Finnish Climate Change Strategy

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Finnish Climate Change Strategy

• Senior Engineer Petteri Kuuva
• Ministry of Trade and Industry

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EU Emissions Trading System

• Emissions Trading Directive (2003/87/EC) took
  effect on October 25th , 2003 and emissions
  trading began on January 1st , 2005.
• How does EU-ETS work?
• Cut CO2 emissions cost-effectively
• Emissions allowances are allocated for the plants
  within the ET-sector, but the amount of
  allowances is less than needed
• The shortage of allowances in the market creates
  a market price for the allowances (supply and
  demand in the market)
• Allowance can be traded within the EU

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EU Emissions Trading System (cont.)

• How does EU-ETS work? (cont.)
• If the companies (within ET-sector) have less
  allowances than they need (emissions during the
  year or projected emissions) companies can
• cut their own emissions (e.g. energy
  conservation, use renewable energy or energy with
  lower CO2 content, reduce production)
• buy allowances from other companies or from the
  market
• take part in JI/CDM projects (or buy)
• If the companies has more allowances than
  emissions companies can sell the allowances
• National Allocation Plans (NAP)
• The European Commission approves the NAPs and the
  Member States allocate the allowances according
  to the Commissions decision.
• The next NAP must be submitted to the Commission
  by June 30th ,2006 (NAP for Kyoto period
  2008-2012)

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Emissions by sub-category in the years 1998-2003
and emission allowances for the years 2005-2007,
Mt CO2
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Kyoto Mechanisms

• Joint Implementation, JI
• Clean Development Mechanism, CDM
• Emission Trading, ET (between Governments)
• Emissions Trading Directive has been amended with
  so called Linking Directive (2004/10/EY)
• project mechanisms (JI, CDM) are part of the
  EU-ETS
• a cost-effective tool for companies within
  ET-sector (and Governments)
• companies within ET-sector can use CERs (CDM
  projects) from year 2005 and ERUs (JI projects)
  from year 2008

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Kyoto Mechanisms (cont.)

• National implementation in Finland
• Shared responsibilities between the authorities
• Ministry of Trade and Industry general tasks
  (e.g. legislation and budget), coordination and
  keeping of registers (Energy Market authority)
• Ministry of Environment JI projects (Designated
  Focal Point)
• Ministry of Foreign Affairs CDM projects
  (Designated National Authority)
• A Steering Group representation of the
  ministries (chairman from MIT), guidelines for
  the Government policy

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Why a New Strategy?

• Government Programme The Government will
  implement the National Climate Strategy and will
  update it to take account of the EU emissions
  trading directive and the Kyoto mechanisms.
  Preparations will be made for the negotiations
  that will follow the end of the Kyoto Protocol
  commitment period the negotiations will give due
  consideration to the competitiveness of the
  national economy
• National Allocation Plan 2 must be submitted to
  the Commission by June 2006
• National Climate Change and Energy Strategy
• Biggest changes since the last Climate Change
  Strategy (2001)
• EU Emissions trading
• Kyoto Mechanisms

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Preparation of the Strategy

• The Ministerial Working Group for Climate Change
  and Energy Policy has the overall responsibility
  of the preparation
• Ministry of Trade and Industry (Chairman Mauri
  Pekkarinen), Ministry of Environment, Ministry of
  Agriculture and Forestry, Ministry of Transport
  and Communications, Ministry for Foreign Affairs
  and Ministry of Finance
• Practical co-operation within the Authorities
  Network
• Officials from the same ministries (Chairman
  Taisto Turunen)
• Resources within the Ministries
• E.g. in MTI about 10 persons take part in the
  preparation

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Goals of the Strategy

• give guidelines for the international climate
  changes negotiations
• support policies to cut GHG emissions also after
  the Kyoto period
• give necessary political guidelines for the
  National Allocation Plan for period 2008-2012
• prepare the national position for the use of
  flexible mechanisms
• prepare national energy policy which takes into
  account the EU emissions trading directive
• prepare guidelines for the use of economic
  instruments, such as taxes and subsidies
• prepare the national positions for the use of
  sinks (article 3.4)
• summarize the goals of the National Strategy for
  Adaptation to Climate Change
• support the competitiveness of the Finnish
  economy

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How we will cut the emissions? -Burden sharing
for ET sector, Non-ET sector, Government

• Average annual emissions (With Measures
  scenario) for the period 2008 2012 is 81.5 Mt
  CO2 ekv.
• Kyoto target for Finland is 70.4 Mt CO2 ekv.
• The need to cut GHC emissions is about 11 Mt CO2
  ekv. per year
• The cost of the emissions reduction is about 200
  million /year
• The costs to cut emissions in the Non-ET sector
  is high (compared the price of emissions
  allowances)
• most of burden will be for the ET sector (impact
  for the competitiveness?)
• What is the role for the Government (active or
  passive in flexible mechanisms)?
• Must be financed from the state budget

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The impacts of the EU emissions trading directive

• The ET-sector will automatically fulfil the
  CO2-emissions cuts
• The companies can cut their own CO2-emissions or
  cut emissions abroad (i.e. buy allowances from
  the EU-market, take part in JI or CDM
  projects)
• There is no need to subsidise the renewable
  energy investments of the ET-sector from the
  clime change point of view
• But there are still other reasons that justify it
  (sustainable development, security of energy
  supply, employment policy, regional policy, etc.)
• Impact on companies depends on the sub-sector
• Process industry
• District heat
• Electricity generation
• Will this be taken into account in the NAP 2?