EU ETS changes proposed by the European Commission, and their results for Poland

Transcription

1 NATIONAL ADMINISTRATOR Emission Allowances Trading Scheme EU ETS changes proposed by the European Commission, and their results for Poland Warsaw,

2 EU ETS modification proposed in draft Directive of the European Parliament and the Council, amending Directive 2003/87/WE 1. Aims of the new Directive Improvement and extension of the Community system of greenhouse gas emissions trading. Achievement of the European Commission targets included in the conclusions of the European Council session of March 2007 (i.e. 3x20%). The targets became a basis for intensification of work on draft documents coming within the so-called Energy and Climate Package. 2. Avoidance of baseline years of the Kyoto Protocol Adoption of the baseline year 1990 means for Poland a loss" of about 110 million tons of CO 2 equivalent.

3 EU ETS modification proposed in draft Directive of the European Parliament and the Council, amending Directive 2003/87/WE cont. 3. New proposals for EU ETS Resignation from the National Plan of Emission Allowance Allocation - sectoral plans on the UE level. Obligation to purchase emission allowances in auctions: ❿ in 100% - for professional power stations, ❿ gradually, from 20% in 2013 to 100% in for other sectors *. Exclusion from the system of installations with capacity no higher than 25 MW and emission no higher than 10 thousand tons of CO2 equivalent in last three years. 5% of the total allocation is a reserve for new installations. Coverage by EU ETS of other greenhouse gases apart from CO2: nitrous oxide and perfluorocarbons - depending on the sector. Coverage by EU ETS of additional types of activity e.g.: production of aluminium, production of nitric acid. * Sectors threatened with competition by countries not covered by EU ETS, will receive free allocations.

4 Poland s situation until 2020 in view of the European Commission's proposal 2007 EU ETS auctions * Increase in the number of allowances for Poland, to be sold in auctions. 39% Total amount of allowances in 2020 higher by about million tons in relation to options without the GDP/citizen indicator National emission (allowance) balance [tons] E CO2 E ETS E nonets AAU Kyoto * Compensation for poorer Member States based on the indicator GDP/citizen.

5 Impact of proposed EU ETS changes on the energy sector Uncertainty of prices of emission allowances. Considerable change of fuel structure in the production sector. Shares of particular fuels and sources will be dependent on many factors, including energy policy of the country. Increased importance of nuclear and gas sources, and development of the wind power generation segment. Extension of transboundary networks and connections. Necessity to bear great investment costs by operators. Construction of CCS installations, initially of demonstration and pilot character (12 installations in the EU, 2 in Poland). Introduction of such substantial changes will be a big challenge for installation operators and for the government. In particular, when we consider these changes jointly with the following proposals: ❿ draft Directive on CCS ❿ stricter emission standards for SO 2, NO x and dust, according to draft amendment of the IPPC Directive.

6 Effects of EU ETS changes for the economy and end users of energy Forecasted visible drop in GDP growth rate. Increased dependence on imported energy. Production slump in energy-intensive sectors. In electricity and heat prices; growing energy poverty.

7 Negative consequences for the environment Import of goods from countries not covered by EU ETS and having lower environmental requirements will bring about an increased impact of transboundary pollution. (The phenomenon applies also to electricity, although in this case import is limited). Increase of operational costs in heat and power plants and in heat plants may lead to loss of their competitiveness in relation to individual or small collective sources of heat. Users disconnection from the heat distribution system, and meeting their needs with the use of small sources whose emissions are not controlled will lead to impairment of air quality, especially in urban agglomerations. The loss of competitiveness of heat and power plants in relation to individual sources may be a serious threat to the achievement of targets of Directive 2004/08/EC (CHP Directive). Production of energy in cogeneration allows for much higher primary energy savings.

8 Poland s position on the proposal concerning EU ETS 1. Definition of small installations A postulate to exclude from the system such installations whose emissions are lower than t CO 2 per year. 2. Reduction of emission allowance prices (price floor and ceiling) Setting an upper limit will make it possible to curb the increase in prices of energy and products of energy-intensive industries. The mechanism will also contribute to preventing carbon leakage outside EU ETS countries. A bottom limit will make it possible to maintain stability of EU ETS as well as to guarantee profitability of investing in clean technologies. In the case of considerable decrease in allowance prices (the situation may occur after moving production outside EU ETS) the mechanism will prevent EU ETS failure. The setting of price floor and ceiling will not lead to abandonment of the reduction targets.

9 Poland s position on the proposal concerning EU ETS cont. 3. Auctioning system A proposal to introduce a so-called mixed system based on benchmark and auctioning. It consists in allocating part of the allowances for the power sector and heat production sector as free-ofcharge allowances, based on the best fuel indicators (benchmarks) in Europe. The remaining part of the allowances will be bought in auctions. This mechanism eliminates a number of negative phenomena, for instance: prevents excessive increase in energy prices, Prevents CO2 emission leakage outside EU ETS - new installations with lower indicators will obtain allowances free of charge, supports development of low-emission coal technologies, rather than a change of structure primary fuels consumption in energy production ("coal switch to gas ).

10 Poland s position on the proposal concerning EU ETS cont. 4. Poland s proposal to introduce flexibility between EU ETS systems and non-ets National limits not used in the nonets system could be bought by operators of installations participating in EU ETS for the purpose of setting their emissions. The aim of this proposal is to increase the supply of allowances on the market. 5. Income from auctions Increased redistribution for less wealthy member states. Proposal: decisions on the way of spending income from auctions are to be taken by member states (taking into account their specific situations).

11 Poland s position on the proposal concerning EU ETS cont. 6. Use of emission credits A postulate to introduce the possibility for individual member states to use AAUs after the year 2012 in the situation of a new agreement concluded (also to use units transferred from the period ). Objection against limiting the possibility to use CER and ERU units only in projects approved by all member states within the Community system in the period

12 Thank you for your attention Maciej Pyrka NATIONAL ADMINISTRATOR Emissions Trading Scheme ul. Kolektorska Warsaw tel kashue@kashue.pl