CO2 Emission Trading in Europe

1
CO-2 Emission Tradingin Europe

• Result from Kyoto Protocol process
• Part of European Climate Change Programme (ECCP)
• Overview of
• Climate change policy ECCP
• ET Directive
• Linking Directive
• Review future

2
CO-2 Emission Tradingin Europe

• Climate change in EU policy
• 4th EC Environmental Action Plan (1987-1992)
• 1989 Commission communication
• 1990 Council resolution (non binding) to
  stabilise CO-2 emissions by 2000 at 1990 level
• 5th EC Environmental Action Plan (1993-2000)
  greater rol
• 1993 Council decision for monitoring mechanism of
  greenhouse gas emissions
• gt amended in 1999, and replaced by Cd
  280/2004/EC

3
CO-2 Emission Tradingin Europe

• 1994 EC adhered to UNFCCC
• 1997 EC signed Kyoto protocol
• 1998 Burden-sharing agreement between EU-MS
• Climate change not a subject in art. 3 EC
• Legal basis for measures -gt art. 175 (1)
• Shared competence EC MS
• 2000 Commission launched ECCP
• 2001-2002 6th EC Environmental Action Plan
  Environment 2010 LT decrease of 70

4
CO-2 Emission Tradingin Europe

• European Climate Change Programme (ECCP)
• Multi-stakeholder process
• Task how to reach 8 target (340 Mt CO-2
  equivalent reduction) cost-effectively ?
• -gt Projected progress in 2012 revealed that
  without additional measures greenhouse gas
  emissions increase by 1 instead of required
  reduction by 8 (1990 levels KP)
• Provided the basis for the Commission to develop
  legislative other proposals

5
CO-2 Emission Tradingin Europe

• European Climate Change Programme (ECCP)
• 2001 Result of 1st phase - ECCP report
• Action Plan for ECCP
• Ratify Kyoto Protocol (happened 31 May 2002)
• Proposal for Emission trading Regulating
  certain fluorinated gases

6
CO-2 Emission Tradingin Europe

• European Climate Change Programme (ECCP)
• Some 40 cost-effective policies and measures with
  an emission reduction potential of some 664-765
  Mt CO-2 equivalent (2 X EU-target)
• Overall cost to comply with EU-target
• 3.7 bn euro or 0.06 of GDP (per annum in 2010)
• Hyp. max. cost-effectiveness (EU-MS)

7
CO-2 Emission Tradingin Europe

• (ECCP) important measures
• EU wide emissions trading
• Renewable energy sources
• Energy performance of buildings
• Energy-efficiency standards for equipment
• Energy demand-side management
• Combined heat-power generation
• Containment / monitoring of fluorinated gases
• Modal shift in transport (infrastructure use
  charging)
• ECCP II started in 2005

8
CO-2 Emission Tradingin Europe

• ET-directive Directive 2003/87/EC of the
  European Parliament and of the Council of 13
  October 2003 establishing a scheme for
  greenhouse gas emission allowance trading within
  the Community and amending Council Directive
  96/61/EC (OJ L 275 of 25 October 2003)
• institutional path
• lt ECCP
• Green Paper on greenhouse gas emissions trading
  within the European Union, COM(2000)87
• 23 October 2001 Commission proposal, COM
  (2001)581
• Council EP discussions
• 22 July 2003 final political agreement
• Amended by Linking Directive 2004/101/EC of 27
  October 2004 (OJ L 338 of 13 november 2004)

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CO-2 Emission Tradingin Europe

• Fundamental elements of the ET-directive
• Pre-determination of the environmental benefits
  (as opposed to command control approach) /
  flexibility / cost-efficiency
• Twofold objective
• Protect the environment
• Guarantee the internal market functioning
• Legal basis art. 175 (1) EC Treaty
• Nature of the proposed ET-scheme mandatory

