EU ETS and the International Climate Regime

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EU ETS and the International Climate Regime
Andrei Marcu Sr VP, Head of Policy and Regulatory
Affairs
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Global GHG Market
Kyoto Party-Level Entity-Level Non-Kyoto Party
Japan
Voluntary targets
Canada
Projects, CDM/JI
EU25X
EU ETS
Russia
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EU ETS the International Climate Regime

• EU ETS is a Domestic Emissions Trading Scheme
• EU ETS was conceived to assist the EU to meet its
  international /Kyoto Protocol commitments
• Impact of International targets and progress on
  international negotiations
• EU ETS - its existence is connected but not
  dependent on Kyoto Protocol
• EUAs and AAUs shadow each other
• EU ETS makes use of the Kyoto Protocol
  flexibility mechanisms(CDMJI)
• EU ETS makes use of the Kyoto Protocol and its
  infrastructure or has to use it CITL/ITL
  connection

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EU ETS International Regime Some Issues

• ITL is sitting on the transfer path for EUAs/EU
  ETS as they need to be shadowed by AAUs
• Art 17 eligibility is creating disturbances in
  market functioning
• UNFCCC regulatory problems reflect in EU ETS
  functioning
• Dual regulation without coordination
• AAUs Hot Air is not a word that should be
  acceptable
• Qualitative Restrictions in the EU ETS for CERs
• Recycled CERs

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EU ETS International Regime What is the Future

• For EU ETS international connection has two
  dimensions
• Multilateral (UNFCCC)
• Domestic Emissions Trading Systems
• EU ETS UNFCCC increasingly disconnected
• Reversal of CIT/ITL role
• Appearance of domestic offsets under Art 24 of EU
  ETS
• CDM/JI much smaller and uncertain role in the EU
  ETS. Role depending of international negotiations
• Target 20-30 depending on international
  negotiations

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EU ETS International Regime What is the Future

• New mechanisms are emerging in the international
  regime for EU ETS to use
• REDD
• Sectoral crediting and trading
• Etc
• Linking with other Domestic Trading Schemes
  when will they come ?
• China is moving with 6 pilots
• Partnership for Market Action
• Ukraine
• Colombia
• China
• Turkey
• Mexico
• Etc

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EU ETS International Regime Conclusions

• EU ETS is here to stay
• EU ETS is an regulatory issue not a scientific
  debate
• EU ETS is an instrument and not the issue issue
  id CC and EU climate change policy
• Phase 3 has significant changes for EU and Poland
• EU ETS relationship with the international
  regimes MAY change but will stay strong
• ETS is an instrument to engage in an efficient
  way in the green race

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Global GHG Market Post-2012
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Eligibility of Project-Based Instruments Post 2012
China
OECD
Allowances
Russia
India
Ukraine
High EmissionsHigh Wealth
NIS
Brazil
?
High EmissionsLow Wealth
Korea, Mexico,South Africa
?
Asian Tigers
Emissions
OPEC
Kyoto Protocol Annex B
Latin America
?
Low EmissionsLow Wealth
Low EmissionsHigh Wealth
Low EmissionsLow Wealth
Small Island States
Israel
Singapore
?
LDC Africa
Post 2012Agreement?
Wealth
CDM/JI Credits
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