Uso de créditos internacionais.
Os créditos internacionais são instrumentos financeiros que representam uma tonelada de CO2 removida ou reduzida da atmosfera como resultado de um projeto de redução de emissões.
Atualmente, os créditos internacionais são gerados através de dois mecanismos criados no âmbito do Protocolo de Quioto. Esses são:
Mecanismo de Desenvolvimento Limpo (MDL) - permitindo que os países industrializados com um compromisso de redução de gases de efeito estufa (chamados países do Anexo 1) invistam em projetos que reduzam as emissões nos países em desenvolvimento como alternativa às reduções de emissões mais caras em seus próprios países Implementação Conjunta (JI) permitindo que os países industrializados atinjam parte de seus cortes necessários nas emissões de gases de efeito estufa, pagando por projetos que reduzam as emissões em outros países industrializados.
A implementação conjunta (JI) prevê a criação de unidades de redução de emissão (ERUs), enquanto o mecanismo de desenvolvimento limpo (MDL) prevê a criação de reduções de emissão certificadas (RCE).
O Acordo de Paris estabeleceu um novo mecanismo de mercado para substituir o MDL e a JI após 2020.
Uso de créditos internacionais na ETS da UE fase 3.
Os participantes no sistema de comércio de emissões da UE (EU ETS) podem utilizar os créditos internacionais do MDL e da JI para cumprir uma parte das suas obrigações ao abrigo do RCLE da UE até 2020, sujeito a restrições qualitativas e quantitativas.
Como o maior mercado de carbono do mundo, o EU ETS é atualmente a maior fonte de demanda de créditos internacionais, tornando-se o principal motor do mercado internacional de carbono e o principal fornecedor de investimentos em energia limpa em países em desenvolvimento e economias em transição.
Restrições qualitativas.
Os créditos são aceitos de todos os tipos de projetos, exceto.
Projetos de energia nuclear projetos de florestação ou reflorestamento (LULUCF) envolvendo a destruição de gases industriais (HFC-23 e N2O).
Os créditos de projetos hidrelétricos superiores a 20 MW de capacidade instalada só podem ser aceitos sob certas condições.
Além disso, é proibido o uso de novos créditos de projetos / RCE após 2018, a menos que o projeto esteja registrado em um dos países menos desenvolvidos (PMA).
Restrições quantitativas.
A legislação da UE especifica os limites máximos até que operadores no âmbito do RCLE da UE podem utilizar créditos internacionais elegíveis para conformidade na fase 2 e na fase 3.
Os direitos de crédito internacionais iniciais para cada participante no sistema para as fases 2 e 3 combinadas são determinados pelos Estados-Membros e depois aprovados pela Comissão em conformidade com a legislação pertinente.
Os participantes no ETS da UE utilizaram 1.058 milhões de toneladas de créditos internacionais na fase 2 (2008-2018). Os direitos não utilizados foram transferidos para a fase 3 (2018-2020).
Troca de créditos.
Desde a fase 3, as RCE e as URE deixaram de ser unidades de conformidade no RCLE da UE e devem ser trocadas por subsídios da UE. Os operadores devem solicitar o intercâmbio de RCEs e URE para subsídios até seu limite de direito individual estabelecido no registro.
Os créditos emitidos em matéria de redução das emissões no primeiro período de compromisso do Protocolo de Quioto (2008-2018) tiveram de ser trocados com as licenças da UE até 31 de Março de 2018.
Utilização de créditos internacionais no RCLE da UE após 2020.
A UE tem um objectivo de redução das emissões domésticas e actualmente não prevê a utilização contínua de créditos internacionais após 2020.
No entanto, é importante que o Acordo de Paris estabeleça disposições sobre a utilização de mercados para fornecer um quadro claro e robusto para vincular os mercados de carbono no futuro.
O artigo 6º do Acordo prevê:
regras contábeis que exigem que as partes apliquem regras contábeis robustas a abordagens que envolvam o uso de "resultados de mitigação transferidos internacionalmente" para contribuições determinadas a nível nacional. Essas regras permitirão a vinculação de esquemas, garantindo a integridade dos compromissos. um mecanismo de mitigação para substituir os mecanismos existentes (como o MDL e a JI) e providenciar a certificação das reduções de emissões para uso em relação a compromissos determinados a nível nacional. Isso poderia facilitar a participação nos mercados internacionais de carbono com base em uma contribuição definida para mitigação.
Essas disposições deverão ser implementadas através da implementação de decisões nos próximos anos. Ao aproveitar a experiência, eles precisarão ser adaptados ao novo contexto no qual todos os países estão fazendo contribuições, mas há uma variedade de tipos de contribuição.
Elegibilidade de créditos internacionais.
08/11/2018 - Regulamento (UE) no 1123/2018 da Comissão sobre a determinação dos direitos creditórios internacionais 07/06/2018 - Regulamento (UE) no 550/2018 da Comissão que determina certas restrições aplicáveis à utilização de créditos internacionais a partir de projectos que envolvam gases industriais Listas de crédito positivas e negativas Lista positiva geral Lista negativa geral Nota explicativa sobre as listas de crédito (47 kB) Regras harmonizadas relativas aos grandes projectos de represas hidrelétricas: 27/10/2004 - Directiva 2004/101 / CE do Parlamento Europeu e do Conselho que altera Directiva 2003/87 / CE relativa aos mecanismos de projecto do Protocolo de Quioto Orientações sobre a aplicação do artigo 11.º, alínea b), 6 da Directiva 2004/101 / CE (55 kB) Questionário de conformidade do projecto (75 kB)
Um novo mecanismo de mercado / reformando o CDM / JI.
Estudos.
Abra todas as perguntas.
Elegibilidade.
Posso usar créditos internacionais para conformidade na Fase 3 do EU ETS? Quais?
Sim, sujeito às restrições quantitativas e qualitativas. De fato, isso significa que, a partir de 1 de abril de 2018, somente os créditos internacionais de projetos registrados em um PMA pós 2018 são elegíveis para uso no ETS da UE, com exceção de créditos de projetos de energia nuclear, projetos de arborização ou reflorestamento (LULUCF) e projetos envolvendo destruição de gases industriais (HFC-23 e N2O). Os créditos de projetos hidrelétricos superiores a 20 MW de capacidade instalada só podem ser aceitos sob certas condições. Além disso, os créditos internacionais devem ser trocados por subsídios da UE antes de poderem ser utilizados para conformidade no RCLE-UE. Os créditos emitidos em relação à redução das emissões no primeiro período de compromisso do Protocolo de Quioto (2008-2018) tiveram que ser trocados com as licenças da UE no prazo de 31 de março de 2018.
O que acontece se um país perder o status de País Menos Desenvolvido (PMA)?
Um projeto em um PMA que está incluído na lista do LDC da ONU quando o projeto é registrado pela Diretoria Executiva do MDL pode continuar a gerar créditos até 2020, seja o que for que aconteça com a lista do LDC da ONU.
Como as restrições qualitativas são controladas e controladas?
As restrições qualitativas são controladas e controladas através da introdução de verificações automáticas no registro da União, com base nas informações referentes ao ID do projeto e ao identificador do período de compromisso dos créditos internacionais relevantes.
Existem propostas adicionais em consideração para aplicar restrição qualitativa a qualquer tipo de projeto específico?
A Directiva EU ETS prevê a introdução de restrições de utilização como parte das disposições de execução de créditos que, de outro modo, podem ser utilizados durante a Fase 3 do RCLE UE. Embora a legislação permita a aplicação de novas restrições de uso, a Comissão Europeia não está considerando restrições de uso adicionais para a Fase 3. No entanto, o objetivo doméstico da UE 2030 não prevê a continuação do uso de créditos internacionais após 2020.
Troca de créditos internacionais para subsídios.
Como funciona o intercâmbio?
O processo para troca é descrito detalhadamente no Regulamento do Registo (artigo 59-61). Um representante de conta pode solicitar uma troca de créditos internacionais elegíveis de uma conta de depósito de operador ou de uma conta de depósito de operador de aeronave no registro da União. O pedido de troca deve ser aprovado por uma segunda pessoa nomeada como representante de conta adicional ou, se nenhum representante de conta adicional for nomeado para a conta, por um representante de segunda conta diferente do que iniciou o pedido. O processo de troca é automatizado: depois que os créditos internacionais são transferidos para uma conta central, um número equivalente de subsídios será transferido automaticamente para a conta da qual a troca foi solicitada.
Um operador pode solicitar tantas trocas de créditos para subsídios quanto necessário, desde que não exceda o seu crédito internacional. Os quadros internacionais de direitos creditórios contêm os direitos calculados para cada instalação e operador de aeronave pelas estatísticas dos membros de acordo com o regulamento sobre os direitos de crédito internacionais. A troca pode ocorrer a qualquer momento durante o ano civil. Uma vez que os créditos são trocados por subsídios, eles não podem ser trocados de volta aos créditos.
Revisão para a fase 4 (2021-2030)
A Comissão Europeia apresentou, em Julho de 2018, uma proposta legislativa para rever o sistema de comércio de emissões da UE (EU ETS) para o período posterior a 2020.
Este é o primeiro passo para cumprir o objectivo da UE de reduzir as emissões de gases com efeito de estufa em, pelo menos, 40% no país até 2030, de acordo com o enquadramento da política climática e energética de 2030 e como parte da sua contribuição para o Acordo de Paris.
Aumentando o ritmo dos cortes de emissões.
Para atingir o objectivo de pelo menos 40% da UE, os sectores abrangidos pelo RCLE têm de reduzir as suas emissões em 43% em comparação com 2005.
Para este fim, o número total de licenças de emissão diminuirá a uma taxa anual de 2,2% a partir de 2021, em comparação com 1,74% atualmente.
Isso equivale a uma redução adicional de emissões nos setores abrangidos pelo ETS de cerca de 556 milhões de toneladas ao longo da década - equivalente às emissões anuais do Reino Unido.
Regras de vazamento de carbono melhoradas.
A proposta desenvolve regras previsíveis, robustas e justas para enfrentar o risco de vazamento de carbono.
Revisando o sistema de alocação gratuita para se concentrar em setores com maior risco de deslocalização de sua produção fora da UE - cerca de 50 setores no total Um número considerável de licenças gratuitas reservadas para instalações novas e em crescimento. Regras mais flexíveis para alinhar melhor a quantidade de licenças gratuitas com números de produção Atualização de benchmarks para refletir os avanços tecnológicos desde 2008.
Espera-se que cerca de 6,3 bilhões de licenças sejam alocados gratuitamente para as empresas no período 2021-2030.
Financiando a inovação com baixa emissão de carbono e a modernização do setor de energia.
Vários mecanismos de apoio serão estabelecidos para ajudar a indústria e os setores de energia a enfrentar os desafios de inovação e investimento da transição para uma economia de baixo carbono.
Estes incluem dois novos fundos:
Fundo de Inovação - alargando o apoio existente à demonstração de tecnologias inovadoras para a inovação inovadora no Fundo de Modernização da Indústria - facilitando os investimentos na modernização do sector da energia e dos sistemas energéticos mais amplos e reforçando a eficiência energética em 10 Estados-Membros com baixos rendimentos.
As licenças gratuitas também continuarão disponíveis para modernizar o setor de energia nesses Estados-Membros de baixa renda.
Entrada de partes interessadas.
As partes interessadas estiveram envolvidas em vários estágios no desenvolvimento desta proposta.
Foram realizadas extensas consultas em 2018, incluindo.
Na sequência destas consultas e da análise dos objectivos da política climática da UE para 2030, a Comissão procedeu a uma avaliação de impacto.
A proposta legislativa foi submetida ao Parlamento Europeu, ao Conselho, ao Comité Económico e Social e ao Comité das Regiões para uma análise aprofundada no âmbito do processo legislativo ordinário.
O público teve a possibilidade de fornecer feedback sobre a proposta legislativa após a sua adopção pela Comissão Europeia. Foram recebidos comentários de 85 partes interessadas e foi apresentado um resumo ao Parlamento Europeu e ao Conselho.
O Sistema de Comércio de Emissões da UE (EU ETS)
O Sistema de Comércio de Emissões da UE explicou.
O sistema de comércio de emissões da UE (EU ETS) é uma pedra angular da política da UE para combater as alterações climáticas e a sua ferramenta chave para reduzir as emissões de gases com efeito de estufa de forma rentável. É o primeiro mercado de carbono do mundo e continua sendo o maior.
opera em 31 países (todos os 28 países da UE, mais a Islândia, o Liechtenstein e a Noruega) limita as emissões de mais de 11 mil instalações de energia pesada (centrais eléctricas e instalações industriais) e as companhias aéreas que operam entre esses países cobre cerca de 45% dos gases de efeito estufa da UE emissões.
Para uma visão geral detalhada, veja:
Um sistema "cap and trade".
O EU ETS trabalha no princípio do "capital e do comércio".
