EU ETS review first results and next steps. Energy & Climate Policy Supply Security in International Comparison

Transcription

1 EU ETS review first results and next steps by Franzjosef Schafhausen, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, Berlin Energy & Climate Policy Supply Security in International Comparison September Salzburg, Austria 1

2 The Problem of EU target sharing (2020) GHG target sharing (20 %/30 %) Energy Efficiency (20 % against bau) Renewable target sharing (20 %) Biofuels (10%) EU ETS 2

3 EU-Targets beyond

4 Perspectives (European Council 15 Feb (Energy), 20 Feb (Environment) and 8/9 March 2007 (Heads of States) Climate protection targets "beyond Kyoto" Binding in all cases: Reduction of GHG emissions by the European Union by 20 % by 2020 versus 1990/1995 levels Conditional (requirement: involvement of other industrialised countries with comparable reductions and appropriate contributions by newly industrialising countries): Reduction of GHG emissions by the European Union by 30 % by 2020 compared with 1990/1995 levels Improvement in the energy efficiency of the European Union by 20% compared with projected consumption Renewable energies to account for a binding share of 20 % of primary energy consumption by 2020 Binding share of biofuels in 2020: 10% 4

5 The importance of EU ETS in Germany 5

6 On the significance of emissions trading Emissions trading is the cornerstone of Germany's climate protection programme, covering around 60 % of Germany's CO 2 emissions Emissons trading is the cornerstone of Europes climate protection programms, covering around 50 % of Europe s CO 2 emissions Massive cut s in the emissions budgets in the second trading period Ambitious post-2012 climate protection targets necessitate a further drastic cut in the emissions trading budget Post-2012 allocation methods: Benchmarking and/or auctioning 6

7 Some Problems 7

8 Emission trends 8

9 EU- Mitgliedstaat Potential Buyers Potential Sellers Source: EUA, 2007 THG- Emissionen Basisjahr THG- Emissionen 2005 burden sharing Zielgröße Zielabweichung in Mio. t Zielabweichung in % Belgium ,5 % Danmark % 55-9 Germany % Finland /- 0 % France /- 0 % Greece % 139 +/- 0 Ireland % 63-7 Italy ,5 % 486,0-96 Luxembourg % 9-4 Netherlands % ,0 Austria % Portugal % 77-9 Sweden % Spain % United Kingdom ,5 % ,9-16,3-2,8 + 2,8 + 1,6 +/- 0-11,1-19,8-44,4-34,7-11,7 + 10,7-32,4 + 0,7 9-6,5

10 Potential Buyers Potential Sellers Source: EUA, 2007 EU- Mitgliedstaat THG- Emissionen Basisjahr THG- Emissionen 2005 Kyoto Ziel Zielgröße Zielabweichung in Mio. t Zielabweichung in % Bulgaria , ,6 Estonia , Latvia , Lithuania , Malta Poland , ,5 + 54,2 + 47,7 Romania , ,8 Slovakia , Slovenia , Czeck Republic , Hungary , Cyprus New EU Countries EU , ,7 + 26,9-11,1 + 19,3 + 30,2 + 31,5-14,6 10

11 Overallocation 11

12 Annual CO 2 emissions from the ET sector in million t (2006 provisional) allocation 495 mio. t ET total Energy Industry

13 Germany is long Rank Installation / Branche Number of installatio ns 1 Zellstoff 4 Difference in absolute terms Difference in % ,4 % 2 Ceramics ,7 % 3 Paper and Pulp ,7 % 4 Cement ,4 % 5 Combustion installations MW insgesamt ,4 % 6 Glass ,9 % 7 Iron and Steel ,0 % 13

14 Germany is long Rank Installation / Branche 8 Compressors Number of installation s Difference in absolute terms Difference in % ,2 % 9 Combustion Installations insgesamt ,0 % 10 Lime ,5% 11 Iron and Steel ,2 % 12 Combustion installation > 50 MW insgesamt ,0 % 14 Refineries ,4% 14

15 EU is long Mitgliedstaat Absolut ( - = Überschuss / + = Defizit) in % (- = Überschuss / + = Defizit) Austria ,09 % Belgium ,13 % Czech. Republic ,53 % Denmark ,97 % Estonia ,66 5 Finland ,2 % France ,780-14,

16 EU is long Mitgliedstaat Absolut (- = Überschuss / + Defizit) in % (- = Überschuss / + Defizit) Germany ,51 % Greece ,14 % Hungary ,58 % Ireland ,11 % Italy ,67 % Latvia ,04 % Lithuania ,66 % 16

17 EU is long Mitgliedstaat Absolut (- = Überschuss / + Defizit) in % (- = Überschuss / + Defizit) Netherlands ,58 % Portugal ,33 % Slovak Republic ,32 % Slovenia ,33 % Spain ,47 Sweden ,70 % United Kingdom ,62 % total ,47 % 17

18 Prices 18

19 Development of the EU ETS: Prices EUA 2007 EUA Nov. 03 Mrz. 04 Jul. 04 Nov. 04 Mrz. 05 Jul. 05 Nov. 05 Mrz. 06 Jul. 06 Nov. 06 Mrz. 07 Jul

20 Experience on the EU-level 1 Directive but 27 different National Allocation Plans! No level-playing-field! Different scopes! Different allocation rules! Different allocation methods! 20

