1. Brewer - Stockholm - 12.12.20061 Uncertainty about Emission Rights and Energy Prices - and Impact on Economic Growth Thomas L. Brewer Associate Professor, Georgetown University, Washington DC and Associate Fellow, Centre for European Policy Studies, Brussels

2. Brewer - Stockholm - 12.12.20062 Outline of Comments Uncertainty and Transparency Issues about the Emissions Trading Scheme Three Episodes Current Situation Offsetting Border Measures to Address Energy Price and Competitiveness Issues

3. Brewer - Stockholm - 12.12.20063 Three Episodes of Regulatory Uncertainty and Their Effects on EUA Prices Spring 2004 Spring 2006 Autumn 2006

4. Brewer - Stockholm - 12.12.20064 EUA Prices: February 2003-June 2004 (From Point Carbon – used with permission)

5. Brewer - Stockholm - 12.12.20065 EUA Prices: November 2005-October 2006 Chart from Carlo Carraro, FEEM, Italy Presentation at Florence School of Regulation, 20 September 2006 Used with permission.

6. Brewer - Stockholm - 12.12.20066 Price developments on the EU market: Nov. 05 – Oct. 06

7. Brewer - Stockholm - 12.12.20067 EUA Prices: November-December 2006 (From Point Carbon)

8. Brewer - Stockholm - 12.12.20068 Current Situation: Commission Decision of 29 November 10 proposed NAPs rejected by the Commission (including Sweden, Germany and UK) 6 not yet submitted (Austria, Czech Rep., Denmark, Hungary, Italy, Spain) 9 pending

9. Brewer - Stockholm - 12.12.20069 Specifics of Rejections Germany: Reduce total from 482 mmt to 453.1 mmt Include new power plants UK: Inadequate list of plants Total allocations okay (246.2 mmt) Sweden: Next slide

10. Brewer - Stockholm - 12.12.200610 Criteria Contravened by Swedish Plan 2. Allowances consistent with actual and projected progress toward fulfilling contribution to Community’s commitments in Decision 93/389/EEC 3. Allowances consistent with potential to reduce emissions 10. List of installations covered with quantities of allowances to be allocated to each one 12. JI/CDM limit: maximum percentage of total allowances to be CERs and ERUs

11. Brewer - Stockholm - 12.12.200611 Excerpt from Summary Table in Commission Communication to Council and Parliament (next slide)

12. Brewer - Stockholm - 12.12.200612

13. Brewer - Stockholm - 12.12.200613 Uncertainty and/or Transparency

14. Brewer - Stockholm - 12.12.200614 Transparency Uncertainty

15. Brewer - Stockholm - 12.12.200615 Inevitable Uncertainty and Controllable Transparency

16. Brewer - Stockholm - 12.12.200616 Uncertainty Issues More Generally Four Levels 1. Terms and implementation of members’ National Allocation Plans (NAPs) 2. Future EU allocation and other rules 3. Industry coverage 4. International interactions of ETS with other climate regulatory regimes … and the trade regime

17. Brewer - Stockholm - 12.12.200617 International Competitiveness Off-setting border measures on imports from ‘cheap energy’ non-Kyoto countries? EU Parliament resolution Commission position French government recent statement

18. Brewer - Stockholm - 12.12.200618 For further information… “Business Perspectives on the EU Emissions Trading Scheme,” Climate Policy, 5 (2005): 137- 144 “The WTO and the Kyoto Protocol: Interaction Issues,” Climate Policy, 4 (2004): 3-12 www.usclimatechange.com brewert@georgetown.edu