The EU Emissions Trading Scheme- EU ETS

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資料 2 The EU Emissions Trading Scheme- EU ETS Presentation to the Emission Trading Subcommittee of the Central Environment Council, Tokyo, 14 th June 2010 Vicky.Pollard@ec.europa.eu 1

This Presentation The EU ETS: Part 1: an essential part of a wider package of climate and energy policies Part 2: it s working and improving: lessons for better systems Part 3: building block of the international carbon market 2

1. The EU ETS: an essential part of a wider package of climate and energy policies 3

EU ETS basics Mandatory system in place since January 2005 Environmental outcome guaranteed: cap on emissions from ~11,500 energy-intensive installations across EU Covering around 50% of EU CO 2 emissions Direct: regulated at source of pollution Essential infrastructure established: EU allowance registry, MRV, compliance and enforcement Use of international credits within quantity and quality limits Simple market system- no price intervention 4

From 2013 large industrial installations & aviation -20% / -30% wrt 1990 levels by 2020 small emitters cross-sectoral EU ETS part of a larger Climate & Energy Policy Package targets & instruments EU ETS Effort Sharing Decision technology specific & product policies Carbon capture and storage Directive Renewable Energy Directive Fuel Quality Directive CO2&cars 5

GHG Target by 2020: -20% compared to 1990-14% compared to 2005 EU ETS -21% compared to 2005 Non ETS sectors -10% compared to 2005 27 Member State targets, stretching from -20% to +20% 6

Sectors covered Began focussed on large direct emitters of CO2: Power generation and other large combustion installations >20MW Refineries Iron and Steel production Cement Pulp and paper, Lime, Glass, Ceramics Expanding: From 2008, emissions of N2O from fertiliser production From 2012, aviation in and to/ from EU (with no double-coverage where equivalent measures taken abroad) From 2013, new large industrial emitters (certain chemical sectors and aluminium, emissions of PFCs) 7

2. The EU ETS is working and improving: lessons for better systems 8

Phased Approach Phase 1: 2005-2007 Learning by doing Cap too generous Market up and running Phase 2: 2008-2012 Kyoto commit ment Robust data Tighter cap Use of CDM/ JI Phase 3: 2013-2020 Revised legislation EU wide-cap Improved allocation, with auctioning becoming default over time 50% of auction revenue for climate action Phase 4: 2021- Cap continues to decline at -1.74% pa 100% auctioning by 2027 9 No end date in the legislation

Evidence The EU ETS works: Reductions in verified emissions under Phase 2-3% in 2008, strong carbon price prior to economic downturn, Small effect of recession in end 2008 (although overall EU growth of 0.8%) -11.6% in 2009, due to recession, low gas price but also changes in behaviour due to EU ETS Point Carbon Surveys In 2006 5% of participants took future cost of carbon into account for investment By 2007 this had risen to 65% By 2010, long term carbon price a decisive factor for new investments for 47% (61% for large polluters). 54% say EU ETS has already caused emissions reductions in my company. 10

EU-wide cap from 2013, more certainty into the future Starting point: 1974 Mt in 2013 2083 Mt/yr Gradient: -1.74% 1720 Mt -20% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Linear factor to be reviewed by 2025 Aviation to be included; will change figures correspondingly, but cap not reduced Disclaimer: all figures are provisional and do not account for new sectors in third period 11

More lessons Good data (MRV) needed for installations covered Auctioning is preferred allocation method: simpler, avoids windfall profits, revenues for public purposes, rewards early action No empirical evidence of carbon leakage Use of international credits for cost containment (within limits) and free allocation to address risk of carbon leakage Carbon price is no more volatile than related commodity prices Keep it simple! 12

3. The EU ETS: building block of the international carbon market 13

A robust international carbon market In parallel to and supporting the UN process To get as close as possible to an international price for carbon As an important source of climate finance- up to 38 billion/year in 2020 with robust market 14

Building a robust international carbon market Through bottom up linking of cap and trade systems in developed countries OECD wide market by 2015- transatlantic market as first step Inclusion of advanced developing countries and competitive sectors by 2020 Reform of CDM, focus CDM on LDCs, replacement over time by a more ambitious sectoral mechanism for advanced developing economies and sectors Sectoral crediting as a stepping stone to ETS 15

Working together On compatible cap and trade systems that can be linked in the future On coordinating recognition policy: which international credits are allowed for compliance: to leverage more ambitious climate action in other parts of the world Because two systems accepting the same international credits will be linked through these credits EU ETS: 1.6 Gigatonnes of guaranteed demand for international credits for 2008-2020 Possibility to restrict access by type Other ETS allow use of offsets/ credits and have provisions for quality control (e.g. US bills up to a maximum of 1.5 gigatonnes per year under Waxman-Markey) 16

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