maintain the competitiveness of European industry.” Promoting Low Carbon Investments In view of the 2030 targets, the proposal is designed to promote low carbon investments and to support economic actors under the EU ETS to cope with the challenges they face in the transition to a low carbon economy. cutting emissions Faster emissions cuts after 2020 2013–2020 2021–2030 Additional emissions reduction 556 million tons CO 2 Figure 1: Emissions reductions in phase three and four of the EU ETS © European Commission (2015), available at: http://ec.europa.eu/clima/policies/ets/revision/docs/ets_revision_slides_en.pdf Two funds are set up to this end: • The Innovation Fund, under which 450 million allowances will be reserved, in order to support innovation in low carbon technologies and processes in renewable industry as well as to stimulate the development and deployment of environmentally safe carbon capture and storage of CO 2 . Demonstration projects of innovative renewable energy technologies will also be eligible. Projects in the territory of all Member States could benefit from the Innovation Fund. • The Modernisation Fund, from which lower-income Member States with a GDP per capita below 60% of the EU average will benefit. It is proposed to be financed by 2% of the total quantity of allowances between 2021 and 2030. The Fund will support investments with a view to modernizing energy systems and improving energy efficiency in the eligible Member States. The governance of the fund will involve an Investment Board with representatives of Member States, the Commission and the European Investment Bank. 8
Overall Architecture New Entrants Reserve Modernisation Fund Innovation Fund 2021–2030 Auctioning Free Allocation Figure 2: Overall architecture of EU allowances in phase four © European Commission (2015), available at: http://ec.europa.eu/clima/policies/ets/revision/docs/ets_revision_slides_en.pdf Conclusion Europe is looking ahead to an intense debate in 2016 and 2017 about the rules governing the EU ETS in Phase Four. Together, the proposed measures will ensure that the EU ETS remains an effective instrument to cut emissions in the decade to come. They will enable the EU to make its fair, ambitious and cost-effective contribution to the EU 2030 targets and the new international climate agreement concluded in Paris, and to prepare the ground for the transition towards a low carbon economy in line with its long term objective of cutting emissions by 80% – 95% by 2050. “In view of the 2030 targets, the proposal is designed to promote low carbon investments and to support economic actors under the EU ETS to cope with the challenges they face in the transition to a low carbon economy.” international carbon action partnership 9
Page 1 and 2: Emissions Trading Worldwide Interna
Page 3 and 4: 2 Bildquelle, Bildunterschrift
Page 5 and 6: 03 Foreword Jean-Yves Benoit and Ma
Page 7: Practitioner Insights Designing Cap
Page 11 and 12: There is considerable room for simp
Page 13 and 14: Allowance prices are gradually risi
Page 15 and 16: plans to the EPA indicating how eac
Page 17 and 18: “China’s intention to launch a
Page 19 and 20: Meanwhile, during the first phase (
Page 21 and 22: “This represents a unique and inn
Page 23: A regularly updated, interactive ve
Page 26 and 27: Global GHG emissions covered by ETS
Page 28 and 29: 28
Page 30 and 31: Europe and Central Asia More than a
Page 32 and 33: the european union emissionS tradin
Page 34 and 35: swiss emissions trading system Flex
Page 36 and 37: Russian Federation under considerat
Page 38 and 39: North America Following the announc
Page 40 and 41: Regional Greenhouse Gas Initiative
Page 42 and 43: California Cap-and-Trade Program Ph
Page 44 and 45: Québec Cap-and-Trade System Flexib
Page 46 and 47: Latin America and the Caribbean Man
Page 48 and 49: Brazil — São Paulo under conside
Page 50 and 51: Asia-Pacific Asia is rapidly establ
Page 52 and 53: Tokyo Cap-and-Trade Program The low
Page 54 and 55: Target setting emissions trading sy
Page 56 and 57: ETS legislation was amended to allo
Page 58 and 59:
Korean Emissions Trading System or
Page 60 and 61:
Chongqing (Pilot) Emissions Trading
Page 62 and 63:
Hubei (Pilot) Emissions Trading Sys
Page 64 and 65:
Shenzhen (Pilot) Emissions Trading
Page 66 and 67:
Taiwan under consideration On 1 Jul
Page 68 and 69:
68
Page 70 and 71:
List of Acronyms ASSET Advanced Tec
Page 72:
As world leaders gathered in Paris
show all

Emissions Trading Worldwide

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?