http:europa'eu'intcommenvironmentclimathome_en'htm

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http//europa.eu.int/comm/environment/climat/home_
en.htm
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The Problem Climate Change

• From 1990 to 2100, the global average temperature
  will increase by 1.45.8 C and 26.3 C for
  Europe.
• Europe has warmed more than the global average,
  with a 0.95 C increase since 1900.
• The warming has been greatest in the most
  northern latitudes and the Iberian Peninsula

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Climate Change is happening and accelerating
Temperature in Europe
Source Stott et al. 2004
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Significant economic losses today

• Flooding in Europe caused around 15 billion of
  economic damages in 2002
• Between 10 to 17 billion economic cost of heat
  wave in Europe 2003 plus around 35.000 premature
  deaths
• Heatwave in India 2002 and rainfall deficit
  caused drop in GDP by 3
• Hurricanes Katrina, Rita and Wilma (all in 2005)
  more than 150 billion
• Australia drought in 2002 cut farm output by 30
  and shaved 1.6 off GDP

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The EUs Kyoto challenge until 2012
EUs 15 emissions 0.9 below 1990
emissions Additional policies and measures by MS
and the use of the Kyoto Protocols Kyoto
mechanisms and carbon sinks needed to meet KPs
target !
Source European Commission
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Implementation challenge aheadSome Member
States need more ET
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The EUs post-2012 strategy
Winning the Battle against Global Climate
Change 9 February 2005

• Five essential elements
• Build on Kyoto
• Broaden participation
• Include more sectors and all gases
• Deploy and develop technologies
• Adapt to the effects of residual climate change

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The international picture

• The world is watching Europe and is impressed
  about the achievement to put in place the EU ETS
  in record time
• The most critical voices on Kyoto (US, Australia,
  Canada) discuss or start introduction of ET
  schemes
• The developing countries benefit from the
  integration of CDM into the EU ETS
• EU ETS both underlines EU leadership and
  motivates the reluctant to follow us

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Why is the EU ETS important?

• Cornerstone of Europes strategy to implement
  Kyoto Protocol as well as a major structural
  element for the post-2012 climate strategy
• Worlds largest emissions trading scheme nucleus
  of international carbon market
• Market-based instrument that allows
  cost-effective environmental policy - we fix the
  total cap and the market can choose options.
• We put a price on carbon. This creates a
  commercial driver to take on new and clean
  technology and make it more effective.

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The EU ETS in a nutshell

• A company based cap-and-trade type scheme
• Major emitting sectors covered (Energy
  industry) by permit requirement for CO2 emissions
• Currency Allowances, entitling to emission of 1
  ton of CO2 equivalent, allocated largely cost
  free up to 2012
• Coverage about 50 EUs CO2 emissions and
  10,000 installations
• EU wide electronic Registry in place
• Monitoring, reporting and verification
• Financial sanctions on non-compliance
• Links to project credits established and links to
  other domestic cap-and-trade schemes possible

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State of play

• First phase ongoing 2005 to 2007
• First compliance cycle closed
• Infrastructure for registries and monitoring set
• Common data sets generated
• Learning for both authorities and companies
• Second phase under preparation 2008 to 2012
• NAP submission deadline 30 June 2006
• Commission assessment of NAPs
• Final allocation decision 31 December 2006
• Build on first phase experience
• Further enrich learning to inform the review

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The emerging global carbon market
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EU ETS Market Volume
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EU ETS Price Development
Phase I allowances Phase II allowances
Source Point Carbon
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2nd Phase The Commissions assessment of NAPs
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Assessment of NAPs the procedure

• NAPs of phase II were due 30 June 2006!
• 19 NAPs have arrived (status 28 November)
• Process is the same as in the first period
• Commission guidance to build on experience and
  recommend sound choices within the given legal
  framework
• Directive allows the Commission three months to
  assess a notified NAP once complete
• A Commission Decision will be adopted on each plan

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Assessment of NAPs the substance

• Commission needs to assess NAPs on basis of 12
  criteria set out in ANNEX III of ET-Directive
• On this basis this task primarily entails to
  assess the quantity and the method of a Member
  State to allocate allowances to its operators

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What is allocation about?

• it defines the scarcity at EU level in the ETS
  and is the driver of the environmental quality of
  the EU ETS
• relevant for all economic sectors

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The basic questions are

• how many allowances
• go to whom
• how?

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Allocation how many?

• Set out in national allocation plan
• adhering to common criteria
• see annex III of the Directive
• subject to scrutiny by the Commission
• National allocation plan may be rejected in part
  or total
• process and outcome transparency (public
  participation)

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Allocation method how?

• Method for 2005 to 2007
• free of charge allocation of at least 95 ,
  Member States may auction up to 5
• Method for 2008 to 2012
• free of charge allocation of at least 90 ,
  Member States may auction up to 10
• EC review in 2006/07 to look at further
  harmonisation

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(No Transcript)
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The Member States in the first batch

• France
• Germany
• Greece
• Ireland
• Latvia
• Lithuania
• Luxembourg
• Malta
• Slovakia
• Sweden
• UK

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Outstanding NAPs

• On 12 October Commission launched infringement
  proceedings
• At this stage Austria, Czech Republic, Denmark,
  Hungary, Italy, and Spain are missing
• All but Denmark have draft NAPs
• Further legal steps will be taken in the course
  of December

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• On Wednesday 29 November 2006 the European
  Commission is scheduled to take its first set of
  decisions on national allocation plans submitted
  under Directive 2003/87/EC, which establishes the
  EU emissions trading scheme for greenhouse gases.
  This first set of decisions will concern 11
  countries France, Germany, Greece, Ireland,
  Latvia, Lithuania, Luxembourg, Malta, Slovakia,
  Sweden and the United Kingdom. The earliest an
  announcement will be made is 12pm Central
  European Time (CET). The announcement will
  comprise a press release and an accompanying
  technical briefing paper as an annex. If the
  announcement is made at 12pm CET, it will be
  displayed on the RAPID website under "midday
  express" as well as on this page. If the
  announcement is not ready to be made at 12pm CET,
  then a statement to this effect will be sent out
  at 12pm CET to the news agencies listed with DG
  Environment. This statement will simultaneously
  also be posted on this website. Thereafter, a
  follow-up statement will be disseminated in the
  same manner to the listed news agencies and the
  DG Environment website, giving 20 minutes notice
  of the announcement being made. Finally, 20
  minutes later, the announcement itself will be
  disseminated to the listed news agencies and the
  DG Environment website. The legal decisions
  themselves will be posted on this web page at the
  time of the announcement being made.
• http//ec.europa.eu/environment/climat/2nd_phase_
  ep.htm