10
CO-2 Emission Tradingin Europe

• Single market for allowances
• Framework that enables the functioning of ET as a
  market mechanism across the EU and beyond (mutual
  recognition of agreements)
• Framework prevents incompatibility of varying
  national schemes (e.g. existed in UK, Denmark
  compatibility not ensured by KP)
• Safeguards against distortion of competition in
  an integrated market
• Fully compatible with IPPC Directive and EU
  electricity gas liberalisation

11
CO-2 Emission Tradingin Europe

• Allowances vs permits
• Allowance
• Are issued by MS (which also ensure their
  cancellation)
• entitlement to emit a tonne of CO-2-equivalent
  during a specified period from sources in an
  installation
• shadow unit is tradable across the EU
• Is held by any person
• Is registered in electronic form in the
  (national) registry
• ??
• Legal nature
• Consequences for the transferability

12
CO-2 Emission Tradingin Europe

• Allowances vs permits
• Permit
• Administrative authorisation
• Site-specific and held by operator
• Non-transferable (except as inherent part of the
  installation when it is sold)
• Sets monitoring and reporting obligations
• Sets obligation to hold allowances to match
  emissions each calendar year
• IPPC-like

13
CO-2 Emission Tradingin Europe

• Coverage / scope (1) -gt Art. 2
• Emissions from
• Greenhouse gases (GHG, 6) listed in annex II
• gt start with CO-2 (46 of estimated em. in 2010)
• Activities listed in annex I
• range of activities energy (power generation,
  refineries), ferous metals production/processing,
  mineral industry (e.g. cement, glass), other
  pulp and paper production
• gt some activities are excluded (e.g. chemicals)
  but are indirectly covered if threshold of 20 MW
  for combustion installation is reached
• Number 4 - 5.000 (up to 2002) -gt 14.000 (December
  2003)

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CO-2 Emission Tradingin Europe

• Coverage / scope (2) -gt Art. 2
• Extended as from (lt art. 24)
• 2005 MS may apply ET to installations lt annex I
  activities below threshold
• 2008 MS may apply ET to non-CO-2 GHG and bring
  in additional sectors e.g. chemicals or aluminium
  production
• ! Extension must be approved by Commission
  assisted by Committee (art. 23)
• ! ET implies costs for everyone as energy
  producers will pass on costs to customers

15
CO-2 Emission Tradingin Europe

• Coverage / scope (3) -gt Art. 27 - 28
• Art. 27 temporary exclusion (opt-out)
• MS may apply to Commission for installations to
  be temporarily excluded until 31/12/2007 (e.g.
  Belgium)
• Exclusion must be approved by Commission assisted
  by Committee (art. 23)
• Art. 28 pooling (lt German UK desire V.A.)
• MS may allow operators of installations to form a
  pool for the same activity up to 31/12/2012
• Operators must apply to competent authority and
  trustee must be nominated
• MS must submit application to Commission that can
  reject
• Liability trustee / operator

16
CO-2 Emission Tradingin Europe

• Art. 3 definitions
• Allowance
• Emissions
• Greenhouse gases annex II ( KP)
• Greenhouse gas emissions permit
• Installation IPPC-definition
• Operator IPPC-definition
• Person
• New entrant
• The public Aarhus-Convention def. / also lt
  SEA-D / PP-D
• Tonne of carbon dioxide equivalent

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CO-2 Emission Tradingin Europe

• Art. 4 7 Greenhouse gas emissions permit
• Art. 4 requirement for permit as from 01/01/2005
• Art. 5 contents of application
• Description of installation / activities
• Use of raw / auxiliary materials
• GHG-emissions sources
• Monitoring reporting measures envisaged
• Art. 6 conditions contents of permit
• All or part of installation, one or more
  installations on same site same operator
• Focus on monitoring reporting requirements
• Obligation to surrender allowances equal to
  emissions as verified
• Art. 7 Information duty to operator -gt update
  permit

18
CO-2 Emission Tradingin Europe

• Linkage with IPPC-directive 96/61/EC
• Art. 8 coordination requirement for MS as both
  directives cover mostly same activities
• gt GHG-permit requirements lt IPPC-permit procedure
  
