Lessons learnt from emissions trading implementation

Transcription

1 Lessns learnt frm emissins trading implementatin Side Event Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 1 Date: Friday, 09 December 2005 Time: 13:00-15:00 Lcatin: Churchill River, Palais de Cngrès, Mntréal, Canada Cmparisn f Natinal Allcatin Plans f EU member states Karline Rgge (Fraunhfer Institute Systems and Innvatin Research) Mnitring in the EU Emissins Trading Scheme Lessns learnt Sina Wartmann (Ecfys GmbH) Carbn Trading in the "Real Wrld" a Legal Perspective Hannah McCaughey (Baker & McKenzie) Lessns learnt frm envirnmental markets in Australia Dr. Regina Betz (Centre fr Energy and Envirnmental Markets, CEEM) COP 11 / COP/MOP 1 Cmparisn f Natinal Allcatin Plans f EU Member States Karline Rgge Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 2 Fraunhfer Institute fr Systems and Innvatin Research (Fraunhfer ISI) Karlsruhe, Germany Side Event: Lessns learnt frm emissins trading implementatin COP 11 / COP/MOP 1 in Mntréal, Canada December 9, 2005

2 Cntent This presentatin will cver Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 3 Overview f the EU Emissins Trading Scheme (EU ETS) Quantitative assessment f targets within the EU ETS Cmparisn f allcatin rules n installatin level Lessns learnt fr the secnd trading perid Overview f the EU Emissins Trading Scheme (EU ETS) Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 4 Apprach: cap-and-trade system Cvered greenhuse gases: nly CO 2 + pt-in starting 2008 Regulated entities: ca CO 2 -intensive installatins (CO 2 permit required) Sectrs: energy, refineries, ferrus metals, cement, lime, glass, ceramics, pulp & paper Timing: successive phases: , etc. Allcatin methd: : at least 95% free f charge; : at least 90% Flexibility: banking between / within phases, brrwing within phases Accuntable units: EU allwances (EUAs), CERs (CDM) frm 2005 and ERUs (JI) frm 2008, quantitative limits frm 2008 nwards, n frestry units Mnitring: Harmnized mnitring, reprting and verificatin f CO 2 emissins based n Mnitring Guidelines Sanctins: harmnized financial sanctins fr nn-cmpliance (40 /t in ; 100 /t frm 2008-) & surrender missing allwances + public ntificatin

3 Sme basic numbers Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 5 EU ETS cvers apprx. 50% f CO 2 emissins f EU MS with highest share f CO 2 emissins in EU ETS: Malta (73%) MS with lwest share f CO 2 emissins in EU ETS: LUX (28%) Cap: 2.2 Bill. EAU/a MS with largest share: GER (499 Mt EAU/a, i. e. 25%) MS with 2nd largest share: UK (245 Mt EAU/a) MS with smallest share: Malta (3 mill. EAU/a) EU-15 hlds 4/5 f ttal EU ETS budget and EU-10 1/5 Apprx. 11,150 installatins cvered MS with mst installatins: GER (1,849), ITA (1.240), FRA (1.172), POL (1.166) MS with least installatins: Malta (2), Cyprus (16), LUX (19) Median: 140, Average: 197 Installatin cverage Number f installatins depends n Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 6 Sectrs included in the scheme Minimum threshlds (capacity/utput) fr activities t be included in the scheme General structure f the natinal ecnmy Definitin f cmbustin installatin: variety in EU MS Natinal prvisins n inclusin and temprary exclusin f installatins (pt in / pt ut) e.g. de minimis rule in NL