Um limite é fixado na quantidade total de certos gases de efeito estufa que podem ser emitidos por instalações cobertas pelo sistema. A tampa é reduzida ao longo do tempo para que as emissões totais caírem.
Dentro do limite, as empresas recebem ou compram licenças de emissão que podem trocar entre si, conforme necessário. Eles também podem comprar quantidades limitadas de créditos internacionais de projetos de poupança de emissões em todo o mundo. O limite do número total de permissões disponíveis garante que eles tenham um valor.
Depois de cada ano, uma empresa deve entregar subsídios suficientes para cobrir todas as suas emissões, caso contrário multas pesadas são impostas. Se uma empresa reduz suas emissões, ela pode manter os subsídios de reposição para cobrir suas necessidades futuras, ou então vendê-las para outra empresa que não possui subsídios.
O comércio traz flexibilidade que garante que as emissões sejam reduzidas, quando menos custa. Um preço robusto do carbono também promove o investimento em tecnologias limpas e com baixas emissões de carbono.
Principais características da fase 3 (2018-2020)
O EU ETS está agora em sua terceira fase - significativamente diferente das fases 1 e 2.
As principais mudanças são:
Um único limite de emissões a nível da UE aplica-se ao sistema anterior de capitais nacionais. O leilão é o método padrão para a alocação de licenças (em vez da alocação gratuita), e as regras de alocação harmonizadas se aplicam às licenças ainda concedidas gratuitamente. Mais setores e Os gases incluíram 300 milhões de licenças reservadas na Reserva dos Novos Participantes para financiar a implantação de tecnologias inovadoras de energia renovável e captura e armazenamento de carbono através do programa NER 300.
Sectores e gases abrangidos.
O sistema abrange os seguintes setores e gases com foco em emissões que podem ser medidas, reportadas e verificadas com um alto nível de precisão:
dióxido de carbono (CO 2) da geração de energia e geração de energia setores industriais intensivos em energia, incluindo refinarias de petróleo, siderúrgicas e produção de ferro, alumínio, metais, cimento, lima, vidro, cerâmica, celulose, papel, papelão, ácidos e produtos químicos orgânicos a granel Óxido de nitrogênio da aviação comercial (N 2 O) a partir da produção de ácidos nítrico, adípico e glioxílico e perfluorocarbonos de glioxal (PFCs) da produção de alumínio.
A participação no ETS da UE é obrigatória para as empresas desses sectores, mas.
Em alguns sectores, apenas as instalações acima de um certo tamanho estão incluídas, certas pequenas instalações podem ser excluídas se os governos implementarem medidas fiscais ou outras que reduzam suas emissões por um montante equivalente no setor de aviação, até 2018 o ETS da UE se aplica apenas aos vôos entre aeroportos localizados no Espaço Económico Europeu (EEE).
Fornecer reduções de emissões.
O ETS da UE provou que colocar um preço sobre o carbono e negociá-lo pode funcionar. As emissões das instalações no esquema estão caindo como previsto - em cerca de 5% em relação ao início da fase 3 (2018) (ver figuras de 2018).
Em 2020, as emissões dos setores abrangidos pelo sistema serão 21% menores do que em 2005.
Desenvolvendo o mercado do carbono.
Criado em 2005, o EU ETS é o primeiro e maior sistema internacional de comércio de emissões do mundo, representando mais de três quartos do comércio internacional de carbono.
O ETS da UE também está inspirando o desenvolvimento do comércio de emissões em outros países e regiões. A UE pretende ligar o EU ETS a outros sistemas compatíveis.
A legislação principal do EU ETS.
30/04/2018 - Versão consolidada da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho 23/04/2009 - Directiva 2009/29 / CE do Parlamento Europeu e do Conselho que altera a Directiva 2003/87 / CE de modo a melhorar e alargar o regime de comércio de licenças de emissão de gases com efeito de estufa da Comunidade 19/11/2008 - Directiva 2008/101 / CE do Conselho o Parlamento Europeu e o Conselho que altera a Directiva 2003/87 / CE, de modo a incluir actividades de aviação no âmbito do regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade 27/10/2004 - Directiva 2004/101 / CE do Parlamento Europeu e do O Conselho que altera a Directiva 2003/87 / CE que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade, no que diz respeito aos mecanismos de projecto do Protocolo de Quioto 13/10/2003 - Directiva 2003/87 / CE do Parlamento Europeu e do Conselho ncil que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho.
Relatórios do mercado de carbono.
23/11/2017 - COM (2017) 693 - Relatório sobre o funcionamento do mercado europeu do carbono 01/02/2017 - COM (2017) 48 - Relatório sobre o funcionamento do mercado europeu do carbono 18/11/2018 - COM 2018) 576 - Relatório sobre o funcionamento do mercado europeu do carbono 14/11/2018 - COM (2018) 652 - O estado do mercado europeu do carbono em 2018.
Revisão do RCLE da UE para a fase 3.
04/02/2018 - Conclusões do Conselho Europeu de 4 de fevereiro de 2018 (ver conclusões 23 e 24) 18/03/2018 - Orientações sobre a interpretação do Anexo I da Diretiva EET da UE (exceto atividades de aviação) 18/03/2018 - Orientação documento para identificar geradores de eletricidade 06/04/2009 - Comunicado de imprensa do Conselho sobre a adoção do pacote de clima e energia 12/12/2008 - Conclusões da Presidência do Conselho Europeu (11 e 12 de dezembro de 2008) 12/12/2008 - Conselho Europeu Declaração sobre a utilização das receitas de leilões 23/01/2008 - Proposta de directiva do Parlamento Europeu e do Conselho que altera a Directiva 2003/87 / CE, a fim de melhorar e alargar o sistema de comércio de licenças de emissão de gases com efeito de estufa da Comunidade 23 / 01/2008 - Documento de trabalho dos serviços da Comissão - Documento de acompanhamento da Proposta de directiva do Parlamento Europeu e do Conselho que altera a Directiva 2003/87 / CE, a fim de melhorar e alargar o sistema de comércio de licenças de emissão de gases com efeito de estufa da UE - Avaliação de impacto.
Implementação.
04/07/2018 - Projecto de regulamento alterado sobre a determinação dos direitos creditórios internacionais 05/06/2018 - Projecto de regulamento relativo à determinação dos direitos creditórios internacionais 05/05/2018 Regulamento (UE) n. º 389/2018 da Comissão, de 2 de Maio de 2018, que estabelece um cadastro da União nos termos do da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho, decisões n. ° 280/2004 / CE e 406/2009 / CE do Parlamento Europeu e do Conselho e que revoga os Regulamentos (UE) n. ° 920/2018 da Comissão e N. º 1193/2018 Texto relevante para efeitos do EEE 18/11/2018 - Regulamento da Comissão que estabelece um Registo da União para o período de negociação com início em 1 de Janeiro de 2018 e períodos de negociação subsequentes do regime de comércio de emissões da União nos termos da Directiva 2003/87 / CE do o Parlamento Europeu e do Conselho e a Decisão 280/2004 / CE do Parlamento Europeu e do Conselho e que altera os Regulamentos (CE) n. º 2216/2004 e (UE) n. º 920/2018 - ainda não publicado no Jornal Oficial 07 / 10/2018 - Regulamento da Comissão (UE) n. º 920/2018 para um sistema de registos normalizado e seguro, nos termos da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho e da Decisão n. º 280/2004 / CE do Parlamento Europeu e do Conselho - versão não incluindo as alterações introduzidas pelo Regulamento de 18 de Novembro de 2018 08/10/2008 - Regulamento (CE) n. º 994/2008 da Comissão para um sistema de registos normalizado e seguro, nos termos da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho e Decisão no 280/2004 / CE do Parlamento Europeu e do Conselho - versão aplicável até 31 de Dezembro de 2018 26/10/2007 - Decisão do Comité Misto do EEE n. ° 146/2007 que liga o RCLE UE à Noruega, à Islândia e ao Liechtenstein 13/11 / 2006 - Decisão 2006/780 / CE da Comissão relativa à prevenção da contenção dupla de reduções das emissões de gases com efeito de estufa no âmbito do regime comunitário de comércio de licenças de emissão para as actividades de projectos no âmbito do Protocolo de Quioto nos termos da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho (n documentado no documento C (2006) 5362) 21/12/2004 - Versão consolidada do Regulamento (CE) n. º 2216/2004 da Comissão relativa a um sistema de registos normalizado e seguro, alterado pelo Regulamento (CE) n. º 916/2007 da Comissão, de 31 de Julho 2007, Regulamento (CE) n. º 994/2008 da Comissão, de 8 de Outubro de 2008, e Regulamento (UE) n. º 920/2018 da Comissão, de 7 de Outubro de 2018 - versão não incluída alterações introduzidas pelo Regulamento de 18 de Novembro de 2018.
Aplicação do IVA.
História legislativa da Directiva 2003/87 / CE.
Trabalho anterior à proposta da Comissão.
08/02/2000 - COM (2000) 87 - Livro Verde sobre o comércio de emissões de gases com efeito de estufa na União Europeia Mandato e resultados do Grupo de Trabalho 1 do ECCP: Mecanismos flexíveis 04/09/2001 - Resumo do Presidente da reunião da consulta das partes interessadas (com Indústria e ONGs ambientais) 19/05/1999 - COM (1999) 230 - Preparação para a implementação do Protocolo de Quioto 03/06/1998 - COM (1998) 353 - Alterações climáticas - Rumo a uma estratégia pós-Quioto da UE Âmbito do ETS da UE : 07/2007 - Instalações pequenas no sistema de comércio de licenças de emissão da UE 10/2006 - Inclusão de atividades e gases adicionais no sistema de comércio de licenças da UE Mais harmonização e maior previsibilidade: 12/2006 - A abordagem para novos operadores e fechamentos 10/2006 - Leilão das licenças de emissão de CO2 no RCLE-UE 10/2006 - Harmonização das metodologias de atribuição 12/2006 - Relatório sobre a competitividade internacional Grupo de trabalho do ECCP sobre o comércio de emissões sobre a revisão do RCLE da UE 15/06/2007 - Relatório final do 4º mee sobre a ligação com os sistemas de comércio de emissões em países terceiros 22/05/2007 - Relatório final da 3ª reunião sobre mais harmonização e previsibilidade aumentada 26/04/2007 - Relatório final da 2ª reunião sobre conformidade robusta e execução 09/03/2007 - Relatório final da 1ª reunião sobre o alcance da directiva.
Proposta da Comissão de outubro de 2001.
22/01/2002 - Documento não oficial sobre sinergias entre a proposta de comércio de emissões da CE (COM (2001) 581) e a Directiva IPPC 23/10/2001 - COM (2001) 581 - Proposta de directiva-quadro relativa ao comércio de emissões de gases com efeito de estufa dentro da Comunidade Europeia.
Reação da Comissão à leitura da proposta no Conselho e no Parlamento (incluindo a posição comum do Conselho)
18/07/2003 - COM (2003) 463 - Parecer da Comissão sobre as alterações do Parlamento Europeu à posição comum do Conselho respeitante à proposta de directiva do Parlamento Europeu e do Conselho 20/06/2003 - COM (2003) 364 - Comunicação da Comissão ao Parlamento Europeu relativa à posição comum do Conselho sobre a adopção de uma directiva que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho 18/03/2003 - Posição comum (CE ) N. º 28/2003 - Posição comum do Conselho sobre a adopção de uma directiva que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho 27/11/2002 - COM (2002) 680 - Proposta alterada para uma directiva do Parlamento Europeu e do Conselho que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho Faq.
Abra todas as perguntas.
Perguntas e Respostas sobre o Sistema de Comércio de Emissões revisado (dezembro de 2008)
Qual é o objetivo do comércio de emissões?
O objectivo do Sistema de Comércio de Emissões da UE (EU ETS) é ajudar os Estados-Membros da UE a cumprir os seus compromissos de limitar ou reduzir as emissões de gases com efeito de estufa de forma rentável. Permitir que as empresas participantes compram ou vendam permissões de emissão significa que os cortes de emissão podem ser alcançados ao menos custo.
O RCLE da UE é a pedra angular da estratégia da UE para lutar contra as alterações climáticas. É o primeiro sistema de comércio internacional de emissões de CO 2 no mundo e está em operação desde 2005. A partir de janeiro de 2008, aplica-se não apenas aos 27 Estados-Membros da UE, mas também aos outros três membros da Área Econômica Européia - Noruega, Islândia e Liechtenstein. Atualmente, abrange mais de 10.000 instalações nos setores de energia e industrial, que são coletivamente responsáveis por cerca de metade das emissões de CO 2 da UE e 40% de suas emissões totais de gases de efeito estufa. Uma alteração à Directiva ETS da UE, acordada em Julho de 2008, trará o sector da aviação para o sistema a partir de 2018.
Como funciona o comércio de emissões?