• Art 26 amendment to IPPC-directive
• IPPC-permit may not include any more an emission
  limit value for direct GHG-emissions, unless it
  is necessary to ensure avoiding significant local
  pollution
• MS may choose not to impose energy efficiency
  requirements for combustion or other
  installations emitting CO-2 on the site
• If necessary permits will be amended
• -gt ! consequences

19
CO-2 Emission Tradingin Europe

• Art. 9 National allocation plan (NAP) (1)
• Must be developed by each MS
• Determines the liability of individual
  installations
• Must be based on objective transparent
  criteria, 11 listed in annex III ( guidance from
  the Commission by COM (2003) 830 further
  guidance in COM (2005) 703) some of these
  criteria can be amended, according to art. 22
• Is subject to public consultation

20
CO-2 Emission Tradingin Europe

• Art. 9 National allocation plan (NAP) (2)
• Is notified to Commission considered by
  Committee
• Can be rejected by Commission
• If a NAP contains State aid within the meaning of
  Art. 87 EC Treaty, Art. 88 has to be applied
  notification to the Commission

21
CO-2 Emission Tradingin Europe

• 1st NAP needed to be ready by 31/03/2004
• some MS very late (Italy, Poland)
• Art. 10 Method of allocation of allowances
• -gt general free allocation (grand fathering) vs
  auction (e.g. Ireland, discussion in Germany)
• -gt MS shall allocate allowances
• -gt 2005-2007 at least 95 free of charge
• -gt 2008-2012 at least 90 free of charge
• ! Principle choice for free allocation, but with
  some room for charging

22
CO-2 Emission Tradingin Europe

• Art. 11 Allocation and issue of allowances
• -gt NAP must be developed for each trading period
• -gt based on NAP, MS decides about
• - total quantity of allowances
• - individual allowances (for each operator)
• For
• - 2005-2007
• - 2008-2012 ( 1st KP- commitment period)
• -gt new entrants must be taken into account
• -gt competent authority issues yearly proportion

23
CO-2 Emission Trading in Europe

• First phase ongoing 2005 to 2007
• First reporting compliance cycle complete (8980
  installations)
• Infrastructure for registries and monitoring
  established
• Common data sets generated
• Learning by doing for both authorities and
  companies
• Second phase near 2008 to 2012
• NAP submission was required by 30 June 2006
• Commission Decisions on first 10 NAPs taken on 29
  November 2006, with Communication setting out
  line
• Equal treatment for all Member States
• May 2007 20 NAPs approved
• Forthcoming proposal for including aviation in EU
  ETS
• -gt COM (2005) 459

24
CO-2 Emission Trading in Europe

• Belgium 16 January 2007 Plan accepted with
  changes required.
• 1) The annual allocation may not exceed 58.5
  million allowances.
• 2) More information needs to be provided on how
  new entrants will be treated.
• 3) Intended ex-post adjustments must be
  eliminated.

25
CO-2 Emission Trading in Europe

• Belgium
• CAP 2005-2007 62.08
• Verified emissions 2005 55.58
• Proposed CAP 2008-2012 63.33
• Allowed CAP (idem) 58.5

26
Allocation in Flanders

• General approach ET-order of 4 February 2005 as
  amended in 2006 and based on REU-decree of 2
  April 2004
• General Allocation Order by Government (28
  February 2005) Individual Allocation Decision
  for each Installation
• e.g.
• Sidmar 28.076.091 allowances
• Interbrew 176.042 allowances
• Allocations are issued individually to each
  operator (annual fractions of total amount for
  period)
• -gt Risks e.g. in case of termination of
  operations, adaptation of amount issued

