Green Week: Trading places

Thursday at Green Week focuses on the impact of the EU's landmark emissions trading scheme. With trading taking place daily, we have comments from three of the key guest speakers at today's not to miss, day-long event.

Paul van Slobbe

"Emissions trading started this year and is truly a great achievement of everybody who contributed.

The authors of the scheme have been wise enough to introduce a pilot phase, to be followed by possible improvements of the scheme.

Looking back at the first allocation process I already see two major areas for potential improvements: an EU level playing field and cost efficient regulation.

Member states have chosen to interpret the definition of combustion installations differently.

This causes an unwanted competition distortion, which is especially harmful in the chemical sector, of which considerable parts are not covered in some member states.

The commission should therefore clarify Annex 1 of the directive.

Small installations with annual emissions of less than 10,000 tonnes cover less than one per cent of total CO2 emissions but account for 33 per cent of all the installations covered by the directive.

The administrative costs of these companies outweigh the potential economic and environmental benefits of their participation.

We should therefore rethink the scope of the directive and grant these installations exemption from the trading scheme."

Paul van Slobbe is project manager for the Dutch government’s CO2 allocation plan

 

Matthias Duwe

"The EU’s emissions trading scheme was designed as one of the key tools to deliver present and future climate targets in Europe, and it does so at the lowest possible cost to industry.

While there is an inherent benefit to the sheer fact that companies have to start taking their climate emissions into account, the extent to which that will happen depends critically on the level of targets and the rules that accompany them.

EU member states have so far failed on both accounts. Emission limits set for the first trading period 2005-7 do not present a reduction over current levels, despite the fact that many of the old member states are far from reaching their Kyoto targets.

The EU stands to lose its credibility as an international leader on climate change if it cannot show that emission reductions are possible.

Member states need to gather the necessary political will to go through with their commitments if they are serious about stopping climate change and want others to join them.

The period 2008-12 needs stricter targets and better rules that make business invest in cleaner technology soon.

The review of the scheme should strengthen the system. Attempts to introduce new exemptions or allow environmentally damaging external credits in the EU system will only weaken its effectiveness and public acceptance."

Matthias Duwe, Climate Action Network Europe

 

Christian Egenhofer

"The EU’s emissions trading scheme is the cornerstone of EU climate change policy. Not only does it cover 45 per cent of total EU CO2 emissions, it is also shows that the EU is serious on climate change.

As the scheme accepts credits from projects undertaken outside the EU (from the Kyoto Protocol’s Clean Development Mechanism and Joint Implementation), it has global reach. The chances are good that it might become a world benchmark as it is the only major CO2 trading scheme.

In order to achieve that, first the EU needs to address some “teething problems”. For example, member states could not agree interpreting key concepts such as the definition of installations, provisions for new investment (i.e. new entrance) or banking in a uniform way. This creates unnecessary complexity and extra costs.

More important is that the scheme may actually hinder instead of facilitating new and more carbon friendly investment.

It is fair to say that the real culprit is the uncertainty regarding the future shape of the so-called “post-2012” climate regime when the Kyoto Protocol expires.

Nevertheless, if the scheme wants to be successful, there is no way around to address the investment conundrum. There are ideas – some of them radical – such as using relative targets for the transition period or accepting a ceiling for the allowance price.

They still need to be tested. But what is needed now is an open discussion on how to amend the scheme including new thinking."

Christian Egenhofer, Senior Fellow, Centre for European Policy Studies

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