EU Emissions Trading

1
EU Emissions Trading
2
Context

• European Climate Change Programme (ECCP)
• Directive on Greenhouse Gas Emissions Trading
  (2003/87/EC)
• Agreement with automobile manufacturers
• CO2 emission objective for the average new
  passenger car sold in EU
• 140 gCO2/km by 2008/2009
• Approximately 5.8 l petrol/100 km or 5.25 l
  diesel/100 km.
• DIRECTIVE 2001/77/EC on renewable electricity
  energy
• Renewables 12 of gross domestic energy
  consumption by 2010

3
Cap and Trade System

• Cap
• total tons of CO2 emissions, equivalent number of
  allowances
• Distribution
• regulated facilities received allowances
• Trade in allowances
• Those with excess emissions/high marginal cost of
  abatement buy
• Those with less emissions/low marginal cost of
  abatement sell

4
National Allowance Plans

• Member states (MS) set national cap total
  quantity of allowances for 2005-07 and 2008-12
• Allocate allowances to individual installations
• NAPs reviewed by Commission
• Issues of subsidization and competitiveness
• MS can buys GHG reduction units to meet its
  overall commitment affects national cap, hence
  burden on industry
• Grandfathering
• 95 of allowance free of charge for 2005-07
• 90 of allowances free of charge for 2007-12

5
Regulated Entities

• Approximately 12,000-13,000 installations
• Sectors
• Energy electric power, oil refineries, coke
  ovens
• Metal ore, iron, steel
• Minerals cement, lime, glass, ceramics
• Pulp and paper
• 46 of estimated EU CO2 emissions in 2010
• Source Krueger Pizer 2004, Lefevere 2005

6
Permits and Allowances

• GHG emission permit
• Description of installation
• Raw and auxiliary material
• Sources of GHG emissions
• Reporting and monitoring measures
• Allowance allowance to emit one ton of CO2
  equivalent during specified period

7
Enforcement

• No permit to sell allowances till emissions
  verified
• Penalty for exceeding emission allowances
• Euro 40/ton for 2005-08
• Euro 100/ton for 2008-12
• Estimated allowance price Euro 26/ton (no
  offsets) to Euro 13/ton (with unlimited offsets)
• Publish names of violators
• Computerized registry of allowance count
  information
• Public access to data on emissions and
  allowances?

8
Linking Directive

• Link JI and CDM to ETS
• Use credits generated by projects-based
  mechanisms to offset obligations under the EU ETS
• Excludes sinks
• Excludes Kyoto emission trading units
• Limit on CDM and JI units used?
• 6 -gt comitology process for setting a cap

9
Challenges

• Source http//europa.eu.int/comm/environment/clim
  at/gge_press.htm