O ETS da UE é um sistema de "capitalização e comércio", ou seja, indica que ele limita o nível geral de emissões permitido, mas, dentro desse limite, permite que os participantes no sistema compram e vendam as licenças conforme exigirem. Essas provisões são a "moeda" comercial comum no coração do sistema. Um subsídio dá ao titular o direito de emitir uma tonelada de CO 2 ou a quantidade equivalente de outro gás com efeito de estufa. O limite do número total de licenças cria escassez no mercado.
No primeiro e segundo período de negociação ao abrigo do regime, os Estados-Membros tiveram de elaborar planos nacionais de atribuição (NAPs) que determinassem o seu nível total de emissões de ETS e quantos subsídios de emissão cada instalação em seu país recebe. No final de cada ano, as instalações devem render subsídios equivalentes às suas emissões. As empresas que mantêm suas emissões abaixo do nível de suas licenças podem vender seus excedentes de licenças. Aqueles que enfrentam dificuldade em manter suas emissões de acordo com suas licenças têm a opção de tomar medidas para reduzir suas próprias emissões - como investir em tecnologia mais eficiente ou usar fontes de energia menos intensivas em carbono - ou comprar os subsídios extras que precisam no mercado , Ou uma combinação de ambos. Essas escolhas provavelmente serão determinadas por custos relativos. Desta forma, as emissões são reduzidas sempre que é mais rentável fazê-lo.
Há quanto tempo o EU ETS está operando?
O ETS da UE foi lançado em 1 de Janeiro de 2005. O primeiro período de negociação foi de três anos até o final de 2007 e foi uma fase de "aprendizagem por fazer" para se preparar para o segundo período de negociação crucial. O segundo período de negociação começou em 1 de Janeiro de 2008 e é executado por cinco anos até o final de 2018. A importância do segundo período de negociação decorre do facto de coincidir com o primeiro período de compromisso do Protocolo de Quioto, durante o qual a UE e outros os países industrializados devem atingir seus objetivos para limitar ou reduzir as emissões de gases de efeito estufa. Para o segundo período comercial, as emissões do ETS da UE limitaram-se a cerca de 6,5% abaixo dos níveis de 2005, a fim de garantir que a UE como um todo e os Estados-Membros individualmente cumprem os compromissos de Quioto.
Quais são as principais lições aprendidas com a experiência até agora?
O EU ETS colocou um preço sobre o carbono e provou que o comércio de emissões de gases de efeito estufa funciona. O primeiro período comercial estabeleceu com sucesso a livre negociação de licenças de emissão em toda a UE, implementou a infra-estrutura necessária e desenvolveu um mercado de carbono dinâmico. O benefício ambiental da primeira fase pode ser limitado devido à alocação excessiva de subsídios em alguns Estados-Membros e em alguns setores, devido principalmente à dependência das projeções de emissões antes que os dados de emissão verificados estejam disponíveis no âmbito do RCLE da UE. Quando a publicação de dados de emissões verificadas para 2005 destacou essa "sobreavaliação", o mercado reagiu como seria esperado pela redução do preço de mercado das licenças. A disponibilidade de dados de emissões verificadas permitiu à Comissão garantir que o limite das dotações nacionais na segunda fase se estabeleça em um nível que resulte em reduções reais de emissões.
Além de sublinhar a necessidade de dados verificados, a experiência até agora demonstrou que uma maior harmonização dentro do RCLE da UE é imperativa para garantir que a UE alcance os seus objetivos de redução de emissões pelo menos com custos e com distorções competitivas mínimas. A necessidade de mais harmonização é mais clara em relação à forma como o limite das licenças de emissão globais é definido.
Os dois primeiros períodos de negociação também mostram que métodos nacionais amplamente diferentes para alocação de licenças para instalações ameaçam uma concorrência leal no mercado interno. Além disso, é necessária uma maior harmonização, esclarecimento e aperfeiçoamento no que se refere ao alcance do sistema, ao acesso a créditos de projetos de redução de emissões fora da UE, as condições para vincular o ETS da UE aos sistemas de comércio de emissões em outros lugares e o monitoramento, verificação e requisitos de relatórios.
Quais são as principais alterações ao ETS da UE e a partir de quando serão aplicadas?
As alterações de design acordadas serão aplicadas a partir do terceiro período de negociação, ou seja, janeiro de 2018. Enquanto os trabalhos preparatórios serão iniciados imediatamente, as regras aplicáveis não mudarão até janeiro de 2018 para garantir a manutenção da estabilidade regulatória.
O EU ETS no terceiro período será um sistema mais eficiente, mais harmonizado e mais justo.
O aumento da eficiência é alcançado por meio de um período de negociação mais longo (8 anos em vez de 5 anos), um limite de emissões robusto e anualmente decrescente (redução de 21% em 2020 em relação a 2005) e um aumento substancial da quantidade de leilão (de menos de 4% na fase 2 para mais da metade na fase 3).
Mais uma harmonização foi acordada em muitas áreas, inclusive no que se refere à definição de limite (um limite da UE em vez dos limites nacionais nas fases 1 e 2) e as regras para a alocação livre de transição.
A equidade do sistema foi substancialmente aumentada pela mudança para as regras de atribuição gratuita da UE para as instalações industriais e pela introdução de um mecanismo de redistribuição que permite aos novos Estados-Membros licitar mais subsídios.
Como o texto final se compara à proposta inicial da Comissão?
Os objectivos de clima e energia acordados pelo Conselho Europeu da Primavera de 2007 foram mantidos e a arquitectura geral da proposta da Comissão sobre o RCLE da UE permanece intacta. Ou seja, haverá um limite máximo da UE sobre o número de licenças de emissão e este limite diminuirá anualmente ao longo de uma linha de tendência linear, que continuará para além do final do terceiro período de negociação (2018-2020). A principal diferença, em comparação com a proposta, é que o leilão de licenças será gradualmente mais lento.
Quais são as principais mudanças em relação à proposta da Comissão?
Em resumo, as principais mudanças que foram feitas na proposta são as seguintes:
Alguns Estados-Membros podem beneficiar de uma derrogação facultativa e temporária da regra segundo a qual as licenças de emissão devem ser atribuídas gratuitamente aos geradores de electricidade a partir de 2018. Esta opção de derrogação está disponível para os Estados-Membros que cumpram certas condições relacionadas com a interconectividade de sua eletricidade grade, participação de um único combustível fóssil na produção de eletricidade e PIB / habitação em relação à média da UE-27. In addition, the amount of free allowances that a Member State can allocate to power plants is limited to 70% of carbon dioxide emissions of relevant plants in phase 1 and declines in the years thereafter. Furthermore free allocation in phase 3 can only be given to power plants that are operational or under construction no later than end 2008. See reply to question 15 below. There will be more details in the Directive on the criteria to be used to determine the sectors or sub-sectors deemed to be exposed to a significant risk of carbon leakage , and an earlier date of publication of the Commission's list of such sectors (31 December 2009). Moreover, subject to review when a satisfactory international agreement is reached, installations in all exposed industries will receive 100% free allowances to the extent that they use the most efficient technology. The free allocation to industry is limited to the share of these industries' emissions in total emissions in 2005 to 2007. The total number of allowances allocated for free to installations in industry sectors will decline annually in line with the decline of the emissions cap. Member States may also compensate certain installations for CO 2 costs passed on in electricity prices if the CO 2 costs might otherwise expose them to the risk of carbon leakage. The Commission has undertaken to modify the Community guidelines on state aid for environmental protection in this respect. See reply to question 15 below. The level of auctioning of allowances for non-exposed industry will increase in a linear manner as proposed by the Commission, but rather than reaching 100% by 2020 it will reach 70%, with a view to reaching 100% by 2027. As foreseen in the Commission's proposal, 10% of the allowances for auctioning will be redistributed from Member States with high per capita income to those with low per capita income in order to strengthen the financial capacity of the latter to invest in climate friendly technologies. A provision has been added for another redistributive mechanism of 2% of auctioned allowances to take into account Member States which in 2005 had achieved a reduction of at least 20% in greenhouse gas emissions compared with the reference year set by the Kyoto Protocol. The share of auctioning revenues that Member States are recommended to use to fight and adapt to climate change mainly within the EU, but also in developing countries, is raised from 20% to 50%. The text provides for a top-up to the proposed permitted level of use of JI/CDM credits in the 20% scenario for existing operators that received the lowest budgets to import and use such credits in relation to allocations and access to credits in the period 2008-2018. New sectors, new entrants in the periods 2018-2020 and 2008-2018 will also be able to use credits. The total amount of credits that may be used will, however, not exceed 50% of the reduction between 2008 and 2020. Based on a stricter emissions reduction in the context of a satisfactory international agreement, the Commission could allow additional access to CERs and ERUs for operators in the Community scheme. See reply to question 20 below. The proceeds from auctioning 300 million allowances from the new entrants reserve will be used to support up to 12 carbon capture and storage demonstration projects and projects demonstrating innovative renewable energy technologies. A number of conditions are attached to this financing mechanism. See reply to question 30 below. The possibility to opt-out small combustion installations provided they are subject to equivalent measures has been extended to cover all small installations irrespective of activity, the emission threshold has been raised from 10,000 to 25,000 tonnes of CO 2 per year, and the capacity threshold that combustion installations have to fulfil in addition has been raised from 25MW to 35MW. With these increased thresholds, the share of covered emissions that would potentially be excluded from the emissions trading system becomes significant, and consequently a provision has been added to allow for a corresponding reduction of the EU-wide cap on allowances.
Will there still be national allocation plans (NAPs)?
No. In their NAPs for the first (2005-2007) and the second (2008-2018) trading periods, Member States determined the total quantity of allowances to be issued – the cap – and how these would be allocated to the installations concerned. This approach has generated significant differences in allocation rules, creating an incentive for each Member State to favour its own industry, and has led to great complexity.
As from the third trading period, there will be a single EU-wide cap and allowances will be allocated on the basis of harmonised rules. National allocation plans will therefore not be needed any more.
How will the emission cap in phase 3 be determined?
The rules for calculating the EU-wide cap are as follows:
From 2018, the total number of allowances will decrease annually in a linear manner. The starting point of this line is the average total quantity of allowances (phase 2 cap) to be issued by Member States for the 2008-12 period, adjusted to reflect the broadened scope of the system from 2018 as well as any small installations that Member States have chosen to exclude. The linear factor by which the annual amount shall decrease is 1.74% in relation to the phase 2 cap.
The starting point for determining the linear factor of 1.74% is the 20% overall reduction of greenhouse gases compared to 1990, which is equivalent to a 14% reduction compared to 2005. However, a larger reduction is required of the EU ETS because it is cheaper to reduce emissions in the ETS sectors. The division that minimises overall reduction cost amounts to:
a 21% reduction in EU ETS sector emissions compared to 2005 by 2020; a reduction of around 10% compared to 2005 for the sectors that are not covered by the EU ETS.
The 21% reduction in 2020 results in an ETS cap in 2020 of a maximum of 1720 million allowances and implies an average phase 3 cap (2018 to 2020) of some 1846 million allowances and a reduction of 11% compared to the phase 2 cap.
All absolute figures indicated correspond to the coverage at the start of the second trading period and therefore don't take account of aviation, which will be added in 2018, and other sectors that will be added in phase 3.
The final figures for the annual emission caps in phase 3 will be determined and published by the Commission by 30 September 2018.
How will the emission cap beyond phase 3 be determined?
The linear factor of 1.74% used to determine the phase 3 cap will continue to apply beyond the end of the trading period in 2020 and will determine the cap for the fourth trading period (2021 to 2028) and beyond. It may be revised by 2025 at the latest. In fact, significant emission reductions of 60%-80% compared to 1990 will be necessary by 2050 to reach the strategic objective of limiting the global average temperature increase to not more than 2°C above pre-industrial levels.
An EU-wide cap on emission allowances will be determined for each individual year. Will this reduce flexibility for the installations concerned?
No, flexibility for installations will not be reduced at all. In any year, the allowances to be auctioned and distributed have to be issued by the competent authorities by 28 February. The last date for operators to surrender allowances is 30 April of the year following the year in which the emissions took place. So operators receive allowances for the current year before they have to surrender allowances to cover their emissions for the previous year. Allowances remain valid throughout the trading period and any surplus allowances can now be "banked" for use in subsequent trading periods. In this respect nothing will change.
The system will remain based on trading periods, but the third trading period will last eight years, from 2018 to 2020, as opposed to five years for the second phase from 2008 to 2018.
For the second trading period Member States generally decided to allocate equal total quantities of allowances for each year. The linear decrease each year from 2018 will correspond better to expected emissions trends over the period.
What are the tentative annual ETS cap figures for the period 2018 to 2020?