4 2. Quantitative assessment f targets fr the EU ETS Macr-level allcatin determines ttal budget fr entire ET-sectr f MS (including reserve fr new entrants) Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 7 Hw t assess the amunt f allcated allwances? (1) Aim f EU ETS: cst-effective reductin f CO 2 -emissins t help EU reach its Kyt target Tw criteria suitable t evaluate whether CO 2 is being reduced: Emissins f cvered installatins in base perid (histric emissins) Prjected emissins f cvered installatins in trading perid (BAUscenari) Allcatin cmpared t histric emissins (base perid) -10% 0% 10% 20% 30% 40% 50% 60% 70% Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 8 Slvenia Hungary Germany UK Belgium Italy Prtugal Greece Spain Netherlands Ireland Denmark Pland Austria Czech Republic France Sweden Slvakia Luxemburg Latvia Finland Cyprus Lithuania Estnia Malta EU-15 EU-10 EU % -2.2% -0.4% -0.2% -0.1% 3.8% 4.3% 6.1% 6.3% 6.5% 6.9% 8.4% 8.8% 9.2% 9.6% 10.9% 13.4% 15.0% 15.8% 3.7% 5.1% 10.8% 23.3% 25.7% Only 5 MS have allcated less allwances than emissins in cuntry-specific base perid 30.9% 36.3% 52.1% 64.9%

5 Allcatin cmpared t ETS emissin prjectins 2006 (BAU) -20% -10% 0% 10% 20% 30% 40% Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 9 Slvakia Denmark Sweden Lithuania Luxemburg Pland Slvenia Netherlands Czech Republic Austria Italy France Spain Finland Ireland Greece Prtugal Belgium UK Malta Hungary Cyprus Germany Latvia Estnia EU-15 EU-10 EU % -14.8% -13.9% -12.2% -9.2% -9.1% -8.0% -6.3% -5.8% -5.3% -4.9% -4.4% -4.0% -3.0% -3.0% -2.1% -1.9% -1.7% -0.7% -6.8% -2.5% -3.4% 0.0% 0.0% 0.7% 1.6% Allcatin f almst all MS lwer than prjected emissins 4.6% Only fur cuntries meet bth criteria: UK, Belgium, Slvenia, Hungary 35.1% What was the impact f the EU Cmmissin n the CO 2 -budget? Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide % -16.5% -13.1% -14.0% -12.5% -9.5% -9.3% -9.0% Required reductins by Cmmissin in rder t btain apprval (%): -4.3% in EU-25 Cuts in 14 f 25 NAPs EU-15: 8 EU-10: 6-4.3% -1.7% -4.4% -3.1% -1.8% -1.2% -1.1% -0.8% -0.6% -0.1% EU-25 EU-10 EU-15 Latvia Pland Slvakia Estnia Lithuania Czech Republic Italy Luxemburg Netherlands Prtugal France Belgium Ireland Austria Spain -0.03% UK Sweden Slvenia Malta Hungary Germany Finland Denmark Cyprus Greece -30% -25% -20% -15% -10% -5% 0%

6 Reductins by EU-COM in Mt CO 2 p.a. Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide EU-25 EU-10 EU-15 Pland Italy Czech Republic Slvakia Netherlands Estnia France Latvia Lithuania Prtugal Belgium Spain Austria Ireland Luxemburg UK -0.1 Sweden Slvenia Malta Hungary Germany Finland Denmark Cyprus Greece Allcatin cmpared t Kyt target Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 12 Hw t assess the amunt f allcated allwances? (2) Assessment f cntributin t reaching Kyt target: Hypthetical emissins target fr EU ETS sectr (Kyt cnfrmity) Assumptins: Starting pint: Kyt / Burden-Sharing target fr all GHG emissins Cnstant share f CO 2 emissins f EU ETS sectr cmpared t all GHG Linear interplatin between base perid emissins and hypthetical EU ETS target fr 2010 gives Hypthetical EU ETS target fr 2006

7 EU ETS cap cmpared t hypthetical EU ETS Kyt target -40% -30% -20% -10% 0% 10% 20% 30% 40% Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 13 Latvia Lithuania Hungary Pland Estnia Czech Republic UK Slvakia Slvenia Germany Belgium Greece Sweden France Prtugal Netherlands Ireland Italy Spain Denmark Austria Luxemburg Finland EU-15 EU-8 EU % -27.3% -17.1% -11.2% -5.5% -4.0% -1.9% -1.6% -8.2% 0.9% 1.0% 5.2% 5.4% 8.0% 9.6% 9.7% 10.3% 13.4% 13.5% 17.7% 20.7% 24.4% 25.3% 7.1% 3.5% 30.7% Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 14 Accepted use f Kyt Mechanisms Ttal f 106 Mt CO 2 e/a Belgium 8.2 Austria 7.0 Spain 20.0 Denmark 4.5 Ireland 3.7 Luxemburg 3.0 Italy 39.6 Netherlands 20.0 Decisin criteria: Administrative bdy Cntracts Financial means