27
CO-2 Emission Tradingin Europe

• Art. 12 Transfer / recognition of allowances
• Between persons in EC
• Between persons in EC and persons in 3rd C-ies if
  allowances are recognised
• MS recognize allowances mutually
• Surrender / cancellation of allowances
• gt Equal to total emissions as verified
• Cancellation of allowances on request of holder
• Art. 13 Validity of allowances
• Only for certain period
• No longer valid allowances (previous trading
  period), not surrendered and cancelled, are
  cancelled by competent authority in the new
  trading period
• - gtKind of banking is possible replacement of
  allowances

28
CO-2 Emission Tradingin Europe

• Carbon Trading Exchanges
• ECX -European Climate Exchange
• EEX - European Energy Exchange
• EXAA - Energy Exchange Austria
• Nord Pool
• Powernext

29
CO-2 Emission Tradingin Europe

• Art. 14 15 Monitoring, reporting, verification
• MS shall ensure monitoring
• Ms shall ensure that operator reports
• Commission guidelines promised by 30/09/2003,
  based on principles in annex IV, were issued on
  29 January 2004 (Decision 2004/156/EC)
• MS shall ensure that reports are verified in
  accordance with criteria set out in annex V
  (principles methodology)
• Unsatisfactory report preclude further transfer
  of allowances until new satisfactory verification

30
CO-2 Emission Tradingin Europe

• Art. 16 Penalties
• MS must set effective, proportionate and
  dissuasive penalties and notify rules to the
  Commission
• Name and shaming of non complying operators
• In case of excess emissions (not covered by
  surrendered allowances)
• 2005-2007 penalty of 40 euro / ton CO-2
• 2008-2012 penalty of 100 euro / ton CO-2
• Plus compensation equal amount of excess
  emissions

31
CO-2 Emission Tradingin Europe

• Art. 17 Access to information
• Decisions related to allocation of allowances
• Reports of emmissions
• Shall be made available to the public except for
  exemptions according to Directive on access to
  environmental information

32
CO-2 Emission Tradingin Europe

• Art. 18 Competent authority
• MS shall designate authority (-ies)
• If more than one, coordination is required

33
CO-2 Emission Tradingin Europe

• International transfer of EU-allowances governed
  by registries and central administrator (art.
  19-20)
• Art. 19 Registries
• MS shall establish registry (allowance
  accounting)
• If more than one MS cooperate, than consolidated
  registry
• Any person may hold allowances (but .)
• Registries are public
• Commission shall adopt regulation, providing for
  standardised electronic registry, ensuring
  transfer-compatibility with KP
• Regulation N 2216/2004 adopted on 21 December
  2004 (published on 29 December 2004)

34
CO-2 Emission Tradingin Europe

• Art. 20 Central administrator
• Commission shall designate central administrator
  to maintain an independent transaction log
• Central administrator must check each transaction
  to ensure regularity of transfer of allowances
• If irregularities are identified, central
  administrator shall inform MS
• 2005-2007 MS-registry lt - gt ETL
• 2008-2012 MS-registry lt - gt ETL lt - gt ITL

35
CO-2 Emission Tradingin Europe

• Art. 21 Reporting by MS
• Yearly report by MS
• Basis for report by Commission
• Commission has to organize exchange of
  information
• Art. 23 Committee
• Assists Commission

36
CO-2 Emission Tradingin Europe

• Art. 25 Links with other GHG-ET-schemes
• For mutual recognition of allowances, agreements
  with 3rd countries/KP-Parties listed in annex B
  KP, should be concluded
• If such an agreement exists, Commission shall
  draw up necessary provisions

37
CO-2 Emission Tradingin Europe

• Art. 29 Force majeure
• During the period 2005-2007, MS may apply to the
  Commission for certain installations to obtain
  additional and non transferable allowances in
  cases of force majeur
• The Commission shall determine whether force
  majeur is demonstrated and authorise the issue of
  such allowances
• The Commission shall develop guidance to describe
  circumstances under which force majeur is
  demonstrated

