Managing our Carbon Emissions or How can we be made to do so? Dr Bill Kyte OBE Talk given to GEF 26 April 2017

Scope of Presentation Targets International scene What do they mean? What is the scale of the problem? Some options to illustrate scale International scene Intergovernmental Panel on Climate Change (IPCC) UN Framework Convention on Climate Change (UNFCCC) Tools for governments Voluntary, Command & Control, Economic Instruments EU Emissions Trading Scheme (EU-ETS) Past, present & future Brexit

Assumptions For this talk I will assume that: Enhanced Global Warming (Climate change) is real Climate change is caused by mankind’s actions There is a need to restrict temp rise to 2o C (1.5oC) There is a need for local, national, regional & global action The Paris agreement will hold

What is the Target 2o C has been identified as a ‘threshold’ above which there is a significant increase in ‘dangerous’ impacts and therefore has been adopted as a political target. Many would argue that 1.5o C is more appropriate.

What does 2oC imply? International EU UK 1,000 Gt C total carbon budget Emissions peak by 2020 Only 50% of 1990 global emissions by 2050 EU 40% by 2030 of 1990 emissions – legally binding 80-95% by 2050 - aspiration UK 57% by 2030 of 1990 emissions – legally binding 80% by 2050 - legally binding

Different ways of ranking emissions % of global emissions Emissions per capita Carbon intensity per GDP Cumulative 1850-2012 Estimated 2030 Gt CO2e China 24.0 Qatar 51.7 Iraq 3.21 US 366 China 15.4 US 17.7 Kuwait 34.1 Uzbekistan 2.01 EU 329 India 7.2 EU 12.1 Net Antilles 32.3 Qatar 1.67 China 150 US 7.1 India 5.4 UAE 30.8 Mongolia 1.63 Russia 103 EU 4.3 Russia 5.2 Bahrain 29.7 N Korea 1.56 Germany 85 Russia 2.7 Japan 3.8 Trin/Tob 27.9 Net Antilles 1.53 UK 70 Japan 1.2 Germany 2.6 Aruba 23.1 Kazakhstan 1.49 Japan 51 Brazil 0.7 Canada 1.8 Luxemb’g 22.7 Trin/Tob 1.43 India 38 S Africa 0.5 UK 1.8 Brunei 19.4 Bahrain 1.32 UK 0.4 S Korea 1.6 Falkands 19.4 Jamaica 1.32 Mexico 1.5 US 19.1 Turkm’n 1.19 Australia 17.6 UAE 1.15 TOP 4 – 59% TOP 6 – 68% TOP 15 – 81%

Carbon Flows through trade

The heart of the Paris Agreement Parties to the Paris text agree : To hold increase in global average temperature to “well below” 2°C and “pursue efforts” to limit increase to 1.5°C National Commitmrnts to limit temperature increase. “The efforts of all parties will represent a progression over time.” New NDCs every five years To aim to reach a global peaking of emissions “as soon as possible.” Aim for balance between emissions and sinks post 2050 Developed countries to lead emission reduction efforts Compliance committee reports on countries’ progress annually Progress check : “global stocktake” every 5 years from 2023

INDCs - The landscape of regulation : references to carbon tax, ETS and International market mechanisms Domestic ETS and carbon taxes Planned / possible use of int'al market mechanisms No specific references or no INDC yet

International, EU & UK Tools Voluntary measures Education/labels Voluntary agreements Command & Control Efficiency standards Emission limits Economic instruments Subsidies/Penalties Carbon tax Emissions trading

trading scheme deliver the same result Economic Instruments Subsidies Kick-starting technologies, should be short term Carbon Tax Carbon price known but emissions reduction unknown Emissions trading Emissions reduction known but price unknown In theory, a carbon tax and an emissions trading scheme deliver the same result In practice, there are significant differences

Comparison of Carbon Tax & ETS Emission Reduction Unknown Known Carbon Price Cost Effectiveness Low High Simplicity Low/Medium Medium Scope All emitting sectors Best for large sources Impact Company Site International Unlikely Can be linked Revenue recycling Yes TAX - ETS - Pay to continue polluting Pay to continue polluting but the total cap has to be met

The EU Emissions Trading Scheme EU ETS is a ‘cap & trade’ scheme Phase 1 2005-2007 ‘Learning by doing’ Phase 2 2008-2011 Cap of -6.5% from 2005 Phase 3 2012-2020 Cap decreases by -1.74% annually Backloading Market Stability Reserve (2019 onwards) Phase 4 2021 -2008 Cap decreases by -2.4% annually

The EU ETS Has performed well: Perceived to have not performed well: Has put carbon on the boardroom and installation agenda Emissions have been reduced & cap met Single carbon price eliminating competition issues within EU Market has functioned well Nearly 100% compliance (even airlines) Perceived to have not performed well: Investment (low carbon) not incentivised Carbon price is too low System is too complex Windfall profits from free allocation

Other Domestic Industry Transport UK Climate & Energy Policies Actions to meet Government Target (-20% CO2) Projects Avoidance of emissions International Emissions Trading Domestic Actions to meet Kyoto (-12.5% GHG) Home Energy Efficiency Scheme (HEES) £330m DETR EU Emissions Trading Scheme EESoPs Energy Eff Stndrd Perform. Actions involving only Energy Industry Electricity Association Fuel poverty task force Emissions Trading Scheme Flare Consents Scheme Fuel Poverty Aviation Emissions Scheme Affordable Warmth Scheme DTI & Trans Co £20m Green Trading International Market Trans. Measures Investment energy eff. CCL Agreements Fuel efficiency or emission targets for CCL reduction Green Certificate Trading Meet supplier obligation Branding Perceptions FFL Income Industry Supplier Renewable Obligation Climate Change Levy Build CHP? Promote Energy Efficiency Revenue from CCL for energy efficiency in business NFFO PES obligation 10% supply from renewables CCL Exemption Renewables & CHP Enhanced Capital Allowances Energy efficiency measures IPPC BAT & energy efficiency EU 22-23% renewable supply directive 10GW(e) Installed CHP capacity Assumed Power Station Mix DTI projections Promote Renewables & CHP Use revenue from CCL Green Tariff Endorsement by Energy Savings Trust Areas Not Tackled Directly •Agriculture •Landfill •Electricity Production •Oil industry •Aviation Export Credit Guarantee Application must include environmental assessment CHP and Renewables Transport Car Tax Relate to car emissions Local Agenda 21 Public sector energy efficiency Integrated Transport Strategy UK Climate & Energy Policies New Deal for Transport DETR on transport Tax on Work Parking To encourage use of public transport Company Cars Tax relief related to emissions Voluntary Agreement Reduce emissions Transport Fuel Duty May be increased Other

Thank You