Has the European Union Emissions Trading System Been a Success? Energy Law Lauren Tozzi Fall 2010
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
Background UN Framework Convention on Climate Change Kyoto Protocol EU ETS
Emissions Trading System Purpose Structure Timeline
Purpose of the ETS To help the EU and member states meet their goals under the Kyoto Protocol. Two mechanisms in the Kyoto Protocol make the ETS possible: Aggregate Emissions Emissions Trading
Terms Who’s trading? Covered installations – the entities in the Member States that must comply e/g – cement and steel factories are covered installations What are they trading? 1 allowance = permission to emit one ton of carbon dioxide
Commission
Timeline Phase I: 2005 – 2007 Phase II: 2008 – 2012 Phase III: 2013 – 2020
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
Lower Emissions MIT Study: 5% in Phase I EU Commission: 11.6% EU Commission: “well on-track”
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
Market Crash National Allocation Plans (NAPs) Overestimation Verified Emissions Data
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
Solutions NAP Review in Phase II EU-Wide Cap in Phase III Bonus Points
Solutions NAP Review in Phase II EU-Wide Cap in Phase III Bonus Points
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
What’s the new threat? And the lack of international cooperation on climate change…
Down Economy Causes Flood of Allowances Factories and production lines go idle Covered installations need fewer allowances So they sell their extra allowances, and There’s a flood of allowances.
What’s the new threat? AND THE LACK OF COOPERATION ON INTERNATIONAL CLIMATE CHANGE…
Outline Background Lower Emissions Market Crash Solutions New Threats Or, are they?
Or, are they? Good forecast despite flood of allowances Steady price of carbon despite bad news
Safety Net
Conclusion