The tentative annual cap figures are as follows:
These figures are based on the scope of the ETS as applicable in phase 2 (2008 to 2018), and the Commission's decisions on the national allocation plans for phase 2, amounting to 2083 million tonnes. These figures will be adjusted for several reasons. Firstly, adjustment will be made to take into account the extensions of the scope in phase 2, provided that Member States substantiate and verify their emissions accruing from these extensions. Secondly, adjustment will be made with respect to further extensions of the scope of the ETS in the third trading period. Thirdly, any opt-out of small installations will lead to a corresponding reduction of the cap. Fourthly, the figures do not take account of the inclusion of aviation, nor of emissions from Norway, Iceland and Liechtenstein.
Will allowances still be allocated for free?
Sim. Industrial installations will receive transitional free allocation. And in those Member States that are eligible for the optional derogation, power plants may, if the Member State so decides, also receive free allowances. It is estimated that at least half of the available allowances as of 2018 will be auctioned.
While the great majority of allowances has been allocated free of charge to installations in the first and second trading periods, the Commission proposed that auctioning of allowances should become the basic principle for allocation. This is because auctioning best ensures the efficiency, transparency and simplicity of the system and creates the greatest incentive for investments in a low-carbon economy. It best complies with the “polluter pays principle” and avoids giving windfall profits to certain sectors that have passed on the notional cost of allowances to their customers despite receiving them for free.
How will allowances be handed out for free?
By 31 December 2018, the Commission will adopt EU-wide rules, which will be developed under a committee procedure (“Comitology”). These rules will fully harmonise allocations and thus all firms across the EU with the same or similar activities will be subject to the same rules. The rules will ensure as far as possible that the allocation promotes carbon-efficient technologies. The adopted rules provide that to the extent feasible, allocations are to be based on so-called benchmarks, e. g. a number of allowances per quantity of historical output. Such rules reward operators that have taken early action to reduce greenhouse gases, better reflect the polluter pays principle and give stronger incentives to reduce emissions, as allocations would no longer depend on historical emissions. All allocations are to be determined before the start of the third trading period and no ex-post adjustments will be allowed.
Which installations will receive free allocations and which will not? How will negative impacts on competitiveness be avoided?
Taking into account their ability to pass on the increased cost of emission allowances, full auctioning is the rule from 2018 onwards for electricity generators. However, Member States who fulfil certain conditions relating to their interconnectivity or their share of fossil fuels in electricity production and GDP per capita in relation to the EU-27 average, have the option to temporarily deviate from this rule with respect to existing power plants. The auctioning rate in 2018 is to be at least 30% in relation to emissions in the first period and has to increase progressively to 100% no later than 2020. If the option is applied, the Member State has to undertake to invest in improving and upgrading of the infrastructure, in clean technologies and in diversification of their energy mix and sources of supply for an amount to the extent possible equal to the market value of the free allocation.
In other sectors, allocations for free will be phased out progressively from 2018, with Member States agreeing to start at 20% auctioning in 2018, increasing to 70% auctioning in 2020 with a view to reaching 100% in 2027. However, an exception will be made for installations in sectors that are found to be exposed to a significant risk of 'carbon leakage'. This risk could occur if the EU ETS increased production costs so much that companies decided to relocate production to areas outside the EU that are not subject to comparable emission constraints. The Commission will determine the sectors concerned by 31 December 2009. To do this, the Commission will assess inter alia whether the direct and indirect additional production costs induced by the implementation of the ETS Directive as a proportion of gross value added exceed 5% and whether the total value of its exports and imports divided by the total value of its turnover and imports exceeds 10%. If the result for either of these criteria exceeds 30%, the sector would also be considered to be exposed to a significant risk of carbon leakage. Installations in these sectors would receive 100% of their share in the annually declining total quantity of allowances for free. The share of these industries' emissions is determined in relation to total ETS emissions in 2005 to 2007.
CO 2 costs passed on in electricity prices could also expose certain installations to the risk of carbon leakage. In order to avoid such risk, Member States may grant a compensation with respect to such costs. In the absence of an international agreement on climate change, the Commission has undertaken to modify the Community guidelines on state aid for environmental protection in this respect.
Under an international agreement which ensures that competitors in other parts of the world bear a comparable cost, the risk of carbon leakage may well be negligible. Therefore, by 30 June 2018, the Commission will carry out an in-depth assessment of the situation of energy-intensive industry and the risk of carbon leakage, in the light of the outcome of the international negotiations and also taking into account any binding sectoral agreements that may have been concluded. The report will be accompanied by any proposals considered appropriate. These could potentially include maintaining or adjusting the proportion of allowances received free of charge to industrial installations that are particularly exposed to global competition or including importers of the products concerned in the ETS.
Who will organise the auctions and how will they be carried out?
Member States will be responsible for ensuring that the allowances given to them are auctioned. Each Member State has to decide whether it wants to develop its own auctioning infrastructure and platform or whether it wants to cooperate with other Member States to develop regional or EU-wide solutions. The distribution of the auctioning rights to Member States is largely based on emissions in phase 1 of the EU ETS, but a part of the rights will be redistributed from richer Member States to poorer ones to take account of the lower GDP per head and higher prospects for growth and emissions among the latter. It is still the case that 10% of the rights to auction allowances will be redistributed from Member States with high per capita income to those with low per capita income in order to strengthen the financial capacity of the latter to invest in climate friendly technologies. However, a provision has been added for another redistributive mechanism of 2% to take into account Member States which in 2005 had achieved a reduction of at least 20% in greenhouse gas emissions compared with the reference year set by the Kyoto Protocol. Nine Member States benefit from this provision.
Any auctioning must respect the rules of the internal market and must therefore be open to any potential buyer under non-discriminatory conditions. By 30 June 2018, the Commission will adopt a Regulation (through the comitology procedure) that will provide the appropriate rules and conditions for ensuring efficient, coordinated auctions without disturbing the allowance market.
How many allowances will each Member State auction and how is this amount determined?
All allowances which are not allocated free of charge will be auctioned. A total of 88% of allowances to be auctioned by each Member State is distributed on the basis of the Member State's share of historic emissions under the EU ETS. For purposes of solidarity and growth, 12% of the total quantity is distributed in a way that takes into account GDP per capita and the achievements under the Kyoto-Protocol.
Which sectors and gases are covered as of 2018?
The ETS covers installations performing specified activities. Since the start it has covered, above certain capacity thresholds, power stations and other combustion plants, oil refineries, coke ovens, iron and steel plants and factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. As for greenhouse gases, it currently only covers carbon dioxide emissions, with the exception of the Netherlands, which has opted in emissions from nitrous oxide.
As from 2018, the scope of the ETS will be extended to also include other sectors and greenhouse gases. CO 2 emissions from petrochemicals, ammonia and aluminium will be included, as will N2O emissions from the production of nitric, adipic and glyocalic acid production and perfluorocarbons from the aluminium sector. The capture, transport and geological storage of all greenhouse gas emissions will also be covered. These sectors will receive allowances free of charge according to EU-wide rules, in the same way as other industrial sectors already covered.
As of 2018, aviation will also be included in the EU ETS.
Will small installations be excluded from the scope?
A large number of installations emitting relatively low amounts of CO 2 are currently covered by the ETS and concerns have been raised over the cost-effectiveness of their inclusion. As from 2018, Member States will be allowed to remove these installations from the ETS under certain conditions. The installations concerned are those whose reported emissions were lower than 25 000 tonnes of CO 2 equivalent in each of the 3 years preceding the year of application. For combustion installations, an additional capacity threshold of 35MW applies. In addition Member States are given the possibility to exclude installations operated by hospitals. The installations may be excluded from the ETS only if they will be covered by measures that will achieve an equivalent contribution to emission reductions.
How many emission credits from third countries will be allowed?
For the second trading period, Member States allowed their operators to use significant quantities of credits generated by emission-saving projects undertaken in third countries to cover part of their emissions in the same way as they use ETS allowances. The revised Directive extends the rights to use these credits for the third trading period and allows a limited additional quantity to be used in such a way that the overall use of credits is limited to 50% of the EU-wide reductions over the period 2008-2020. For existing installations, and excluding new sectors within the scope, this will represent a total level of access of approximately 1.6 billion credits over the period 2008-2020. In practice, this means that existing operators will be able to use credits up to a minimum of 11% of their allocation during the period 2008-2018, while a top-up is foreseen for operators with the lowest sum of free allocation and allowed use of credits in the 2008-2018 period. New sectors and new entrants in the third trading period will have a guaranteed minimum access of 4.5% of their verified emissions during the period 2018-2020. For the aviation sector, the minimum access will be 1.5%. The precise percentages will be determined through comitology.
These projects must be officially recognised under the Kyoto Protocol’s Joint Implementation (JI) mechanism (covering projects carried out in countries with an emissions reduction target under the Protocol) or Clean Development Mechanism (CDM) (for projects undertaken in developing countries). Credits from JI projects are known as Emission Reduction Units (ERUs) while those from CDM projects are called Certified Emission Reductions (CERs).
On the quality side only credits from project types eligible for use in the EU trading scheme during the period 2008-2018 will be accepted in the period 2018-2020. Furthermore, from 1 January 2018 measures may be applied to restrict the use of specific credits from project types. Such a quality control mechanism is needed to assure the environmental and economic integrity of future project types.
To create greater flexibility, and in the absence of an international agreement being concluded by 31 December 2009, credits could be used in accordance with agreements concluded with third countries. The use of these credits should however not increase the overall number beyond 50% of the required reductions. Such agreements would not be required for new projects that started from 2018 onwards in Least Developed Countries.
Based on a stricter emissions reduction in the context of a satisfactory international agreement , additional access to credits could be allowed, as well as the use of additional types of project credits or other mechanisms created under the international agreement. However, once an international agreement has been reached, from January 2018 onwards only credits from projects in third countries that have ratified the agreement or from additional types of project approved by the Commission will be eligible for use in the Community scheme.
Will it be possible to use credits from carbon ‘sinks’ like forests?
No. Before making its proposal, the Commission analysed the possibility of allowing credits from certain types of land use, land-use change and forestry (‘LULUCF’) projects which absorb carbon from the atmosphere. It concluded that doing so could undermine the environmental integrity of the EU ETS, for the following reasons:
LULUCF projects cannot physically deliver permanent emissions reductions. Insufficient solutions have been developed to deal with the uncertainties, non-permanence of carbon storage and potential emissions 'leakage' problems arising from such projects. The temporary and reversible nature of such activities would pose considerable risks in a company-based trading system and impose great liability risks on Member States. The inclusion of LULUCF projects in the ETS would require a quality of monitoring and reporting comparable to the monitoring and reporting of emissions from installations currently covered by the system. This is not available at present and is likely to incur costs which would substantially reduce the attractiveness of including such projects. The simplicity, transparency and predictability of the ETS would be considerably reduced. Moreover, the sheer quantity of potential credits entering the system could undermine the functioning of the carbon market unless their role were limited, in which case their potential benefits would become marginal.
The Commission, the Council and the European Parliament believe that global deforestation can be better addressed through other instruments. For example, using part of the proceeds from auctioning allowances in the EU ETS could generate additional means to invest in LULUCF activities both inside and outside the EU, and may provide a model for future expansion. In this respect the Commission has proposed to set up the Global Forest Carbon Mechanism that would be a performance-based system for financing reductions in deforestation levels in developing countries.
Besides those already mentioned, are there other credits that could be used in the revised ETS?
Sim. Projects in EU Member States which reduce greenhouse gas emissions not covered by the ETS could issue credits. These Community projects would need to be managed according to common EU provisions set up by the Commission in order to be tradable throughout the system. Such provisions would be adopted only for projects that cannot be realised through inclusion in the ETS. The provisions will seek to ensure that credits from Community projects do not result in double-counting of emission reductions nor impede other policy measures to reduce emissions not covered by the ETS, and that they are based on simple, easily administered rules.
Are there measures in place to ensure that the price of allowances won't fall sharply during the third trading period?
A stable and predictable regulatory framework is vital for market stability. The revised Directive makes the regulatory framework as predictable as possible in order to boost stability and rule out policy-induced volatility. Important elements in this respect are the determination of the cap on emissions in the Directive well in advance of the start of the trading period, a linear reduction factor for the cap on emissions which continues to apply also beyond 2020 and the extension of the trading period from 5 to 8 years. The sharp fall in the allowance price during the first trading period was due to over-allocation of allowances which could not be “banked” for use in the second trading period. For the second and subsequent trading periods, Member States are obliged to allow the banking of allowances from one period to the next and therefore the end of one trading period is not expected to have any impact on the price.
A new provision will apply as of 2018 in case of excessive price fluctuations in the allowance market. If, for more than six consecutive months, the allowance price is more than three times the average price of allowances during the two preceding years on the European market, the Commission will convene a meeting with Member States. If it is found that the price evolution does not correspond to market fundamentals, the Commission may either allow Member States to bring forward the auctioning of a part of the quantity to be auctioned, or allow them to auction up to 25% of the remaining allowances in the new entrant reserve.
The price of allowances is determined by supply and demand and reflects fundamental factors like economic growth, fuel prices, rainfall and wind (availability of renewable energy) and temperature (demand for heating and cooling) etc. A degree of uncertainty is inevitable for such factors. The markets, however, allow participants to hedge the risks that may result from changes in allowances prices.
