PowerPointpresentatie

1
EU Directive on Emission Allowance TradingState
of play Peter Wittoeck FOD Volksgezondheid,
Veiligheid voedselketen en Leefmilieu DG
Leefmilieu Eenheid klimaatverandering
2
Timeline (past)

• Cion Green Paper 8.03.2000 stakeholder
  consultations
• Proposal for a Directive 29.10.2001
• EU (Env.) Council orientation debate on major
  issues 12.12.2001
• Progress reports to all EU (Env.) Council
  meetings in 2002
• EP amendments 10.10.2002
• Political agreement Council 9.12.2002

3
Time line (future)

• Adoption of preambular paragraphs
• 2nd reading in EP
• 2nd reading in Council
• Conciliation procedure?
• In time for implementation by MS by dec. 2003?

4
General characteristics

• Cap and trade
• 2 trading periods
• 2005-2007 (pre-Kyoto)
• 2008-2012 (Kyoto 1st c.p.)
• Entity trading
• Focus on energy intensive industries
• Focus on CO2 emissions

5
Main crunch issues

• Mandatory or voluntary?
• Participating sectors/gases
• Allocation
• Compliance
• Banking
• Links with other systems

6
Participation/coverage

• Mandatory for all EU Member States
• BUT Possibility to link to other DET (e.g. new
  MS)
• Mandatory for sectors covered by annex I (energy
  intensive, above threshold)
• Combustion installations
• Oil refineries
• Coke ovens
• Ferrous metals
• Cement
• Glass
• Ceramic products
• Pulp and paper

7
Participation/coverage

• BUT
• Possibility to OPT OUT in 1st period
• Possibility to OPT IN
• smaller installations in Annex I from 2005
• additionnal activities and gases from 2008
• Review by 31.12.2004
• proposal to include other activities and gases
• AND
• All persons  may participate in trading

8
Initial allocation methodology

• 1st period (2005-2007)
• free allocation (grandfath./benchmark.)
• based on criteria contained in annex III (not
  very specific)
• BUT further (facultative) guidance to be
  developed by Cion.
• ! NAP to be submitted to Cion by 31.12.2003
• 2nd period (2008-2012)
• maximum 10 auctioning
• 2004 review will consider further harmonisation

9
Pooling (German proposal)

• Aim shield entire sectors from rules on
• Allocation
• Monitoring, reporting and verification
• Liability/compliance
• Main risk for other MS
• Market power (Germany has ½ of installations)
• Result
• confirmation that pooling allowances is permitted
  (which it was already)
• /- same rules
• need for Cion approval

10
Compliance

• Emissions report not satisfactory
• suspension of eligibility to transfer
• Insufficient allowances
• Name and shame
• Penalty
• 2005-2007 40/ton CO2 eq
• 2008-2012 100

11
Banking

• Between 1st and 2nd period
• MS may allow banking
• Kyoto does not recognise 1st period allowances
• Between 2nd and subsequent
• Allowed
• Necessary to mirror Kyoto banking

12
Links with other schemes

• Other ET schemes
• Only with Kyoto Annex B Parties
• Through agreements, art. 300 EC
• Risk flooding EU market with hot air
• MS may trade individually
• Project-based mechanisms, incl. JI CDM
• Credits will be recognised in future
• Modalities to be decided in separate Directive in
  2003
• Is Cion preparing an EU credit-based instrument?