investigating the 2030 framework and looking ahead towards phase iv
DESCRIPTION
This presentation investigates the EU 2030 framework and looks ahead towards phase 4 of the ETS. What is likely to change with the framework and what needs to be done for the ETS to achieve its objectives? Looking ahead to the 21st Conference of the Parties on Climate Change 2015 – what should and is likely to be done? The presentation was given by Alyssa Gilbert, Unit Manager Market-based Mechanisms at Ecofys, at the 6th annual European Emissions Markets conference on 29 September 2014 in Brussels.TRANSCRIPT
Investigating the 2030 framework and looking ahead towards phase IV
A presentation for the 6th annual European
Emissions Markets conference
Alyssa Gilbert
29/10/2014
© ECOFYS | |
So what have we learnt and what does this tell us about
the future?
29/09/2014 Alyssa Gilbert 2
2030 framework EU ETS Phase IV
EU emissions and energy
policy
EU ETS reform
Implications for aviation
Sector perspectives
Fraud prevention &
market regulation
ETS worldwide
© European Union, 1995-2014
© ECOFYS | |
Debate toward the 2030 framework
29/09/2014 Alyssa Gilbert 3
> Debate on target setting & level of ambition – 2020 targets, 2030 framework, 2050 roadmap – EU ETS inclusion of sectors & industry – Ambition v. competitiveness debate – Member State priorities & barriers
> Climate change, economic crisis, Euro crisis…
– Europe under pressure – Reconciling growth and climate action – New commissioners
> Will the EU continue to be a leader?
– Competitiveness – Security of supply – Employment and growth – Climate negotiations – … http://ec.europa.eu/clima/policies/2030/index_en.htm
EE
+30% RE
27% GHG
-40%
2050 2030 2020
© ECOFYS | |
The EU ETS phase 4 in the context of the 2030
framework
29/09/2014 Alyssa Gilbert 4
40%
27% 30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
GHG emissionreductions
(relative to 1990)
Renewable energy share Energy efficiencyimprovements
(relative to 2005)
2020
2030
20502050 targets subject to scenario-based variations
> “The 2030 policy framework for
climate and energy proposed by the
European Commission aims to make
the European Union's economy
and energy system more
competitive, secure and
sustainable.”
– “To achieve the overall 40%
target, the sectors covered by
the EU emissions trading
system (EU ETS) would have
to reduce their emissions by
43% compared to 2005.”
– “Emissions from sectors outside
the EU ETS would need to be cut
by 30% below the 2005 level.
This effort would be shared
equitably between the Member
States.” http://ec.europa.eu/clima/policies/2030/index_en.htm
© European Union, 1995-2014
© ECOFYS | |
The EU ETS phase 4: towards phase IV
29/09/2014 Alyssa Gilbert 5
Free allocation to industry
Market stability reserve
Time
Allow
ances
Auction
Allowance surplus
Allowance deficit
PHASE IV: 2021 - 2030
> Key issues to consider for phase IV
– Carbon leakage & competitiveness
– Structural reform
– Scope & coverage
> Some hints…
– Revised efforts sharing structures (“New
Innovation Facility, “Modernisation Fund”)
– Revised auctioning
– Creation of an allowance reserve
– Inclusion of transport fuels
– Afforestation offset opportunities
EC, 2013: The EU ETS - Factsheet
© ECOFYS | |
The EU ETS phase 4: incremental improvements or
integrated reform?
> Make incremental improvements
OR
> Carry out integrated reform
> “The UK has long called for reform of the EU ETS to ensure the carbon market can deliver long-term emissions
reductions goals cost effectively, so the MSR legislative proposal was welcomed. However, it does not constitute
the comprehensive reform of the EU ETS the UK would like to see as it does not correct the problem of
oversupply in the EU ETS, and as such is insufficient to put the System on the right track once and for all. The
UK continues to call for cancellation of an ambitious volume of allowances to reduce the current surplus and
help restore the balance between supply and demand.” (DECC, 2014, IK Vision for Phase IV of the EU ETS)
> “The proposed target of 40% GHG emission reductions is not nearly enough to put Europe on track towards its
decarbonisation objective of 80-95% reductions by 2050. Moreover, technical loopholes in the current climate
framework have accumulated to a 4 billion hot air bubble which threatens EU’s future climate ambition.
Without immediate and urgent action, this hot air bubble would effectively cause that the actual
emissions reductions under a 40% GHG reduction target may be as low as 26%.” (Carbon Market
Watch, Sep. 2014, Reaction to leaked 2030 Council Conclusions)
29/09/2014 Alyssa Gilbert 6
© ECOFYS | |
What about the international context?
