Transcript 2011-09

Overview of EU offset
provisions
[email protected]
Unit B3 – International carbon market, aviation and maritime
DG Climate Action
European Commission
Significant emission reductions
need to be made globally
EU objective: 80 to 95% reductions largely
through domestic measures:
 around -80% internal reductions in 2050
compared to 1990
Developed Countries: similar effort
EU
100%
80%
60%
40%
20%
Developing Countries:
 -5% compared to 1990
 Equivalent to 80% compared
to business as
usual
0%
1990
2000
2010
2020
Baseline
Developed Countries
500%
80%
400%
60%
300%
40%
200%
20%
100%
2000
2010
Baseline
2020
2030
Global action
2040
2050
Global action
Developing Countries
100%
0%
1990
2030
2040
2050
0%
1990
2000
2010
Baseline
2020
2030
Global action
All sectors need to contribute (or other countries/ sectors do more)
2040
2
2050
“Offsetting” alone cannot solve
climate change threat
Figure 1: Projected development of greenhouse gas emissions in different
regions of the world
If EU and other
industrialised countries
stop all emissions
Gigatonnes CO2 equivalents
80
70
60
50
Rest of World
40
Other annex 1
30
EU
Global emission path
fitting 2°C scenario
20
10
0
1990
2050
Source: Greenhouse gas reduction pathways in the UNFCCC process up to 2025, CNRS/LEPII-EPE, RIVM /M NP,
ICCS-NTUA, CES-KUL (2003).
Move to new (sectoral) market
mechanisms
•
CDM was successful to help countries meet Kyoto targets, generate
financial flows to DCs, engage private business and for DCs to learn
about carbon market and setting up an infrastructure,
•
But CDM also:
– Suffers from methodological problems that complicate the assessment of additionality
and the exact quantity of emission reductions
– May create disincentive for own action in emerging economies
– Cannot generate required scale of international reductions and carbon finance flows
to DCs. High Level Group on Climate Change Finance estimated that $30 – $50 Bln
annually could be generated through a broader and deeper carbon market.
•
Sectoral market mechanisms would:
– offer a more comprehensive price signal that also stimulates domestic climate
policy action in DCs across broad segments of the economy, through a crediting
threshold to reflect own action by the country and so net benefits to the atmosphere.
– Avoid cumbersone and subjective project-based additionality testing
A vision:
carbon market transition
Relative share of global emissions
Bilaterally linked
cap and trade
Emissions not covered
by cap and trade
Sectoral crediting applied
Reformed CDM
TIME
Means
•Increasing focus on LDCs
•Strengthen governance
•Strengthen environmental integrity
• Through UNFCCC supply-side where possible
• Through EU demand-side where necessary
Progress at UNFCCC
supply-side
CDM EB
•
Many efforts undertaken to improve objectivity and transparency, incl.
–
further clarifications of additionality tool (investment analysis guidelines, FOIK and CP)
–
development of alternatives to the additionality tool (standardised baselines)
–
modalities and procedures for direct communication
–
etc.
Cancun outcome and prospects for Durban
•
Cancun decision to consider establishment of new market mechanisms in Durban
•
Two lines of action emerging for decision in Durban (agreement that both are needed):
– establishment of specific market mechanism (sect crediting and trading)
– general framework for Parties to develop and use market mechanisms
•
African group, China, Ecuador stating explicit conditions for establishing new market
mechanisms, e.g. KP2
EU demand-side:
More selective use of credits
Provisions in EU ETS
•
CDM projects registered prior to 2013 can continue to generate eligible credits
•
Credits from CDM projects registered after 2012 can only come from LDCs
•
No ERUs after 2012 without new QELROs
•
Exceptions:
– Provision to restrict use of specific credits from project types decided in CCC with
scrutiny by Council and European Parliament
– Provisions for bi- or multilateral agreements for supply of credits (sectoral credits)
if no international agreement concluded by Dec 2009
– Provisions for Community projects
•
If there is an international agreement
– only credits from projects in third countries that have ratified agreement
– types of credits agreed will be subject to a common EU approach
More selective use of credits:
Use restrictions
• Projects should bring real emission reductions, benefit SD and have no
significant adverse social and environmental impacts
• Ban on HFC23 and adipic N2O motivated by project-type specific
economic and environmental concerns together with strategic
considerations
• Only valid for EU ETS operators, but under the Effort Sharing decision
Governments should justify use of any banned credits.
• MS use of credits under ESD is also meant to enhance achievement of
international agreement (art 6)
• No new proposals for restrictions planned at present, but Commission
needs to have an instrument available to act when integrity is at stake
More selective use of credits:
Bi- or multilateral agreements
Intentions
•
Focus on sectoral crediting to help eliminate technical and political
barriers to making progress in UNFCCC on the introduction of new
mechanisms.
Challenges
•
Setting up administrative and procedural frameworks in DCs
•
Make them attractive for DCs i.e provide sufficient demand through
higher targets and more selective use of credits.
•
Need for piloting sectoral crediting in order to crystallize the challenges
and practicalities of implementation.
•
Participation in the World Bank Partnership on Market Readiness
Fund is instrumental to facilitate the designing of robust pilots and finding
interested partners.
Community projects
Provisions under art 24(a)
• Allows to issue allowances or credits for projects in
reducing non-ETS emissions, for use in ETS or ESD
• Implementing measures may be adopted via comitology
• No double counting and no impediment to policy
measures (not trivial)
• MS has to agree to projects (affect ESD compliance)
• Hierarchy in the Directive
– 1st best harmonised extension of the scope of the EU ETS
– 2nd best – unilateral extension of the scope of the EU ETS
– 3rd best – Community offsets
– obligation to consider 1st best route for activity with Community
projects in the subsequent EU ETS review
Community projects
Critical mass of opportunities?
Current cap
•
Due to recession, significantly lower carbon price and a considerable buffer of
unused EUAs and CER/ERUs
•
limited potential (double counting, extended coverage in ETS or other
binding legislation)
•
Moral hazard problem / inconsistent with move away from project-level crediting
internationally
•
Administrative costs
Tighter cap
•
Strategic decisions would have to be made
– should we allow for more credits
– if yes, which types of credits (Community offsets, JI, CDM, potential REDD credits,
new sectoral credits)
•
No immediate action under Community offsets, but Commission welcomes pilot
initiatives in order to learn more in which areas the development of rules may be
envisaged at a later stage.