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Emission
Trading in the EU
EU
Climate Change Strategy.
By Rob Bradley, Climate Network Europe
Who
is Climate Network Europe?
We focus on climate change
83
European Members
More
than 300 members of the Climate Action Network (CAN)
Necessary
global perspective
CAN
a major player at Kyoto
The
EU as the home of emission trading?
EU can
set the rules, but domestic trading is VERY different from Kyoto trading.
Why
consider emissions trading?
Sets a CAP on total emission from the sectors covered
Certainty
of environmental outcome
Trading
helps allocate effort between countries, increasing equity
Helps
reduce costs, making deeper cuts more politically acceptable
Encourages
innovation pushes further than best available techniques
EU
emission trading is not the same as Kyoto emission trading!
Kyoto trading incorporates hot air due to silly target-setting
Compliance is essential to a credible trading system we have the
ECJ!
EU trading will be for companies easier to prosecute
Few international equity issues
About
the Commission proposal
Downstream trading system
Direct
emissions only
Sectors limited to large point sources (industrial)
Chemical sector partly excluded
CO2 only
What
has happened to it?
Proposal was blocked in interservice consultation
Blockers were DG ENTR, Germany Ministry of Economics and BDI
Proposal to reappear before COP7
Part of overall implementation package
Key
issues for NGOs
Mandatory or voluntary?
Sectors
covered and targets
Compliance system
Allocation methodology
Project mechanisms
Mandatory
or voluntary?
Industry arguing for voluntary system
Pilot phase 2005-7 ?
Would a voluntary system have buyers?
What other policies would then be necessary?
What kind of voluntary? Companies? Sectors? Countries?
Commission envisages just key industry sectors large point sources
Just CO2, perhaps other gases later
Chemical sector direct CO2 emissions out
Possible that countries could opt in other sectors, but still unclear
Compliance
€50 per tonne CO2 over-emission
Amount
less important than the fact that it makes non-compliance stupid
Vital therefore that ET applies to companies directly
Penalty must be automatic
Proposed Directive strong on this
Allocation
methodology
Auctioning vs. Grandfathering
Hybrids are possible
Principle of reward for early action/ penalty for late
Methodology to be decided at EU or member state level?
Not critical for environmental outcome
Project
mechanisms
Current proposal does not include project mechanisms
Industry very strongly advocates inclusion
NGOs demand higher environmental standards than under the Kyoto Protocol
Need to define crunch issues that could devalue ET
Need
a feel for trade-offs with other policies and measures, e.g. taxes