Current events: UN Climate Summit - objectives
Raising the stakes: Ban Ki Moon, a high profile name for a high profile case
> Public platform for leaders at the highest level
> Engaging leaders and advance climate action
> Mobilizing political will toward a global agreement in 2015
> Consulting stakeholders: Member States, finance, business, civil society, local leaders
> Limiting global warming to 2 degrees Celsius
29/09/2014 Alyssa Gilbert 7
UN Climate Summit 23 Sept, New York
© ECOFYS | |
What about the international context?
Current events: UN Climate Summit - preparing
29/09/2014 Alyssa Gilbert 8
GOVERNMENTS
• Eg: timely release of ‘The new climate
economy’ – funded by Colombia, Ethiopia, Indonesia, Norway,
South Korea, Sweden, UK
PRIVATE SECTOR
• Contributions: New projects, scaling-up,
partnerships • Initiatives: Carbon
pricing leadership • Events: UN private sector
forum – UNGC
CIVIL SOCIETY
• 4 thematic sessions: climate, health & jobs,
climate science, economic case for action, voices from the climate front
lines
8 ACTION AREA agriculture, cities, energy, financing, forests, industry, resilience
UN Climate Summit 23 Sept, New York
© ECOFYS | |
What about the international context?
Current events: UN Climate Summit - outcomes
29/09/2014 Alyssa Gilbert 9
“The summit delivered. We heard strong commitment for a meaningful universal climate agreement in Paris next year….Let us look back
on today as the day we decided to put our human
house in order.”
Pricing carbon Putting a price on carbon will provide markets with the policy signals needed to invest in climate solutions. • 73 national Governments, 11 regional
governments and more than 1,000 businesses and investors signaled their support for pricing carbon. Together these leaders represent 52 per cent of global GDP, 54 per cent of global GHG emissions and almost half of the world’s population.
• Some leaders agreed to join a new Carbon Pricing Leadership Coalition to drive action aimed at strengthening carbon pricing policies and redirecting investment
• More than 30 leading companies announced their alignment with the Caring for Climate Business Leadership Criteria on Carbon Pricing.
UN climate Summit, Chair’s summary: http://www.un.org/climatechange/summit/2014/09/2014-climate-change-summary-chairs-summary/
> High profile: 100 heads of state/government, 800+ other leaders
> New announcements? Is this enough?
> Chair’s summary points: – Convergence on a Long-Term Vision
– Cutting Emissions
– Moving markets and mobilizing money
– Pricing carbon
– Strengthening resilience
– Mobilizing New Coalitions
– The Way Forward to Lima,
Paris and beyond
Ban Ki Moon
© ECOFYS | |
What about the international context (continued)?
Upcoming events: CoP 21 Paris, 2015 – Objectives
ACT 2015
> Steady proposition: upfront emissions reduction commitments by states with max.
cost of ~1% GDP
> Dynamic proposition: less ambitious immediate plans ramped up over time,
meaning higher costs post-2050 ~2% GDP
> Pioneer proposition: countries send clear signals to business and trigger
significant upfront investment but lower costs post 2050
29/09/2014 Alyssa Gilbert 10
Effort
/cost
Aim: reaching a legally binding global agreement to tackle climate change
Ambition Joint goal of all
parties to phase out
anthropogenic GHG emissions
by 2050
Nationally proposed 2020-23
commitments consistent with the phase out goal based on self selected
equity principle
Register of mitigation actions by non-state
entities
© ECOFYS | |
What about the international context (continued)?
Upcoming events: CoP 21 Paris, 2015 – Outcomes (?)
> Legal gap in UNFCCC: fundamental
weakness is lack of clear binding
commitment for any party to reduce
GHGs
29/09/2014 Alyssa Gilbert 11
Co-author: N. Höhne, Ecofys > Very ambitious & clear phase out goal
> Nationally determined commitments
– With justification
– In line with phase out goal
Proposal: commitment
& equity principle
Technical review
Final 2020-23 commitment
More ambitious 2024-27
commitment
Sufficient? No
Yes
© ECOFYS | |
And to conclude…
29/09/2014 Alyssa Gilbert 12
Sectors
Member States
Europe
International community
…
EU ETS Phase IV
=> An ambitious 2030 framework
requires a effective ETS
UNFCCC
© ECOFYS | | Alyssa Gilbert
Today’s speaker
Alyssa Gilbert
Ecofys UK
T: +44 (0)20 74230-976
www.ecofys.com
13 29/09/2014