38
CO-2 Emission Tradingin Europe

• Art. 30 Review and further development
• gt report by Commission (30 June 2006)
• Art. 31 Implementation
• gt transposition date 31 december 2003.
• gt id . For Linking directive 13 November 2005
• Art. 32 Entry into force
• gt 25 October 2003

39
CO-2 Emission Tradingin Europe JI - CDM

• Linking Directive
• Proposal COM (2003) 403 on 23 July 2003
• JI CDM are primarily designed to provide
  flexibility to Parties
• Some EU-MS prepare their use (e.g. Netherlands)
• Mechanisms mainly driven by private sector
• Project-based instruments JI / CDM governed by
  international law

40
CO-2 Emission Tradingin Europe JI - CDM

• What does linking mean?
• Linking JI-CDM to EU-ET means creating a direct
  link to provide more flexibility and certainty to
  legal entities
• In concrete terms, linking means that JI-CDM
  credits can be used by operators to fulfil their
  obligations under the EU-ET
• Linking implies the recognition of JI-CDM credits
  as equivalent to allowances from an environmental
  and economic point of view

41
CO-2 Emission Tradingin Europe JI - CDM

• Creating a bridge to the Kyoto framework (1)
• -gt EU-ET JI-CDM are different frameworks
• Different nature
• EU-ET cap trade of direct emissions (ex ante
  allocation)
• JI-CDM baseline credit (ex post verification)
• Different regulatory context and institutions
  involved
• Different timing
• Different unit of trade
• EU-allowances
• JI -gt Emission reduction units (ERUs),
• CDM -gt certified emission reductions (CERs)

42
CO-2 Emission Tradingin Europe JI - CDM

• Creating a bridge to the Kyoto framework (2)
• ()
• Before entry into force of KP (February 2005)
  different level of certainty
• EU ET-directive final
• JI-CDM ratification of KP was necessary for
  implementation

43
CO-2 Emission Tradingin Europe JI - CDM

• Elements to be taken into consideration
• Need to preserve the architecture and the
  environmental integrity of the EU-ET-scheme
• Necessary compatibility with KP Marrakech
  Accords for the issuance and transfer of
  JI-CDM-credits
• JI can happen within the EU, particularly in an
  enlarged EU - gt importance of Acquis
  communautaire
• Baseline JI project
• EU-ET lt AC interface with JI

44
CO-2 Emission Tradingin Europe JI - CDM

• Desirability of linking JI-CDM
• Increase of compliance options for entities
• Reduction in allowance price and compliance costs
• Increase liquidity of the EU-ET-market
• Stimulate demand for JI-CDM-credits
• Contribution to host countriess SD
• Promotion of EST to 3rd countries
• Drive environmental policy integration in
  EU-external policies and contribute to
  EU-SD-strategy

45
CO-2 Emission Tradingin Europe JI - CDM

• Key elements LD (1)
• How to link?
• Conversion of JI-CDM-credits into allowances
  maintain single currency within EU-ET
• Participant lt EU-ET, delivers project credit to
  national authority and receives an allowance, in
  exchange for it
• When to link?
• 1st KP-commitment period 2nd ET-trading period
• No JI available before 2008
• Companies can accrue CDM-credits before 2008 and
  convert them afterwards (as from 2008)
• Desirability of linking JI-CDM

46
CO-2 Emission Tradingin Europe JI - CDM

• Key elements (2)
• What projects to link with?
• gt All types of credits allowed for conversion,
  except some
• How much to link? Problem
• Risk !
• gt COMMISSION DECISION of 13 November 2006 on
  avoiding double counting of greenhouse gas
  emission reductions under the ETS for project
  activities under the Kyoto Protocol C(2006) 5362

47
CO-2 Emission Tradingin Europe JI - CDM

• Consequences of linking
• More flexibility and certainty for
  entities/operators
• More control for MS

48
CO-2 Emission Tradingin Europe JI - CDM

• More flexibility and certainty for
  entities/operators
• If projects fit with objective criteria, entities
  will have full certainty upon conversion use
  credits for EU-ET-compliance
• Newly issued allowances can be used as any other
  original allowance
• No further restriction on use and banking or
  other obligations arising from KP

