UPSTREAM REFORM OF THE EU EMISSIONS  TRADING SYSTEM      Kyoto2
CUTTING EMISSIONS IS       URGENTThe Royal Society recently published ananalysis which suggests that:■ There is now little...
THE EU EMISSIONS TRADING   SYSTEM IS NOT WORKING■ Less than 50% of fossil carbon  is covered.■ Complex and vulnerable to  ...
DIAGNOSIS AND TREATMENT■ A fundamental weakness in the EU ETS is that  it is a ‘downstream’ system (next slide).■ Upstream...
UPSTREAM CONTROLS ON         FOSSIL CARBONIt is simpler, cheaper andmore effective to controlfossil carbon ‘upstream’— at ...
UPSTREAM REFORM OF THE           EU ETS■ Permits required to extract coal, oil or gas from the  ground within the EU.■ Per...
BORDER LEVELLING■ Border levelling is needed (with or without upstream  reform):   ■ To protect EU businesses from unfair ...
BENEFITS OF UPSTREAM REFORM OF        EU ETS (SUMMARY)■ Control of 100% of fossil carbon.■ Protecting EU businesses from u...
TOWARDS A GLOBAL SYSTEM■ Several additional benefits of upstream  controls in a global system.■ An upstream EU ETS can ser...
BENEFITS OF UPSTREAM  REFORM OF THE EU ETS (1)■ In one step, the reform would achieve  control over 100% of fossil carbon ...
BENEFITS OF UPSTREAMREFORM OF THE EU ETS (2)■ A reformed system is likely to raise the price of carbon much closer to its ...
BENEFITS OF UPSTREAMREFORM OF THE EU ETS (3)■ Border levelling measures:  ■ Protect businesses in the EU from unfair    co...
ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (1)■ No need for legally-binding national targets:  ■ Much eas...
ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (2)■ No need for special arrangements for  international aviat...
ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (3)■ Simplifications can reduce problems  arising from complex...
GETTING THE SNOWBALL ROLLING■ Upstream reform of the EU ETS can  serve as a demonstrator and provide  incentives for a glo...
MORE INFORMATION■ URLs: ■ www.k2support.org ■ www.kyoto2.org■ “Turn off greenhouse gases at  source” (2 pages).■ “Upstream...
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Upstream reform of_eu_ets_latest

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Describes how the EU Emissions Trading System may, with advantage, be reformed so that coal, oil and gas are controlled where they come out of the ground or are imported.

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Upstream reform of_eu_ets_latest