Are there any provisions for linking the EU ETS to other emissions trading systems?
Sim. One of the key means to reduce emissions more cost-effectively is to enhance and further develop the global carbon market. The Commission sees the EU ETS as an important building block for the development of a global network of emission trading systems. Linking other national or regional cap-and-trade emissions trading systems to the EU ETS can create a bigger market, potentially lowering the aggregate cost of reducing greenhouse gas emissions. The increased liquidity and reduced price volatility that this would entail would improve the functioning of markets for emission allowances. This may lead to a global network of trading systems in which participants, including legal entities, can buy emission allowances to fulfil their respective reduction commitments.
The EU is keen to work with the new US Administration to build a transatlantic and indeed global carbon market to act as the motor of a concerted international push to combat climate change.
While the original Directive allows for linking the EU ETS with other industrialised countries that have ratified the Kyoto Protocol, the new rules allow for linking with any country or administrative entity (such as a state or group of states under a federal system) which has established a compatible mandatory cap-and-trade system whose design elements would not undermine the environmental integrity of the EU ETS. Where such systems cap absolute emissions, there would be mutual recognition of allowances issued by them and the EU ETS.
What is a Community registry and how does it work?
Registries are standardised electronic databases ensuring the accurate accounting of the issuance, holding, transfer and cancellation of emission allowances. As a signatory to the Kyoto Protocol in its own right, the Community is also obliged to maintain a registry. This is the Community Registry, which is distinct from the registries of Member States. Allowances issued from 1 January 2018 onwards will be held in the Community registry instead of in national registries.
Will there be any changes to monitoring, reporting and verification requirements?
The Commission will adopt a new Regulation (through the comitology procedure) by 31 December 2018 governing the monitoring and reporting of emissions from the activities listed in Annex I of the Directive. A separate Regulation on the verification of emission reports and the accreditation of verifiers should specify conditions for accreditation, mutual recognition and cancellation of accreditation for verifiers, and for supervision and peer review as appropriate.
What provision will be made for new entrants into the market?
Five percent of the total quantity of allowances will be put into a reserve for new installations or airlines that enter the system after 2018 (“new entrants”). The allocations from this reserve should mirror the allocations to corresponding existing installations.
A part of the new entrant reserve, amounting to 300 million allowances, will be made available to support the investments in up to 12 demonstration projects using the carbon capture and storage technology and demonstration projects using innovative renewable energy technologies. There should be a fair geographical distribution of the projects.
In principle, any allowances remaining in the reserve shall be distributed to Member States for auctioning. The distribution key shall take into account the level to which installations in Member States have benefited from this reserve.
What has been agreed with respect to the financing of the 12 carbon capture and storage demonstration projects requested by a previous European Council?
The European Parliament's Environment Committee tabled an amendment to the EU ETS Directive requiring allowances in the new entrant reserve to be set aside in order to co-finance up to 12 demonstration projects as requested by the European Council in spring 2007. This amendment has later been extended to include also innovative renewable energy technologies that are not commercially viable yet. Projects shall be selected on the basis of objective and transparent criteria that include requirements for knowledge sharing. Support shall be given from the proceeds of these allowances via Member States and shall be complementary to substantial co-financing by the operator of the installation. No project shall receive support via this mechanism that exceeds 15% of the total number of allowances (i. e. 45 million allowances) available for this purpose. The Member State may choose to co-finance the project as well, but will in any case transfer the market value of the attributed allowances to the operator, who will not receive any allowances.
A total of 300 million allowances will therefore be set aside until 2018 for this purpose.
What is the role of an international agreement and its potential impact on EU ETS?
When an international agreement is reached, the Commission shall submit a report to the European Parliament and the Council assessing the nature of the measures agreed upon in the international agreement and their implications, in particular with respect to the risk of carbon leakage. On the basis of this report, the Commission shall then adopt a legislative proposal amending the present Directive as appropriate.
For the effects on the use of credits from Joint Implementation and Clean Development Mechanism projects, please see the reply to question 20.
Quais são os próximos passos?
Member States have to bring into force the legal instruments necessary to comply with certain provisions of the revised Directive by 31 December 2009. This concerns the collection of duly substantiated and verified emissions data from installations that will only be covered by the EU ETS as from 2018, and the national lists of installations and the allocation to each one. For the remaining provisions, the national laws, regulations and administrative provisions only have to be ready by 31 December 2018.
The Commission has already started the work on implementation. For example, the collection and analysis of data for use in relation to carbon leakage is ongoing (list of sectors due end 2009). Work is also ongoing to prepare the Regulation on timing, administration and other aspects of auctioning (due by June 2018), the harmonised allocation rules (due end 2018) and the two Regulations on monitoring and reporting of emissions and verification of emissions and accreditation of verifiers (due end 2018).
International carbon market.
International carbon markets can play a key role in reducing global greenhouse gas emissions cost-effectively.
The number of emissions trading systems around the world is increasing. Besides the EU emissions trading system (EU ETS), national or sub-national systems are already operating or under development in Canada, China, Japan, New Zealand, South Korea, Switzerland and the United States.
Carbon markets in Paris Agreement.
The Paris Agreement provides for a robust and ambitious basis for the use of international markets and reinforces international targets, transparency and the accountability of Parties.
Recognising the importance of international carbon markets, Article 6 of the agreement.
allows Parties to use international trading of emission allowances to help achieve emissions reduction targets establishes a framework for common robust accounting rules , and.
creates a new, more ambitious market mechanism .
Bilateral cooperation.
In 2018, a 3-year project was initiated by the European Commission in close cooperation with China to support the design and the implementation of emission trading in China.
The project provides technical assistance for capacity building. It supports the 7 regional pilot systems already set up and the establishment of a nation-wide emission trading system.
In the EU-China Joint Statement on Climate Change adopted at the EU-China Summit on 29 June 2018, the EU and China agreed to "further enhance existing bilateral cooperation on carbon markets, building upon and expanding on the on-going EU-China emission trading capacity building project and work together in the years ahead on the issues related to carbon emissions trading."
Against this background, the Commission and China are considering further activities.
The Korean emissions trading system (KETS), launched in 2018, covers around 66% of Korea's total greenhouse gas emissions. It is the first mandatory emissions trading system among non-Annex I countries under the UNFCCC.
The KETS could trigger the expansion of emissions trading among emerging economies and developing countries.
The European Commission supports Korea through a technical assistance project focused on building the necessary capacity to implement the KETS.
Multilateral cooperation.
The European Commission is a founding member of the International Carbon Action Partnership (ICAP), which brings together countries and regions with mandatory cap-and-trade systems. The ICAP provides a forum for sharing experience and knowledge and organises regular training courses.
The Commission also supports the development of domestic carbon markets through the Partnership for Market Readiness (PMR). The PMR is a platform for the exchange of experience on carbon market instruments and assists some 17 countries in preparing and implementing these.
Linking with other cap-and-trade systems.
Linking compatible emissions trading systems with each other enables participants in one system to use units from another system for compliance purposes.
Linking offers several potential benefits , including:
reducing the cost of cutting emissions increasing market liquidity making the carbon price more stable levelling the international playing field by harmonising carbon prices across jurisdictions, and supporting global cooperation on climate change.
The EU ETS legislation provides for the possibility to link the EU ETS with other compatible emissions trading systems in the world at national or regional level.
Conditions for linking include:
system compatibility (the systems have the same basic environmental integrity, and a tonne of CO 2 in one system is a tonne in the other system) the mandatory nature of the system, and the existence of an absolute cap on emissions.
The EU and Switzerland have signed an agreement to link their systems. Once the agreement has entered into force, linking would result in the mutual recognition of EU and Swiss emission allowances. Switzerland would keep a separate system from the EU ETS.
The EU and Australia also considered the possibility to link their systems. However, due to the repeal of the Australian system in 2018, the linking negotiations have not been pursued.
Eligibility of international credits.
08/11/2018 - Commission Regulation (EU) No 1123/2018 on determining international credit entitlements 07/06/2018 - Commission Regulation (EU) No 550/2018 determining certain restrictions applicable to the use of international credits from projects involving industrial gases Positive and negative credit lists General positive list General negative list Explanatory note on the credit lists Harmonised rules regarding large hydroelectric dam projects: 27/10/2004 - Directive 2004/101/EC of the European Parliament and of the Council amending Directive 2003/87/EC in respect of the Kyoto Protocol's project mechanisms Guidelines on the application of Article 11(b) 6 of Directive 2004/101/EC Project compliance questionnaire.
Linking with other greenhouse gas emissions trading systems.
Encouraging new market mechanisms.
31/08/2018 - Study: Design options for sectoral carbon market mechanisms EU submissions on the new market mechanism 11/04/2018 - Views on the new market based mechanism 13/08/2018 - Addendum 26/05/2018 - COM(2018) 265 - Communication: Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage 09/03/2018 - COM(2018) 86 - Communication: International climate policy post-Copenhagen Studies.
Open all questions.
Perguntas & amp; answers on implementation of rules regarding the eligibility of international credits in the EU ETS (10/2018)
When did the new Registry Regulation (Regulation No 389/2018) enter into force?
Regulation No. 389/2018 entered into force on 4 May 2018.
What does 'legally binding' quantified emission targets from 2018 to 2020 mean in the context of Article 58(2) of the new Registry Regulation?
The term 'legally binding' refers to the entry into force of the amendment to the Kyoto Protocol under international law (i. e. once three quarters of Parties to the Kyoto Protocol have deposited instruments of ratification).
What is the impact of Article 58(2) on projects from Annex B Parties in third countries (i. e. non-EU ETS Parties)?
In accordance with Article 58(2) of the new Registry Regulation, ERUs issued after 31 December 2018 in respect of emission reductions taking place until 31 December 2018 from non-EU ETS Annex B Parties can only be held in ETS accounts in the Union Registry provided that:
The amendment to the Kyoto Protocol including a commitment for such a Party has entered into force OR The Party has deposited an instrument of ratification OR The credits are issued under track 2 OR Where track 2 issuance is not possible, the date of reduction (pre-2018) is certified by an AIE.
What other credits cannot be held in ETS accounts in the Union Registry?
Unit holdings in ETS accounts in the Union Registry are harmonised in accordance with Annex I of the Registry Regulation. It should be noted that for person holding accounts in Member States' Kyoto Protocol Registries, Member States can determine unit holdings. Person holding accounts in Member States' Kyoto Protocol Registries can be identified by their 121 account type (e. g. PT-121-1234567 for a person holding account in the Portuguese part of the Union Registry).
If a credit cannot be held in an ETS account in the Union Registry in accordance with Annex I, where can it be held in the Registry System?
These credits can be held in Member States' Kyoto Protocol Registries part of the Union Registry, in person holding accounts if allowed by the Member State.
How can the user know if a credit is eligible for exchange and holding in an ETS account, since serial numbers are not visible in the Union Registry?
The Registry application itself will flag international credits as eligible or ineligible . This status will be clearly visible in the application. On this basis, an account holder will be able to distinguish eligible credits held on a KP account from those that are either pending eligibility (because further steps are required) or ineligible (in accordance with relevant legislation).
Is there a cut-off date for the use of international credits issued for the Kyoto Protocol's first commitment period (CP1 credits) ?
Yes, in Accordance with Article 60 of the Registry Regulation, credits issued in respect of emission reductions occurring in the first commitment period of the Kyoto Protocol can be exchanged until 31 March 2018. These credits cannot be exchanged after this date, even if they are "carried-over" or banked into the second commitment period of the Kyoto Protocol. After 31 March 2018, these credits will be marked as "ineligible" in the Union Registry.
How can holders of international credits identify whether their credits need to be exchanged before 31 March 2018 in accordance with Article 60 of the Registry Regulation?
The serial number of each credit contains both the original commitment period (the commitment period for which the unit was issued) and the applicable commitment period (the period in which the unit can be retired). The original commitment period is visible in the Union Registry. After 31 March 2018, those international credits with an original commitment period of 1 (i. e. those units issued for CP1 reductions) will no longer be eligible for exchange. That is, after 31 March 2018, these credits will be marked as "ineligible" in the Union Registry.
It is important to note, that even if these credits are "carried-over" or banked between commitment periods of the Kyoto Protocol, the original commitment period will remain unchanged and these credits will continue to be ineligible for exchange in the EU ETS.
What if international credits for which ETS holdings are prohibited according to Annex I are held in ETS accounts in the Union Registry after entry into force of the Registry Regulation or after 31 March 2018 (for CP1 credits)?
International credits issued after the respective deadlines set out in Article 58 and Article 60 of the Registry Regulation have become ineligible following the entry into force of the Regulation or, for CP1 units, after 31 March 2018.
In accordance with Article 58(3), and Article 115, the so-called "cleaning" operation, the National Administrators have requested the account holders of these credits to transfer them to an appropriate Kyoto Protocol account.