8 EU ETS cap cmpared t hypthetical EU ETS Kyt target (with / withut KM) -40% -30% -20% -10% 0% 10% 20% 30% 40% Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 15 Latvia Lithuania Hungary Pland Estnia Czech Republic UK Slvakia Slvenia Germany Belgium Greece Sweden France Prtugal Netherlands Ireland Italy Spain Denmark Austria Luxemburg Finland EU-15 EU-8 EU % -27.3% withut flexible Kyt Mechanisms -17.1% with intended use f Kyt Mechanisms -11.2% -5.5% -4.0% -1.9% -1.6% -8.2% 0.9% 1.0% 5.2% 5.4% 8.0% 9.6% 9.7% 10.3% 13.4% 7.1% 3.5% 20.7% 24.4% 25.3% 30.7% 3. Cmparisn f allcatin rules n installatin level Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 16 Allwances are allcated fr free in mst MS: Auctining nly in DNK (5% ~ 33.5 Mi. p.a.), HUN (2.5%), Lithuania (1.5%) and IRL (0.75%), revenues mstly used t cver administrative csts Grandfathering: Allcatin based n histrical emissins in mst MS Wide variety f base perids: frm 1990 t 2004, mstly 3-5 years, ften exclusin f year with lwest emissins, exemptins / case f hardship almst all MS use grwth factrs (GER nly partially thrugh BM) Benchmarking elements: Allcatin based n specific emissins in DNK, Lithuania, NL, FRA, GER (in GER chice between grandfathering and BM) Special prvisins fr, amng thers, CHP and ther clean technlgies, prcess-related emissins, early actin Ex-pst adjustments if emissins "lwer than expected" (e.g. GER < 40 %, LUX < 10 %) nt accepted by EU Cmmissin!

9 Sectral differentiatin f allcatin methd Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 17 Why differentiatin by sectr? Accunt fr different reductin pssibilities due t technical restrictins and cmpetitive reasns Stricter allcatin fr energy sectr cmpared t industry sectr (e.g. in Spain, Sweden, UK) Hw did MS differentiate by sectr? Sectr caps Sectr specific reductin / grwth factrs Different base perids fr different sectrs Wh differentiated by sectr? Only 3 MS d nt use any sectr specific features (GER, LUX, Malta) All ther MS incrprated differentiatin by sectr in allcatin methd Early actin Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 18 Prblem: Allcatin based n recent base perids means disadvantage fr installatins that implemented CO 2 reductin measures in the past One Slutin: Special rules t reward these early carbn-efficient installatins Very limited direct cnsideratin: Cmpliance factr f 1.0: in GER fr 12 years after implementatin (instead f ), Latvia (fuel substitutin and imprvement f energy efficiency), EST (energy sectr) Bnus / Reserve: POL, CZR, HUN Indirect cnsideratin thrugh: Earlier base perids: e. g. CYP (starting 1990), IRL, ITA, UK, LUX, Slvenia, Latvia, EST, Lithuania, FRA Substitutin f years in base perid: Belgium/Brussels (with ne year frm ) Benchmarks fr incumbents favrs efficient installatins: AUT, NL, DNK, BEL / Wallnia, Lithuania, Slvenia

10 New entrants New entrants usually get free allwances frm reserves "Uncrdinated" EU harmnizatin as new entrant allcatin culd influence chice f lcatin Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 19 Only exceptin is Sweden: new installatins in energy sectr must buy allwances (except fr CHP plants with a minimum degree f efficiency) Benchmarking: specific emissins * (prjected) utput In general BAT (e.g. Denmark, Germany, Sweden) Sme MS use average BM Usually n cmpliance factr (exceptin: Spain) Ex-pst adjustment based n actual utput data (Germany) prhibited by EU-COM pending legal case against decisin Reserve fr new entrants Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 20 In EU 4.7% f ETS budget reserved fr new installatins (ca. 102 Mt CO 2 p.a., ) Large variety amng MS: 0.6% (GER) % (Malta) f ETS budget If reserve t small: Mst MS allcate n first-cme-first-served basis (AUT, BEL, DNK, EST, FRA, GRE, IRL, Latvia, Malta, NL, PRT, Slvenia, Slvakia, SPA, UK) Sme MS purchase missing EAUs n market (ITA, POL, FRA, LUX, GER) Prprtinal reductin fr each new install. fr past year (HUN, CZR) If reserve t large: Excess allwances either sld / auctined (AUT, CZR, EST, FIN, GRE, HUN, IRL, ITA, LUX, POL, UK) r cancelled at end f trading perid in remaining MS (e. g. GER) refunded t incumbent installatins: NOT apprved