  1. 1. UPSTREAM REFORM OF THE EU EMISSIONS TRADING SYSTEM Kyoto2
  2. 2. CUTTING EMISSIONS IS URGENTThe Royal Society recently published ananalysis which suggests that:■ There is now little or no chance of keeping global temperatures below 2°C.■ 2°C now represents the boundary between dangerous and extremely dangerous climate change! Kyoto2
  3. 3. THE EU EMISSIONS TRADING SYSTEM IS NOT WORKING■ Less than 50% of fossil carbon is covered.■ Complex and vulnerable to WE NEED fraud. A BETTER■ Problems of unfair competition SYSTEM – AND SOON! and ‘leakage’.■ ‘Import emissions’ not counted.■ Too many allowances, too many free, price of carbon too low, and emissions not falling. Kyoto2
  4. 4. DIAGNOSIS AND TREATMENT■ A fundamental weakness in the EU ETS is that it is a ‘downstream’ system (next slide).■ Upstream reform: ■ would be relatively simple to do. ■ would solve most of the problems.■ There is little chance of creating a robust, effective system without upstream reform.■ Given the urgent need for cuts in emissions, upstream reform should be introduced soon. Kyoto2
  5. 5. UPSTREAM CONTROLS ON FOSSIL CARBONIt is simpler, cheaper andmore effective to controlfossil carbon ‘upstream’— at the relative handfulof places where coal, oiland gas come out of theground — than trying tocontrol emissions‘downstream’ at the muchlarger number ofemissions-producingbusinesses. Kyoto2
  6. 6. UPSTREAM REFORM OF THE EU ETS■ Permits required to extract coal, oil or gas from the ground within the EU.■ Permits required to import coal, oil or gas into the EU.■ Permits would be auctioned, not give away for nothing, and may be traded.■ Numbers of permits reduced from year to year in the light of climate science.■ Money from the sale of permits may be used to help businesses and people make the transition to the clean, green economies of the future. Kyoto2
  7. 7. BORDER LEVELLING■ Border levelling is needed (with or without upstream reform): ■ To protect EU businesses from unfair competition. ■ To prevent ‘leakage’ of industries out of the EU.■ Imports and exports: ■ Permits would be required to import cameras, apples, coal, etc, to reflect the fossil carbon that is embodied in them. ■ Credits for exports at the same rates as the corresponding categories of imports.■ Solves the problem of ‘import emissions’.■ Is a potential source of funds for the EU.■ Permits for imports takes us more than half way to an upstream system! Kyoto2
  8. 8. BENEFITS OF UPSTREAM REFORM OF EU ETS (SUMMARY)■ Control of 100% of fossil carbon.■ Protecting EU businesses from unfair competition.■ Budget discipline, raising the price of emissions to their proper level.■ No need for legally-binding national targets.■ Simplicity: ■ Reduce administration costs. ■ Reduce fraud. Kyoto2
  9. 9. TOWARDS A GLOBAL SYSTEM■ Several additional benefits of upstream controls in a global system.■ An upstream EU ETS can serve as a demonstrator and provide incentives for a global system of upstream controls.■ There would be a snowball effect because the incentive would become progressively stronger with increasing numbers of ‘upstream’ countries.■ LET’S START THE SNOWBALL ROLLING! Kyoto2
  10. 10. BENEFITS OF UPSTREAM REFORM OF THE EU ETS (1)■ In one step, the reform would achieve control over 100% of fossil carbon used in the EU, instead of less than 50% with the system as it is now.■ Simpler and cheaper to administer.■ Allows tight controls in accordance with climate science.■ Reduced opportunities for fraud. Kyoto2
  11. 11. BENEFITS OF UPSTREAMREFORM OF THE EU ETS (2)■ A reformed system is likely to raise the price of carbon much closer to its proper level.■ No need within the EU ETS for the Kyoto ‘Clean Development Mechanism’ or ‘Joint Implementation’ — thus simplifying administration and avoiding problems such as ‘additionality’, perverse incentives, spurious accounting, and fraud. Kyoto2
  12. 12. BENEFITS OF UPSTREAMREFORM OF THE EU ETS (3)■ Border levelling measures: ■ Protect businesses in the EU from unfair competition. ■ Prevent ‘leakage’ of industries out of the EU. ■ Solve the problem of ‘import emissions’. ■ Controls on imports fit naturally into the upstream model.■ A reformed EU ETS may pave the way for a global system of upstream controls (next). Kyoto2
  13. 13. ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (1)■ No need for legally-binding national targets: ■ Much easier to ensure compliance by the operators of coal mines, oil wells or gas wells than to put whole countries in the dock if they fail to meet their targets. ■ Much less confrontation and resistance in international negotiations. ■ Negotiations can shift from the ‘burdens’ of cutting emissions to the benefits and opportunities of new green economies.■ There is still a useful role for informal national targets and national initiatives. Kyoto2
  14. 14. ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (2)■ No need for special arrangements for international aviation or shipping.■ No need for special provision to deal with loose targets from the past or with the problem of ‘hot air’. Kyoto2
  15. 15. ADDITIONAL BENEFITS OF A GLOBAL SYSTEM OF UPSTREAM CONTROLS (3)■ Simplifications can reduce problems arising from complexity itself: ■ Causing negotiations to become bogged down in a multiplicity of options; ■ Providing opportunities for narrow interests to skew things in their favour; ■ Multiplying the costs of administration; ■ Multiplying the opportunities for fraud. Kyoto2
  16. 16. GETTING THE SNOWBALL ROLLING■ Upstream reform of the EU ETS can serve as a demonstrator and provide incentives for a global system of upstream controls.■ There would be a snowball effect because the incentive would become progressively stronger with increasing numbers of ‘upstream’ countries.■ LET’S START THE SNOWBALL ROLLING! Kyoto2
  17. 17. MORE INFORMATION■ URLs: ■ www.k2support.org ■ www.kyoto2.org■ “Turn off greenhouse gases at source” (2 pages).■ “Upstream reform of the EU Emissions Trading System” (8 pages). Kyoto2

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