Uncertainty about Emission Rights and Energy Prices
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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. Outline of Comments.

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Uncertainty about Emission Rights and Energy Prices- and Impact on Economic GrowthThomas L. BrewerAssociate Professor, Georgetown University, Washington DCandAssociate Fellow, Centre for European Policy Studies, Brussels

Brewer - Stockholm - 12.12.2006


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

Brewer - Stockholm - 12.12.2006


Three Episodes of Regulatory Uncertainty and Their Effectson EUA Prices

  • Spring 2004

  • Spring 2006

  • Autumn 2006

Brewer - Stockholm - 12.12.2006


EUA Prices:February 2003-June 2004(From Point Carbon – used with permission)

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Price developments on the EU market: Nov. 05 – Oct. 06

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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

Brewer - Stockholm - 12.12.2006


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

Brewer - Stockholm - 12.12.2006


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

Brewer - Stockholm - 12.12.2006


Uncertainty

and/or

Transparency

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Transparency

Uncertainty

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Inevitable Uncertainty

and

Controllable Transparency

Brewer - Stockholm - 12.12.2006


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

Brewer - Stockholm - 12.12.2006


International Competitiveness

Off-setting border measures on imports from ‘cheap energy’ non-Kyoto countries?

  • EU Parliament resolution

  • Commission position

  • French government recent statement

Brewer - Stockholm - 12.12.2006


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

Brewer - Stockholm - 12.12.2006


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