A similar operation will be undertaken after 31 March 2018 to implement Article 60 of the Registry Regulation in respect of CP1 credits.
When does the exchange of international credits for allowances take place?
The exchange can take place at any point during the calendar year.
The international credit entitlement tables contain entitlements calculated for each installation and aircraft operator by Member States in accordance with the Regulation on international credit entitlements (RICE).
How will the exchange work?
The process for the exchange is described in detail in the Registry Regulation (Articles 59-61). An account representative can request an exchange of eligible international credits from an operator holding account or an aircraft operator holding account in the Union registry. The exchange request needs to be approved by a second person nominated as additional account representative or, if no additional account representative is nominated for the account, by a second account representative different than the one who initiated the request. The exchange process is automated: after the international credits are transferred to a central account, an equivalent number of allowances will be transferred automatically to the account from which the exchange was requested.
An operator can request as many exchanges of credits for allowances as needed, provided it does not exceed its international credit entitlement. Once credits are exchanged for allowances, they cannot be exchanged back into credits.
Is the status of the credit as marked in the registry (e. g. eligible or ineligible ) fixed or subject to change?
The information in the Union Registry regarding the eligibility of international credits is subject to change over time based on the best information available.
If the credit is a CER, it will be important to check the effective registration date of the project. If the host Party is not an LDC and the effective registration date is after 2018, CERs from the project will not be eligible for exchange in the EU ETS in accordance with the provisions of Article 11a(8) of the EU ETS Directive.
If the credit is a CER and the effective registration date is before 2018 , it is also important to check that it is not ineligible in phase 3 of the EU ETS in accordance with Regulation 550/2018 (e. g. it is not an HFC-23 project nor an N2O-adipic acid project).
If the credit is a track 1 ERU issued by a non-EU Party before 2018 , the information in the Union Registry is, to our knowledge, accurate with respect to the provisions in the EU ETS Directive and the Registry Regulation.
Likewise, for CERs, track 2 ERUs and ERUs issued by an EU Member State the information in the Union Registry is, to our knowledge, accurate with respect to the provisions in the EU ETS Directive and the Registry Regulation.
A credit in my account is marked as ineligible but, it should be eligible International Credit Holdings (ICH). How should I proceed?
In the first instance, check the eligibility lists published on our website.
If the credit has been incorrectly marked based on the published criteria, please contact your National Administrator.
If the ERU was issued after 31 December 2018 , the status of the credit will be updated upon successful completion of the certification referred to in Q16.
In all cases, if a change of status is warranted, the status of a credit will be changed the day after the information is updated in the Union Registry.
If my credit is marked as pending/ineligible , what is the impact?
The immediate impact is that such credits cannot be transferred to another ETS account in the Union Registry. These credits can, however, be transferred to a KP account.
After a "cleaning" operation referred to in Article 58 (3) (see Q9) has been completed, it will no longer be possible to hold credits marked as ineligible in EU ETS accounts and these credits will need to be moved accordingly.
When will the ineligible credits need to be moved out of ETS accounts in the Union Registry (in accordance with Article 58(3))?
An initial operation has already taken place and your national administrator should have already contacted account representatives. A further "cleaning" operation will take place to manage units issued in the first commitment period of the Kyoto Protocol. This operation is foreseen after the deadline for the exchange of the credits, 31 March 2018, in accordance with Article 60 of the Regulation 389/2018.
When will market participants be informed about the certification required under Article 58(2)?
Guidance on the certification which applies in accordance with Article 58(2) of the Registry Regulation is available.
Perguntas & amp; answers on use of international credits in the third trading phase of the EU ETS (January 2018)
Terminologia.
Least Developed Countries (LDCs) list: As there had been no international agreement at the end of 2018, nor had there been any EU agreements with third countries, article 11a(4-5) provides a default situation of prohibition on using new-project CERs beyond 2018, unless they are from LDCs or can be swapped for CERs from LDCs. What happens if a country loses its LDC status: if the project is at validation stage, if the project is registered, if CERs have already been issued?
The guidance on the DG CLIMA webpage explains that "A project in an LDC that is included in the UN list when the project is registered by the CDM Executive Board may continue to generate credits up to 2020, whatever happens to the list.
Crediting period renewal: Does the registration date pertaining to 'projects that were registered before 2018' referred to in Article 11a(2-4) correspond to the start date of the first crediting period of the project, or to the start date of any subsequent crediting period?
The start date refers to the start date of the first crediting period. Hence credits from projects that were registered prior to 2018 and that have their crediting period renewed after 2018 will continue to be usable (in the absence of use restrictions).
Date of registration: What will be the applicable cut-off date for the registration of CDM projects for being able to produce EU-ETS-eligible CERs post 2018.
Subject to no other quality restrictions, credits from projects registered before 2018 will be eligible for use in the EU ETS. The date of registration shall be the registration date determined by the EB, including the effective date of registration in accordance with Decision 3/CMP.6 i. e. "the date on which a complete request for registration has been submitted by the designated operational entity where the project activity has been registered automatically".
Implementation of provisions.
Swapping process: As from 2018, recognised international credits must be exchanged into (phase 3) allowances before surrendering them for compliance.
a) What are the modalities for this swapping process? Who will do it, when will it start?
The exchange of credits will start from 1 January 2018 onwards or as soon as a forthcoming revision of the Registry Regulation has been adopted, whatever is latest. The modalities will be developed in this revision. Only "operators" as defined in the ETS Directive can exchange CERs/ERUs for allowances.
b) Will this be an instant process or would there be a delay in receiving an allowance in return for a CER on the same user account?
Details in this regard will be determined in a forthcoming amendment of the registry regulation.
c) Can a request for a swap be refused on grounds other than the credit not being a compliance credit and if yes under which circumstances?
Details in this regard will be determined in a forthcoming amendment of the Registry Regulation. Given that the exchange route is only for operators, an exchange will be declined if an operator has exhausted the limit of its entitlements for exchanging credits, as reflected in articles 11.a(2-4) and (8) of the ETS Directive.
d) Can swapping be done at any time during the year, or do operators have to wait until the surrender deadline?
Details in this regard will be determined in a forthcoming amendment of the Registry Regulation. The Commission envisages for the exchange to take place throughout the calendar year and not limited to the annual compliance date. The competent authority will make the exchange on request from operators.
Quantitative limits: Article 11a(8) provides for options whereby operators would be able to use additional volumes of credits beyond the quantity they were allowed to use between 2008 and 2018. What are the steps and timeline of the comitology process to 'specify the exact percentages' of additional allowed credit volumes?
The ETS Directive does not specify the time by which these volumes should be determined. The Commission foresees that the necessary rules should be in place before credits are used in respect of phase 3.
UNFCCC carry-over rules: The Marrakesh rules (Decision 13/CMP.1) state that Parties are allowed to carry over CERs and ERUs 2.5% of their initial Kyoto AAUs to the potential subsequent commitment period. This amount will be confirmed after the true up period in 2018.
a) Can a compliance company, or a non-compliance actor carry over international credits "as credits" to the post-2018 period? In other words, will it be possible to bank CERs/ERUs?
For phase 3, credits can only be used for compliance in the EU ETS if exchanged for phase 3 allowances. This exchange of international credits with a first commitment period identifier into allowances will only be allowed until March 2018, which is before the end of the Kyoto Protocol's true-up period. On the difficulties of banking under the Kyoto protocol of selective CDM CP1 into the future, see chapter 6.2.4. 'Transition and predictability' of the 2008 impact assessment accompanying the revision of the EU ETS.
b) Are all EU ETS account holders able to carry over credits within limits?
Under the EU ETS, all compliance buyers (i. e. not all account holders) can exchange unused credits within the limits provided in article 11a and this exchange is guaranteed until the end of March 2018.
Future policy development.
Bilateral agreements:
a) Given the continuing absence of an international agreement, what action has the Commission taken to negotiate bilateral agreements with major host countries?
The Commission envisages the primary focus of potential bilateral agreements to be on creating demand for credits from new market mechanisms and to pilot the establishment of such new market mechanisms. The Commission contributes and actively participates in the World Bank's Programme for Market Readiness to promote such initiatives.
b) Bilateral agreements: How can interested stakeholders contribute to the set-up and implementation of bilateral agreements?
Stakeholders are encouraged to reach out to developing countries to support and explain the EU's position on the future of the carbon market, share lessons learned from emissions trading, Joint Implementation, Activities Implemented Jointly, and the CDM and explore areas for testing new market mechanisms.
c) Bilateral agreements: Will bilateral agreements be broad in nature (e. g. for all sectors in the host country) or targeted to specific sectors?
EU legislation is very open with regard to the scope of bilateral agreements that might be reached.
Process for qualitative restrictions: From 1 January 2018, measures may be applied to restrict 'the use of specific credits from project types' according to article 11a(9).
a) What is the definition of 'type'? What is the definition of 'specific credits'?
Under 'type' the Commission understands credits that were generated using one or several methodologies approved by the UNFCCC CDM Executive Board and JI Supervisory Committee. 'Specific credits' could refer to all credits under a project type or credits from a project type generated in a set of countries.
b) Have any such qualitative restrictions been adopted so far?
From the start of the EU ETS in 2005 full use restrictions have already been applied in the EU ETS to CERs from projects at nuclear facilities and from projects in agriculture and forestry (so-called LULUCF). As of 1 January 2018 CERs and ERUs from projects involving the destruction of trifluoromethane (HFC-23) and nitrous oxide (N2O) emissions from adipic acid production will be prohibited in the EU ETS. An exception is made until 30 April 2018 for destruction from existing projects that is credited before 1 January 2018, for compliance with 2018 commitments.
c) Are there further proposals under consideration to apply qualitative restrictions to any specific project type?
The revised ETS Directive provides for use restrictions to be introduced as part of the implementing provisions for credits which are otherwise usable during phase 3 of the EU ETS, running from 2018 to 2020. While the legislation allows putting in place further use restrictions adding to those adopted in early 2018, the European Commission is currently not considering any additional use restrictions.
d) How will qualitative restrictions be tracked and controlled?
Qualitative restrictions will be tracked and controlled through the introduction of automatic checks in the Union registry, based on the information regarding the project ID and the commitment period identifier of relevant international credits.
e) Is a positive list of unrestricted credits possible?
EU legislation does not foresee such a list.
f) Type of qualitative restrictions: What type of restrictions could be invoked according to article 11a(9)?
The Directive does not limit the types of restrictions that can be introduced. These will depend on project-type, economic, environmental, strategic and administrative circumstances.
Programme of Activities (PoAs): According to Article 11a(2) credits from projects registered pre-2018 are eligible for compliance in the EU ETS.
a) Does this imply that CDM Project Activities (CPAs) included after 2018 to PoAs registered pre-2018 are also eligible?
Article 11.a(3) of the EU ETS Directive states that "…competent authorities shall allow operators to exchange CERs and ERUs from projects that were registered before 2018 issued in respect of emission reductions from 2018 onwards for allowances valid from 2018 onwards". This wording would indicate that the moment of registration of a project is to be taken as a cut-off date for determining whether future CERs would be eligible for use in the EU ETS. A PoA is only registered once and CPAs are added to a PoA without a separate registration. It is therefore the Commission's interpretation that CERs from CPAs added after 2018 to a PoA registered prior to 2018 can be used for compliance in the EU ETS.
The Commission is, however, also aware that this interpretation of article 11.a(3) may increase the supply of CERs from non-LDCs. This contradicts the spirit of the Directive to allow only CERs from projects registered after 2018, if they come from LDCs. The Commission will therefore continue to monitor the evolution of PoAs, including their impact on the development of new sectoral mechanisms. The Commission notes that the Directive allows the Commission to propose appropriate regulatory measures under article 11.a(9) of the EU ETS, if the situation would require this.
b) Would restrictions (if adopted according to article 11a(9)) be applicable to PoAs?
Any use restrictions for specific credits from project-types agreed under article 11.a(9) would also be applicable to PoAs.
c) Will CERs from CPAs in LDCs be EU ETS eligible, if the PoA (no matter date of registration) also includes non-LDCs (so called cross country PoAs)?
This will depend on the possibility to clearly distinguish the country of origin of each CER, and whether such a filter can easily be introduced in the CITL. If this is the case, the Commission sees no objections to this.
JI projects registered before 2018: Article 11a(3) allows exchange of credits from projects registered before 2018 issued in respect of emission reductions from 2018 onwards. This applies both to CERs and ERUs. However, in the case of ERUs, issuance and transfer by the Host Party is subject to prior conversion of AAUs. This means that the absence of a second commitment period under the Kyoto Protocol would imply no continuation of JI projects after 2018. Has it been considered how to implement Article 11a(3) with regard to ERUs, in the absence of a second commitment period under the Kyoto Protocol: Continuation of JI project baselines beyond 2018 via a bilateral agreement – would this be a bilateral agreement signed between the EU as a block and various host countries to allow continuation of projects within that country?
a) Continuation of JI project baselines beyond 2018 via a bilateral agreement – would this be a bilateral agreement signed between the EU as a block and various host countries to allow continuation of projects within that country?