49
CO-2 Emission Tradingin Europe JI - CDM

• More control for MS
• to check at the moment of conversion against
  objective criteria what project credits come in
  and if they are compatible with national climate
  strategy national JI-CDM-programmes
• to implement KP requirements on banking of JI-CDM
  credits, commitment period reserve and
  supplementarity

50
CO-2 Emission Tradingin Europe

• ET new policy tool in EU environmental policy
• Compliance is the ultimate challenge
• () compliance in a permit system depends on the
  technical ability to detect violations and the
  legal ability to deal with the violations.
• () research has mainly focused on the issue of
  non-compliance in the sense of not holding enough
  permits to cover all emissions and has more or
  less neglected non-compliance in monitoring and
  reporting.
• -gt Review art 30 !

51
EU ETS stakeholder survey

• Key results
• EU ETS has an impact on corporate behaviour all
  sectors price in value of allowances
• Long-term topics have highest priority for all
  stakeholders
• However no clear consensus on what choices to
  take
• Companies vote for longer allocation periods (ten
  years or more)
• Benchmarking seen as interesting alternative,
  however most companies think more than 3
  benchmarks per sector are needed
• More auctioning disliked by most companies but
  favoured by other stakeholders
• Wide consensus that scheme design changes should
  be brought in with sufficient lead-time

52
Recommendations by High Level Groupon
Competitiveness, Energy and the Environment

• EU ETS is the central instrument for GHG
  reductions towards the 2C target (?)
• Advance international debate beyond 2012
• Identify how EU ETS can be linked to emerging
  compatible systems and use of Kyoto credits can
  be facilitated
• Increase investor certainty
• Take account of regulatory stability and improve
  regulatory coherence
• Consider participation costs of small
  installations

53
The EU ETS Review

• Commission Communication COM(2006)676 Building a
  global carbon market
• Identified four areas for review
• Scope of the Directive
• Further harmonisation and increased
  predictability
• Robust compliance and enforcement
• Linking with emission trading schemes in third
  countries
• In addition, consideration being given to
• Institutional and procedural aspects
• Relationship between EU ETS and other market
  based regulatory instruments

54
What the review is about

• Improve the functioning of the scheme based on
  practical implementation and experience
• Relevant for periods from 2013 onwards, as
  markets need regulatory stability
• Expand coverage further sectors and gases,
  beyond aviation
• N20, CH4, carbon capture and storage
• Streamline design of the EU ETS
• More harmonised approach to cap-setting and
  allocation
• More predictability and certainty
• More harmonised approach to new entrants and
  closures
• Harmonisation of accreditation and verification

55
What the review is not about

• Not relevant for the second trading period
• Allocation plans are decided this year
• Directive can not be amended before the start of
  the second period
• Regulatory stability calls for appropriate
  lead-time for scheme design changes
• Not about continuation of EU ETS
• Not change for the sake of change
• Terms of reference set out the issues for the
  review
• Changes to be based on examination of the costs
  and benefits of scheme design changes

56
Implementation of the Review

• European Climate Change Programme (ECCP)
• Multi-stakeholder consultative process
• Consultation on review to take place within ECCP
  group on emission trading
• Interested parties are invited to submit their
  views and share their practical experience with
  the Commission
• Member States Report of on implementation of the
  EU ETS (Article 21 Reports)
• LIFE project LETS Update

57
CARBON MARKET Report 2007

• Global carbon markets were worth 22.5 billion in
  2006. The market saw transactions for 1.6 billion
  tonnes of CO2e. The EU ETS accounted for 62 per
  cent of the volume and over 80 per cent of the
  value.
• EU ETS saw 1 billion tonnes of CO2 transacted,
  worth 18.1 bn. This was 2.5 times higher than in
  2005. The OTC and exchanges dominated by 817 Mt
  and 14.6 billion.
• Developing countries continue to deliver
  reductions. The CDM saw transactions for 523 Mt
  CO2e in 2006, with a secondary market adding 40
  Mt and a combined value of 3.9 billion.