11 Benchmark cmparisn fr new entrants Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 21 New entrants benchmarks fr electricity prductin: FRA: 900 g CO 2 / kwh GER: g CO 2 / kwh Lithuania: 551 g CO 2 / kwh BEL (FIN): 500 g CO 2 / kwh ITA: g CO 2 / kwh and 555 g CO 2 / kwh DNK: 342 g CO 2 / kwh SWE: 265 g CO 2 / kwh UK: Gas benchmark (fr 5 different technlgies) nly tw MS use fuel-specific benchmarks (GER, ITA) a lt f MS did nt specify benchmarks in NAP Onging research and plicy dialgue n EU wide harmnizatin f benchmarks 4. Lessns learnt fr the secnd trading perid Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 22 Mre stringent cap fr ETS sectr (fulfil all 3 criteria) Aim fr cst-efficient allcatin between nn-trading and trading sectrs (i.e., cnsider differences in marginal abatement csts) Extensin f auctining (increasing share ver time, ultimate gal 100%) Innvatin incentive Reductin f windfall prfits, esp. if applied t electricity industry EU Harmnisatin Definitin f installatin (Annex I was nt precise enugh) Benchmarking (fr hmgeneus prduct categries, n fuel differentiatin) De minimis rule t reduce transactin csts Less exemptins (e.g. prcess related, early actin) Increase transparency Cnsider innvatin incentives fr climate friendly technlgy f all rules Mre lng-term certainty fr investrs needed Inclusin f ther gases and sectrs t imprve efficiency (e.g. aviatin)

12 Transactin csts vs. cmpliance csts: the case f small emitters Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 23 Germany: 85% f allwances are allcated t tp 10% f installatins 50% f installatins (small) nly receive 1.6% f ttal allcatin (similar in rest f EU: 33% ~ 0.7%, 55% ~ 2.6%) Share f accumulated allwanes Share f installatins Surce: DIW/Fraunhfer ISI/Ök-Institut (Frthcming): Final Reprt NAP fr Germany (in German). High csts fr industry and gvernment! Threshlds have t be chsen carefully! Final Cnclusins Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 24 EU ETS as EU plicy innvatin: ambitius and successful effrt Mre than 11,000 installatins in 25 cuntries cvered Sund framewrk f fundamental design chice (e. g. sanctins, mnitring, supervisin by EU COM) Framewrk grants flexibility fr imprvement: Implementatin in different phases with review ptins Banning f banking frm 1st t 2nd trading perid (fresh start) Shrtcmings f first trading perid can be vercme in future trading perids EU ETS n track t becme mdel fr future GHG emissins trading schemes

13 Further infrmatin can be dwnladed free-f-charge frm the German Emissins Trading Authrity (DEHSt): Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 25 DEHSt / Fraunhfer ISI / Ök-Institut: "Implementatin f Emissins Trading in the EU: Natinal Allcatin Plans f All EU States" (Nvember 2005) 634/SharedDcs/Dwnlads/EN/ETS/E U NAP Vergleich,templateId=raw, prperty=publicatinfile.pdf/eu_na P_Vergleich and in the ISI-Manual "Flexible Instruments fr Climate Prtectin" (2005, 3rd editin) Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 26 Detailed infrmatin n Emissins Trading CDM JI Spnsr: Envirnmental Ministry f the Federal State Baden-Württemberg Online available (in German nly):

14 Thank yu fr yur attentin! Karline Rgge: Cmparisn f EU-NAPs ~ Mntréal, 9 December 2005 ~ Slide 27 Karline Rgge Karline.Rgge@isi.fraunhfer.de