As explained in relation to question 6, bilateral agreements are envisaged to focus on the promotion of sectoral market mechanisms.
b) In the event that projects fall outside the EU ETS: Can such projects use commitment period 1 (CP1) AAUs to back ERUs generated January 2018 – March 2018?
The Commission considers that this is not in line with the Kyoto Protocol, according to which AAUs have been created in respect of emissions from 2008 to 2018 (CP1). In line with the principle of the Kyoto Protocol, the continuation of JI after 2018 is subject to new quantified emission targets being in place (CP2). This is also referred to in the recitals of the EU legislation (recital 28 of Directive 2009/29/EC). Using CP1 AAUs for backing ERUs generated between January 2018 and March 2018 is opposed to this, as it would allow the conversion of CP1 AAUs (not usable in the EU ETS) into a CP1 ERUs on behalf of post 2018 reductions (usable in the EU ETS). This would mix up the accounting system under which these units are created. Also, the UNFCCC Secretariat's advice on CDM accounting goes in the opposite direction, thereby creating an inconsistency that should not be supported. The CDM Executive Board have advised that "CERs may be used by Annex I Parties in complying with their emission targets for the first commitment period, as long as they have been issued for emission reductions or removals taking place up to the end of 2018". If nothing else, the continuation of crediting CDM projects is less of an issue as these projects do not impact on the inventories of Annex I Parties.
Sectoral crediting / trading: The EU intends to develop new mechanisms to scale up the use of carbon markets for climate finance and to provide better incentives for own mitigation action in developing countries.
a) Has the Commission assessed the actual possibility of sectoral mechanisms to meet demand for international credits in the EU ETS in the near future?
Under existing commitments there is currently no shortage of supply to accommodate the maximum possible EU demand for international credits. In fact, one of the main challenges for the introduction of sectoral mechanisms is to ensure sufficient demand for such credits. The speed by which new mechanisms can be implemented will also depend on other factors, including progress made in the international negotiation on their establishment, the geographical and sectoral scope of the first application, and the level of interest from developing countries.
b) How does the Commission intend to address possible disruptions in the market (due to the combined effect of possible CDM restrictions and new crediting mechanisms)?
The Commission does not share the view that the market would be disrupted by a (temporary) shortage of supply of international credits. The flexible nature of the EU ETS design would simply result in the allowance price incentivising more reductions in installations covered by the EU ETS and a reduced reliance on international credits for compliance purposes.
c) Does the Commission have plans to consult with stakeholders on the practical implementation of sectoral crediting?
No specific stakeholder consultation is planned on this issue, as the Commission regularly interacts with interested stakeholders and always welcomes ideas and input from stakeholders on practical implementation of sectoral crediting.
d) How could the private sector get involved with sectoral crediting?
Implementation of sectoral crediting will require a considerably more important role of the host country governments. They offer host governments to implement sectoral policies that achieve structural transformations of targeted sectors. The role of the private sector, in particular current project developers and consultants, is likely to change significantly. Instead of directly receiving credits from an international body as it is the case with CDM, project developers will need to interact with national governments. This provides for a more proactive role of national governments to introduce appropriate regulatory frameworks for blending of public and private sources of finance. The incentives for the private sector to invest in GHG emissions reductions will depend on the chosen policy mix, and will be country-specific. The proactive interaction between developing country host governments and the private sector on how to best put an incentive structure in place to attract private capital should be encouraged.
e) Could the emerging international REDD+ mechanism qualify as a sectoral mechanism?
No, for reasons of liability, non-permanence and capacity to monitor emissions with sufficient level of accuracy credits from a possible REDD+ mechanism will not be considered for compliance use in the EU ETS before the end of phase 3.
Stepping up the EU reduction target: The CDM pipeline would imply that CERs from projects registered pre-2018 could be sufficient to cover the demand from the current CER/ERU import limits in phases two and three.
a) Could potential rules on credit eligibility (except where bilateral agreements) be relaxed in a move beyond the current 20% reduction target?
The impact assessment accompanying the introduction of use restrictions on industrial gas credits in the EU ETS has identified significant economic and environmental shortcomings of such credits. These would not disappear with more stringent EU targets. Therefore there are no reasons to reconsider the ban on such credits. But more generally, under a stricter cap strategic decisions will have to be made whether to allow for more credits, and if so which types of credits this would be (new market mechanisms, CDM, etc.).
b) In case of a 30% reduction target with increased access to credits, what would be the share of use of these credits between ETS and non ETS sectors.
This would have to be determined through an appropriate impact assessment, if and when such an increased target is politically decided.
Is the adoption of a 2nd commitment period under the Kyoto Protocol an " international agreement on climate change" in the sense of Art. 11a(7) of the EU ETS Directive and Art. 5(3) of the Effort Sharing Decision?
The ETS Directive (Directive 2009/29) and the Effort Sharing Decision (Decision 406/2009) make clear that the term "international agreement on climate change" refers to the "future" agreement that was expected to be reached at COP15 in Copenhagen and that would apply for the period "beyond 2018". This, however, did not happen in Copenhagen.
Negotiations have continued ever since, resulting in the decision in Durban in December 2018 to "launch a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties", to be adopted by 2018 and to come into effect and be implemented from 2020.
The adoption of a second commitment period of the Kyoto Protocol without a legally binding agreement for the period beyond 2018 under which other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries commit themselves to contributing adequately according to their responsibilities and capabilities is therefore not an international agreement as referred to in Article 11a(7) of the EU ETS Directive and Article 5(3)of the Effort Sharing Decision.
Would reaching an international agreement pursuant to Article 11a(7) of the EU ETS Directive and Article 5(3) of the Effort Sharing Decision (ESD) reopen the EU ETS and ESD to CDM credits from projects registered post-2018 other than in Least Developed Countries (LDCs)? What would an agreement mean for eligibility of credits from LDCs?
Articles 11a(7) of the EU ETS Directive and Article 5(3) of the ESD limit the acceptance of CDM credits to those from countries that have ratified the new "international agreement on climate change". They do not "broaden" access in any way.
Thus, once an international agreement pursuant to Article 11a(7) of the EU ETS Directive and Article 5(3) of the ESD is reached, the limitation to CDM credits from new projects from the LDCs for the period starting in 2018 continues to apply. Any broadening of the eligibility criteria to allow new credits from other countries, with the exception of credits used under Article 11a(5), would require an amendment of the ETS Directive. Credits from projects in LDCs and other countries started before 2018 will only be accepted if they originate from countries that have ratified the agreement.
How many international credits will be allowed in the EU ETS after 2020?
The magnitude and nature of international credits for which a demand may be created in the EU ETS from 2021 onwards is yet to be defined. The European Parliament and Council would, on the basis of a proposal from the Commission, decide how much demand the EU should create for international credits and of what types at a later stage and in the light of various factors, including the level of ambition of countries in the post-2020 climate regime.
Perguntas & amp; answers on use restrictions for certain industrial gas credits as of 2018 (November 2018)
What types of credits are restricted, what kind of restriction will apply and when will the use restrictions enter into force?
The use of international credits from the Clean Development Mechanism (CDM) and Joint Implementation (JI) from projects involving the destruction of trifluoromethane (HFC-23) and nitrous oxide (N2O) from adipic acid production in the EU Emission Trading System (EU ETS) will be prohibited as of 1 January 2018. An exception is made until 30 April 2018 for projects taking place before 1 January 2018, complying with 2018 commitments.
Are these the first use restrictions applied in the EU ETS?
No. Full use restrictions have already been applied in the EU ETS to credits generated from projects at nuclear facilities and from credits generated from agriculture and forestry (so-called LULUCF) activities.
Why were use restrictions focused on industrial gas credits?
There are a number of reasons for adopting use restrictions on some industrial gas projects. The acceptance of credits from industrial gas projects has been controversial for some time. Certain gases have a very high global warming potential and abatement is very cheap. This can create huge financial rewards for project developers. The main concerns about these projects are:
a) Additionality – is production and subsequent destruction of the gas higher than what would have happened without a CDM project?
HFC-23 is produced as a by-product during production of another greenhouse gas, HCFC-22, principally in air conditioners and refrigerators. HFC-22 is a powerful ozone depleting substance, which is covered by the Montreal Protocol. Crediting the abatement of HFC-23 can create a perverse incentive to produce more HCFC-22 than would have happened without the CDM, and consequently produce credits that are not additional.
Also, the EU considers that cheap emission reductions in developing countries, such as those from certain industrial gas projects, should not be realised through the carbon market, but instead should be the responsibility of developing countries as part of their own efforts. Alternatively, these reductions could still be in part or fully funded by developed countries based on the actual costs for their abatement.
b) Obstacles to development of sectoral crediting mechanisms.
Due to the big quantity of cheap credits available from HFC-23 and N2O from adipic acid production, there is insufficient demand for credits from sectoral mechanisms. The EU favours these mechanisms above HFC-23 and N2O projects, because they stimulate domestic climate policy action in developing countries across broad segments of the economy, generate higher volume of credits at lower transaction costs, facilitate a move to multi-sectoral cap-and-trade system, and scale up additional international carbon finance flows to Developing countries.
c) Obstacles to phase out of gases under the Montreal Protocol.
The current incentive structures for HFC-23 undermine attempts under the Montreal Protocol to accelerate the phase-out of HCFC-22 for non-feedstock use, and to consider financing the destruction of HFC-23 on an via contributions to the Multilateral Fund.
d) Imbalance in the geographical distribution of projects.
The dominance of industrial gas projects distorts the geographical distribution of projects under the Kyoto Protocol's flexible mechanisms in favour of some advanced developing economies. The EU has called for a better geographical distribution of projects in the CDM, in particular for Least Developed Countries (LDCs). Use restrictions can encourage investment in projects in LDCs.
How could stakeholders contribute?
During the preparations of the Commission proposal and accompanying impact assessment, stakeholders were invited to submit their views on the design of use restrictions for industrial gas credits. Many stakeholders responded and provided valuable written input.
How can use restrictions improve value for money?
Revenues from the sale of HFC-23 credits in the EU ETS represent up to 78 times the initial capital investment and operational costs of these projects. In other words, the rates of return of these projects are excessive. These projects are not reducing global emissions in an efficient manner. The EU considers that cheap emission reductions, such as those from industrial gas projects, should not be done through the carbon market, but instead should be the responsibility of developing countries as part of their appropriate own action to keep global warming below 2 degrees Celsius.
Which countries are the main suppliers of industrial gas credits?
80% of HFC-23 credits and 60% of N2O credits under the CDM come from China. The remainder of these projects are mostly generated in India and some advanced developing countries (some of them OECD-members). Use restrictions are therefore fully in line with an increasing focus of the CDM on LDCs. The EU considers that OECD countries, such as South Korea and Mexico, should contribute to mitigation through measures such as sectoral market mechanisms or emissions trading, rather than through CDM projects.
Are the use restrictions "retroactive"?
No. The EU ETS Directive (2009/29/EC) allows for restricting the use in the EU ETS of credits from certain project types. This by no means affects the issuance of units, which is managed by the CDM Executive Board. The Directive foresees a notice period of 6 months to 3 years for the application of restrictions from the time they are formally adopted in order to allow sufficient time for market participants to adapt.
What will be the market impacts of these use restrictions?
The EU considers there will be enough credits available from the 3300 other projects (non HFC-23, non-adipic acid N2O) registered so far to supply the EU ETS up to the limit allowed over the next 10 years, even without any new credits from sectoral crediting. Therefore allowance prices should be relatively unaffected.
The market was given early notice of the use restrictions, so as to enhance investment in alternative projects that can deliver credits for the EU ETS from 2018 to 2020. The impact assessment shows that even if developed and developing countries fully implement their pledges under the Copenhagen Accord; there would still be sufficient reduction potential in developing countries in areas other than industrial gases at prices below the current European carbon price. This is confirmed by e. g., a recent study by Bloomberg New Energy Finance [1] .
Are HFC-23 projects not crucial to create sufficient liquidity in the carbon market?
Overall liquidity is guaranteed by the fungibility between CERs/ERUs and EU allowances. The economic recession has produced a situation where many EU companies accumulate and hold sizeable surpluses of allowances. In the light of this, there will be sufficient liquidity in the market for the coming years.
Will the restrictions lead to a fragmentation of the international carbon market?
No, because the EU makes up the vast majority of the international carbon market. In addition, other (developed) countries are likely to follow the EU's lead in not accepting industrial gas credits,.
Is this not a matter for the UNFCCC?
As the largest purchaser of JI and CDM credits in the world, and to safeguard the integrity of its Emissions Trading System, the EU takes the lead in the UNFCCC process in trying to reform the CDM in order to improve its environmental integrity, effectiveness, efficiency, regional distribution and contribution to sustainable development. The EU will continue to work in the UNFCCC process towards this end. Nonetheless, it is for the EU to ensure the integrity of the EU Emission Trading System and to decide which international credits it allows for compliance, in accordance with the EU ETS Directive (2009/29/EC).
