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Mary Veronica Tovsak Pleterski's power-point presentation Presentation Transcript

  • 1. The future of the EU ETS - W hat to expect in Phase 3 Mary Veronica Tovsak Pleterski Director B – European and International Carbon Markets DG Climate Action European Commission
  • 2. A predictable EU-wide cap until 2020 and beyond -20% 2083 Mt/yr Gradient: -1.74% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Starting point: 1974 Mt in 2013 1720 Mt
    • 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
  • 3. A wider scope
    • New sectors
      • Aluminium
      • Basic chemical production
    • New gases (nitrous oxide, PFCs)
    • Aviation as from 2012
      • internal, inbound and outbound aviation, unless equivalent measures in 3 rd countries
  • 4. Harmonised Allocation Rules
    • Auctioning is default allocation method – for power sector as from 2013
    • Phasing out free allocation for industrial sectors (80% in 2013 – 30% in 2020 – 0% in 2027), unless…
    • … deemed exposed to significant risk of carbon leakage, then free allocation at 100% of benchmark
    • Aviation: 15% auctioning
  • 5. Auctioning
    • Regulation unanimously agreed by Member States and to be formally adopted end of October
    • A common auction platform for 20+ Member States
      • option for Member States to set up own auction platform
    • Simple auction format
    • Predictable auction calendar
    • Adequate oversight:
      • a single auction monitor,
      • solid know-your-customer checks and
      • provisions to mitigate risk of market abuse
    • Next steps: procurement of common auction platform and single auction monitor
  • 6. Benchmarking
    • Commission internal discussions in the final phase
    • Draft decision on harmonised allocation rules to be sent to Member States in view of vote in Climate Change Committee
    • Then 3 months scrutiny in EP and Council
    • Implementation of an agreed Directive – hence a technical rather than political task
    • Thanks to all stakeholders who have contributed constructively to this process!
  • 7. Market oversight
    • Com to examine level of carbon market oversight
      • Preparing stock-taking Communication to EP and Council ( main gap is spot market)
      • Major study in 2011, incl. open web-based stakeholder consultation, impact assessment
      • Legislative proposal as appropriate end 2011
    • In the meantime – Auctioning Regulation ensures integrity of auctions, even if allowances are auctioned spot
  • 8. Maritime transport emissions
    • Commission invited to come forward with a proposal if there is no agreement in IMO/UNFCCC by the end of 2011 – act should enter into force in 2013
    • Very difficult to progress in IMO/UNFCCC
    • No decision yet on policy or timing (other policies could work)
    • Design issues:
      • Scope/coverage - like aviation (310 Mt/year) or different?
      • Full auctioning?
      • Competitiveness/leakage?
      • Monitoring & enforcement issues
    • ETS being actively discussed in IMO (IMO Expert Group report MEPC 61 INF. 2)
  • 9. Providing the right incentives through use of international credits
    • Credits from projects to reduce industrial gases
      • Reports that they are poor value for money + of low environmental integrity
      • Concern that they reduce incentive for more ambitious, appropriate own action in developing countries
      • COM is preparing a proposal to restrict their use as allowed by revised ETS Directive
    • Coordination of use restrictions important:
      • To avoid arbitrage opportunities between markets
      • To increase incentive for more ambitious action, including sectoral crediting, in host countries
  • 10. Differences between sectoral crediting and CDM
    • Higher developing country government involvement
      • Gathering sectoral data
      • Setting crediting thresholds
      • Facilitation reductions throughout the sector
    • Different incentive structure
      • Aggregate for all installations within the sector
      • Individual installation gains depend on performance of other installations
      • Threshold below BaU
  • 11. Global carbon market: EC vision for the future
    • Size of market
    • Incentives to move towards cap and trade
    Reformed CDM Sectoral crediting applied Emissions not covered by cap and trade Bilaterally linked cap and trade TIME Total global emissions
  • 12. Info on the Climate Action and Renewable Energy Package at http://ec.europa.eu/environment/climat/emission/index_en.htm