21 Experiences with NAP I in Germany The various allocation regulations are extremely complex, and the effort involved in submitting an application and in monitoring is comparatively large. The allocation result was impossible to predict ex ante, either for individual plant operators or for the German Government. A number of allocation rules are rather counter-productive in terms of incentification (ex post amendments, process-differentiated benchmarks for new plant). A number of allocation regulations (ex post amendments) were contested by the Commission. A ruling has yet to be reached in the European Court hearing. Several allocation regulations were contested for distorting competition (e.g. transfer ruling) ahead of the first trading period The allocation guarantees given for long periods (transfer regulation, new installation ruling, early action without evidence) are rejected by Brussels. 21

22 But the good news The market is working! 22

23 Development of the EU ETS market: Volume Source: Point Carbon 23

24 Reactions related to the second period 24

25 NAP II Macroplan "cap" Cap Cap Total cap 495 million t/a million t/a Reserve 3 million t/a 23 million t/a Budget for incumbents 495 million t/a 453,07509 million t/a -23 million t/a reserve -11 million t/a additional installations = 419,07509 million t/a million t/a auctioning = million t/a 25

26 New structures in NAP II Benchmarks for power plants (incumbents and new installations) Consistent benchmarking system for CHP plants Concessions for small emitters Use of CDM and JI emissions credits (external opening of the system) Greater transparency Significantly reduced complexity No time guarantees 26

27 Dispense with special provisions in NAP II Transfer rule Nuclear power plant substitution Malus rule Option rule "Early action rule" with evidence - will expire as planned Ex post corrections Explicit rule on process-related emissions NAP II and ZUG 2012 are now substantially more transparent and calculable Allocation rules are based on objective yardsticks 27

28 Auctioning in Germany 40 certificates per annum will be sold or auctioned (8.8 % of the allocation volume) No price setting The market determines the price Without exception, the volume for the auction originates from all electricity-generating plants (new comers as well as incumbents) Auction leads to an (additional) reduction in the free allocation for electricity-generating plants of 17 % The bidder group is not limited Start with selling switch to auctioning by 2010 at the latest Technical implementation of the auction within the context of an ordinance (Auctioning Ordinance, VerstVO) 28

29 Brussels 29

30 Calculation of Germany's cap by the EU Commission The Commission's "global formula": (VET 2005 x growth factor x factor for the ) + additional improvement in installations carbon intensity x = ( x x ) + 11 million t x = million t/a 30

31 Interventions by the Commission 31

32 Decisions by the Commission on NAP s for the second period Insgesamt Litauen Slowakei Finnland Schweden Zypern Malta Tschech. Rep. Niederlande Polen Irland Estland Ungarn Vereinigtes Königreich Frankreich Griechenland Belgien Luxemburg Slowenien Deutschland Österreich Italien Spanien 32 Lettland 0,0% -10,0% -20,0% -30,0% -40,0% -50,0% -60,0% Kürzung durch die KOM in % zum Vorschlag NAP I

33 Auctioning in the NAP II of other EU Member States (EU volume status 16 June 2007: approx. 100 million t/a) 33

34 10% 8% 6% 4% 2% 0% 34 Niederlande Polen Großbritannien Ungarn Irland Italien Lettland Luxemburg Österreich B elgien

35 Belgien; 0,2 Österreich; 0,4 Ungarn; 1,5 Irland; 0,1 Großbritannien Italien; 12,0 17,2 Lettland; 0,5 Niederlande; 3,9 Luxemburg; 0,2 Polen; 20,9 35

36 The EU ETS-review 36

37 Review - process Stakeholder group in the framework of the European Climate Change Programme (ECCP) Participants: Governments, business sector, NGO s, Science, Trade Unions four meetings : 8./ ; 26./ ; 21./ ; 14./ Review report = records of the four meetings Next step: Amendments of the EU ETS Directive proposal by the Commission on december 5 th 2007 (?) 37

38 Review Report Expansion to other greenhouse gases (CH 4 and N 2 O)? Expansion to other sectors (aviation, transport, private households)? Harmonisation of the scope Harmonisation of central allocation rules (new entrants, closure rule, cap-setting) Change of the allocation methods (benchmarking, auctioning) Interactions with other mechanisms Treatment of offset projects Clarification of the treatment of small emitters Extension of the trading period to eight, ten or fifteen years Inclusion of governments and regions outside of the EU Strengthening of the EU Commission s position Treatment of CCS Monitoring, reporting, verification, register 38

39 Trends Extension of the trading period to eight years Cap-setting will become more transparent and predictable cap setting on the EU-level? 28 th Member State? Distinction between industry and energy (main reason: international competition) Auctioning to become the dominant and binding allocation methods allocation methods have to be harmonized and have to be mandatory Allocation on the EU-level? Central allocation rules have to be harmonised (creation of a "level playing field") Emissions trading will be extended beyond the EU Emissions trading will probably be extended to other sectors (aviation, shipping) and greenhouse gases Project-related mechanisms will remain a component of emissions trading (safety valve?) 39

40 By the way 40

41 Cases before the European Court Member States against decisions by the Commission on National Allocation Plans for the second period Estonia Latvia Poland Slovakia Czech Repblic Hungary 41

42 Thank you for your attention. 42