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EU ETS and the International Climate Regime

EU ETS and the International Climate Regime. Andrei Marcu Sr VP, Head of Policy and Regulatory Affairs. Global GHG Market. Kyoto Party-Level Entity-Level Non-Kyoto Party. Japan. Voluntary targets. Canada. Projects, CDM/JI. EU25+X. EU ETS. Russia.

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EU ETS and the International Climate Regime

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  1. EU ETS and the International Climate Regime Andrei Marcu Sr VP, Head of Policy and Regulatory Affairs

  2. Global GHG Market Kyoto Party-Level Entity-Level Non-Kyoto Party Japan Voluntary targets Canada Projects, CDM/JI EU25+X EU ETS Russia

  3. EU ETS & the International Climate Regime • EU ETS is a Domestic Emissions Trading Scheme • EU ETS was conceived to assist the EU to meet its international /Kyoto Protocol commitments • Impact of International targets and progress on international negotiations • EU ETS - its existence is connected but not dependent on Kyoto Protocol • EUAs and AAUs shadow each other • EU ETS makes use of the Kyoto Protocol flexibility mechanisms(CDM&JI) • EU ETS makes use of the Kyoto Protocol and its infrastructure – or has to use it – CITL/ITL connection

  4. EU ETS & International Regime – Some Issues • ITL is sitting on the transfer path for EUAs/EU ETS as they need to be shadowed by AAUs • Art 17 eligibility is creating disturbances in market functioning • UNFCCC regulatory problems reflect in EU ETS functioning • Dual regulation without coordination • AAUs – “Hot Air” is not a word that should be acceptable • Qualitative Restrictions in the EU ETS for CERs • Recycled CERs

  5. EU ETS & International Regime – What is the Future • For EU ETS international connection has two dimensions • Multilateral (UNFCCC) • Domestic Emissions Trading Systems • EU ETS & UNFCCC increasingly disconnected • Reversal of CIT/ITL role • Appearance of domestic offsets under Art 24 of EU ETS • CDM/JI much smaller and uncertain role in the EU ETS. Role depending of international negotiations • Target 20%-30% depending on international negotiations

  6. EU ETS & International Regime – What is the Future • New mechanisms are emerging in the international regime for EU ETS to use • REDD+ • Sectoral crediting and trading • Etc • Linking with other Domestic Trading Schemes – when will they come ? • China is moving with 6 pilots • Partnership for Market Action • Ukraine • Colombia • China • Turkey • Mexico • Etc

  7. EU ETS & International Regime – Conclusions • EU ETS is here to stay • EU ETS is an regulatory issue not a scientific debate • EU ETS is an instrument and not the issue – issue id CC and EU climate change policy • Phase 3 has significant changes for EU and Poland • EU ETS relationship with the international regimes MAY change but will stay strong • ETS is an instrument to engage in an efficient way in the green race

  8. Full Global GHG Trading Large Sources of CO2, CH4, N2O HFC, PFC, SF6 Transport(?) All Major Emitting Countries Canada Japan EU JI: CH4, N2O Norway EU ETS CO2 Only Norway EU ETS CO2 only, Power focus CDM: Any gas, any sector Non-EU JI: Any gas, any sector Pre-’08 2008-12 Beyond 2012 Global GHG Market Post-2012 8 8

  9. Eligibility of Project-Based Instruments Post 2012 China OECD Allowances Russia India Ukraine High EmissionsHigh Wealth Brazil NIS ? High EmissionsLow Wealth Korea, Mexico,South Africa ? Asian Tigers Emissions OPEC Kyoto Protocol Annex B Latin America ? Low EmissionsLow Wealth Low EmissionsHigh Wealth Low EmissionsLow Wealth Small Island States Israel Singapore ? LDC Africa Post 2012Agreement? Wealth CDM/JI Credits 9 9

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