The restrictions proposed would not replace the function of the CDM Executive Board or the Joint Implementation Supervisory Committee. The restrictions apply only to the use of these units for compliance purposes in the EU ETS.
Isn't the CDM Executive Board also investigating HFC-23 credits?
The Board is assessing allegations of non-additionality of HFC-23 credits. We strongly support action of the CDM Executive Board to eliminate these allegations, but this is not the only reason for restrictions in the EU ETS. There are other concerns related to the environmental merits, cost-effectiveness and competitive distortions of these projects. The EU must also reconcile the domestic use of CDM credits and its demands internationally to move away from the CDM towards sectoral mechanisms. Finally, the same concerns apply to JI projects of these categories.
Will the European Commission propose to apply further use restrictions beyond industrial gases for phase 3?
The ban on credits from these industrial gases is one of the implementing provisions of the revised ETS Directive for the third phase of the EU ETS, from 2018 to 2020. There may be further use restrictions in the future. However, the European Commission is currently not considering any specific use restrictions beyond industrial gases.
What is the "major overhaul" of the CDM that the EU is envisaging?
The European Union advocates creating a new generation of sectoral market mechanisms in more advanced developing countries, as a first step towards cap-and-trade systems. In addition, the environmental integrity of the CDM should be improved and the system should focus on Least Developed Countries. The CDM is a pure offsetting mechanism, where a tonne of greenhouse gas emissions reduced in a developing country creates a right to emit a tonne of greenhouse gases in a developed country. The EU believes that such a system cannot deliver the emission reductions needed to keep global warming below 2°C. To achieve this goal, commitments by industrialised countries should be complemented by appropriate mitigation actions by developing countries, in particular the most advanced developing countries.
Do these restrictions bind also Member States when they buy international credits for compliance with non-ETS emissions?
No. Use restrictions applied in accordance with the revised EU ETS Directive are only applicable to companies covered by the EU ETS. However, if Member States intend to use credits which are restricted in the EU ETS, for compliance with their 2018-2020 targets outside the EU ETS, they will have to motivate this to the European Commission. Several Member States have already decided not to use such credits for non-ETS compliance.
EU Carbon Emissions Trading Scheme In Freefall.
The European Union carbon emissions trading scheme—the biggest in the world and the heart of Europe’s climate-change program—is in dire straits. The scheme’s carbon price has collapsed. The primary reason: The economic recession has suppressed manufacturing, thereby reducing emissions and creating a huge oversupply of carbon emissions allowances.
Carbon trading is a market approach to reducing greenhouse gas emissions in which each facility involved is given an emissions cap for the year, and each year that cap is reduced. A firm must record and report its facilities’ emissions and must obtain allowances for its total emissions. An allowance permits a facility to emit 1 metric ton of carbon dioxide or its carbon equivalent; some allowances are given for free by the government, others can be bought at auction or from other firms.
If a facility exceeds its cap, the company operating it has options: It can reduce emissions, buy allowances from other companies, or obtain allowance offsets by reducing emissions at another pollution source. The cost of an allowance is referred to as the carbon price and is driven by market conditions such as supply and demand.
If the low carbon price continues, the region’s ability to meet long-term reduction targets for greenhouse gas emissions will be severely hampered because the trading scheme will fail to provide money for cleantech programs and incentive for manufacturers to adopt cleaner technologies.
The trading scheme is a key component of the EU’s climate-change strategy because about 40% of all greenhouse gases emitted in the region fall under EU’s control. The mandatory scheme applies to 11,000 industrial installations, including power plants and major chemical facilities, across all 27 member states, as well as in Croatia, Iceland, Liechtenstein, and Norway. The aviation sector has been included in the scheme, but its active participation has been deferred to allow for an international agreement on aviation emissions, which is expected to be concluded in the fall.
The goal of the European Commission, the EU’s administrative body and the architect of the emissions trading scheme, is to reduce all greenhouse gas emissions by 20% from 1990 levels by 2020. To contribute toward this goal, the trading scheme has targeted a 21% cut in the emissions of participating sectors by 2020 from a 2005 baseline.
In recent weeks, however, the EU carbon price dropped to a new low of $5.20 for each metric ton allowance of CO 2 , down from a high of $23 in 2018. This is despite an annual reduction of the EU emissions cap of 1.74% through 2020 and the introduction on Jan. 1 of a new phase of the scheme requiring companies to purchase allowances.
At its current carbon price, the EU emission scheme’s role in encouraging chemical firms to ditch fossil fuels and adopt greener technologies “is meaningless,” says André Veneman, director of sustainability at AkzoNobel. Many of the industry’s investments in low-carbon technologies that are marginally financially viable also will likely be delayed, he says. Without a strong carbon price, the underlying push to cleantech in the EU will come only from the price of oil, Veneman adds.
Veneman and other experts say that a carbon price of between $68 and $135 is required if industry as a whole is to be forced to shift onto a new low-carbon footing.
Yvo de Boer, special global adviser for climate change and sustainability for KPMG—an audit, tax, and advisory firm—and former executive secretary for the United Nations Framework Convention on Climate Change, is pushing for a much higher price of about $200 per allowance. “That’s the kind of level that drives the price signals that we really need,” de Boer recently told EurActiv, an EU policy website.
Analysts agree that the primary reason for the EU’s low carbon price is the economic recession, which has suppressed demand for emissions allowances because production is down, thus manufacturers’ emissions are too.
A secondary reason for the low carbon price is the high number of “generous” exemptions for the scheme handed out to energy-intensive industries, says Marcus Ferdinand, senior market analyst for Thomson Reuters Point Carbon, a carbon market information provider. In 2018, just over 50% of the 2.1 billion metric tons of allowances provided by the EU will be sold through auctions with the remainder due to be allocated free of charge.
Emissions credits generated from the worldwide implementation of cleantech projects agreed to under the Kyoto protocol also can be sold on the EU emissions trading market and have added further to the market’s oversupply.
A recent report by ECN, an independent Dutch energy research organization, forecasts that without intervention this situation will result in zero emissions reduction from the trading scheme until at least 2020. This lack of reduction is because the oversupply of allowances is projected to last through 2025. The market is on course to have a surplus of 2.2 billion allowances in 2018, equivalent to a full year of emissions by industry, ECN states.
For its part, the commission in a recent report accepts that the allowance surplus “in the longer term could affect the ability of the EU emissions trading scheme to meet more demanding emission reduction targets cost-effectively.”
There are already signs that the low carbon price is having an impact on the functioning of the trading scheme. The German government withdrew 4 million allowances from an auction on Jan. 18 because they failed to meet the reserve price. With the drivers for oversupply showing no signs of abatement, analysts expect more of these auctions to fail.
The commission had planned to generate billions of dollars by auctioning carbon allowances and then reinvest the money to subsidize cleantech development programs including renewable energy projects. As a consequence of the low price, the available funds are now far smaller than expected, and the scale and number of projects funded has dropped.
To bump up the price of carbon, the commission has proposed to postpone—or backload—until 2019 or 2020 some 900 million emissions allowances originally tagged for distribution from 2018 to 2018. “It seems that the commission is trying to save the market from falling apart,” Ferdinand says.
The catch is that to start backloading the commission must first gain legal approval from both the European Council, which represents all of the governments of EU member states, and the European Parliament. That won’t be easy because a small number of EU countries, led by Poland, are enjoying the low carbon price and are resisting the commission’s proposal. Poland is the world’s 10th-largest consumer of coal—the fuel that generates the most carbon emissions—and is even considering building new coal-fired power stations.
Investment by the EU to help Poland transition to a more sustainable energy mix could be money well spent both environmentally and politically, according to de Boer. But time is running out, and on Feb. 19 a leading committee within the European Parliament will vote on whether to allow backloading.
“It’s make-or-break day, as the following policy process is very much dependent on the outcome of that vote,” Ferdinand says. If the lawmakers reject backloading, the price of carbon will languish between $5.40 and $6.70 per metric ton, he says. However, in the unlikely event that the vote goes the commission’s way, he adds, the price would go slightly higher.
Not everyone is unhappy with the way things are turning out. The current situation suits the European Chemical Industry Council (CEFIC), Europe’s main chemical industry association. Three years ago CEFIC was warning that the EU emissions trading scheme was the single biggest threat to the competitiveness of the region’s chemical industry. That threat has fallen, the group notes, in line with the price of carbon.
“Although the price is lower, it is still a cost that does not exist outside the EU,” says Peter Botschek, director of energy for CEFIC. The EU’s unilateral emissions trading scheme is anticompetitive and a high carbon price would drive manufacturing out of the region, he says. But even if backloading takes place, there are so many flaws in the market that it would “hardly have an impact,” Botschek adds. A global emissions trading scheme, on the other hand, would be acceptable to the EU chemical industry, he says.
But a range of experts outside the chemical industry is keen to see the commission apply measures to push up the price of carbon. Among them is David Cook, executive ambassador for Stockholm-based The Natural Step, a sustainable development organization that advises firms, including chemical companies, on how to be sustainable.
To download a PDF of this article, visit cenm. ag/carbontrade2.
“A low carbon price is not a good thing,” Cook says. The chemical sector’s backing of a low carbon price is shortsighted, he says, as the issue of climate change and sustainable manufacturing “is not going to go away.” With a low carbon price, the transition to clean energy “ultimately will still happen but will take longer than it should,” ele diz.
In the short term, carbon trading in Europe is still generating cash to fund cleantech projects, albeit at a smaller scale than if the carbon price had been higher. In December 2018, the commission awarded more than $1.6 billion to cofund 23 innovative renewable energy demonstration projects. The money was generated directly from the sale of 200 million emissions allowances under the commission’s New Entrants Reserve 300 (NER300) funding program, which sets aside 300 million allowances for subsidizing installations of innovative renewable energy technology and carbon capture and storage (CCS). Private investors are set to contribute another $2.7 billion to the projects.
It’s “a ‘Robin Hood’ mechanism that makes polluters pay for large-scale demonstration of new low-carbon technologies,” says EU Commissioner for Climate Action Connie Hedegaard, referring to the legendary English outlaw who robbed the rich to feed the poor.
With the carbon price five times less than it was a few years ago, there is one-fifth of the money available for these projects, Ferdinand says. Projects funded by NER300 cover a wide range of renewable technologies, including advanced biofuels, concentrated solar power, geothermal power, and wind power.
CCS, a highly capital intensive but unproven approach to combating CO 2 emissions from sources such as power stations, missed out on funding from NER300 in December because projects were not advanced enough to meet commission criteria or because they lacked partner funding.
The commission has a further 100 million carbon allowances that it plans to sell on the market in the next few years so that it can invest in a second wave of renewable technology projects. The commission will set aside almost $400 million for CCS projects from this second auction round.
The development of low-carbon and even zero-carbon technologies will be slowed by the low carbon price, however, and that is a problem, says Michael Carus, managing director of Nova Institute, a privately owned firm in Hürth, Germany, providing expertise on low-carbon technologies. In particular, the move to develop chemical processes based on the use of CO 2 as a feedstock will be adversely affected by the low carbon price just when it is starting to emerge as a viable commercial option, Carus says.
But one analysis indicates that the situation isn’t so grim. A study by KPMG shows that investment in cleantech has not slowed despite the presence of a relatively low carbon price and economic downturn, says Barend van Bergen, head of KPMG’s Global Center of Excellence for Climate Change & Sustentabilidade. “The other good news is the spread of carbon regimes. It’s not just the EU anymore. It’s spreading into Canada, India, Brazil, China, New Zealand, and Australia,” van Bergen says. But, he points out, “we still need a significantly higher carbon price before there is a mainstream shift to renewables.”
If the EU carbon price continues to flounder, other EU member states, such as the Netherlands, could take action at the national level, van Bergen says. For example, countries might establish a carbon tax.
The U. K. already has taken such steps. It introduced a tax of $7.90 for each metric ton of CO 2 generated in the production of electricity consumed by certain industries including chemicals. This price has been applied to top up the low price of the EU emissions trading scheme, says Nick Sturgeon, director for energy, trade, and competitiveness at the Chemical Industries Association, a U. K. industry group. The U. K. chemical industry is lobbying hard to attain exemptions from this carbon tax, Sturgeon says.
Although the U. K. has introduced a carbon tax, it is still an unusual approach. Many governments around the world that are seeking to reduce their greenhouse gas emissions in a meaningful way still consider carbon emissions trading as the only viable option.
Officials in countries including South Korea and Australia have been in detailed discussions with EU officials to determine the best options for setting up their national carbon emissions trading schemes. Although Europe’s scheme is awash with oversupply of allowances, its problems have come at just the right time to ensure that developers of emerging schemes can learn from the EU’s experience.
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