58
CARBON MARKET Report 2007

• Our reference scenario expects volumes in the
  carbon market to grow by 50 in 2007. We expect
  more than 2.4 billion tonnes CO2e to transact
  over the year. Using current prices as a
  benchmark, the extra volume marginally increases
  the total value to 23.6 billion.
• 65 of survey respondents say EU ETS have
  initiated internal abatement projects. This is a
  marked change from last years survey, where only
  15 said the introduction of carbon trading had
  initiated abatement.
• EU ETS is main compliance strategy for 37 of
  survey respondents. Internal abatement and
  investment/trading of CDM/JI credits (both about
  25) are seen as the second most important
  strategies. Relocation of production is only
  mentioned by a handful of respondents

59
CARBON MARKET Report 2007

• More confidence in CDM/JI than one year ago. The
  CDM/JI market is a success, at least compared to
  the 2006 survey. The project market is seen as
  more mature (although not a mature market), and
  is resulting in cost-effective emission
  reductions.
• Close to complete pass-through of carbon into
  power prices. The impact of the CO2 price has
  been one of almost complete pass-through in the
  UK and German power markets, despite a slow
  response to the introduction to the scheme for
  continental power prices. The impact on the
  Nordic power market is primarily through the
  interconnection with Germany.
• Import of credits from CDM/JI will not be enough
  to meet shortfall in EU ETS. Survey respondents
  expect levels of abatement in the EU ETS to
  higher in Phase II than in Phase I. Although the
  system opens for substantial imports of credits
  from CDM/JI, 82 of respondents find that this
  will not be enough to meet the shortfall in
  Europe.

60
CARBON MARKET Report 2007

• Survey finds 17/t for EUA price in 2010, 23/t
  in 2020. Survey respondents do not expect import
  of credits to be enough to avoid domestic
  reductions in the EU ETS. Thus, the price of
  carbon should reflect fuel-switching prices
  rather than the price of CDM/JI credits.
• !!! Marketprice on 3 May 2007 approximately O,50
  euro/t
• 71 of respondents expect a global climate
  agreement post-2012, with a 60 likelihood that
  USA and Australia will join. Only 9 of
  respondents do not expect a global agreement.
  China (36) is seen as a more likely candidate
  than India (30) in such an agreement.

61
Recent EU developments

• 10 January 2007 Communication Limiting global
  climate change to 2 degrees Celsius the way
  ahead for 2020 and beyond
• -gt limit GHG-emissions of developed countries to
  minus 30 in 2020 ( 1990), for EU 20
  through ET-system
• -gt in 2050 worldwide reduction of 50 , for
  developed countries - 60 to 80

62
Recent EU developments

• Environment Council conclusions of 20 february
  2007
• EU Spring Summit (9 March 2007) conclusions
• -gt chapter III on integrated climate and energy
  policy endorses 20/2 outcome
• UNFCCC future (post 2012)
• global carbon markets, technology transfer,
  adaptation, deforestation, intl avaiation and
  maritime transport emissions

63
Recent EU developments

• On 8 June 2007 Transport Ministers adopted
  Council Conclusions on the position to be taken
  by EU Member States at the ICAO Assembly in
  September 2007 in relation to the inclusion of
  aviation in the European emissions trading
  scheme.
• On 31 May 2007 the European Economic and Social
  Committee adopted an opinion welcoming the
  Commission's proposal as a "carefully considered
  and pragmatic approach" to address emissions from
  aviation.

64
General conclusion

• Climate change policy has introduced the concept
  of a market based instrument ( ref. new
  Communication 28 March 2007)
• Its application raises a lot of implementation
  questions
• A top political willingness has provided for a
  rapid institutionalisation including market
  values and opportunities
• Its environmental benefits are still hard to
  assess