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Dutch Pilot Allocation Plan for an European Emission Trading scheme

Dutch Pilot Allocation Plan for an European Emission Trading scheme. Maurits Blanson Henkemans Ministry of Economic Affairs Netherlands Delhi 1-11-2002. What I want to discuss. Dutch position EU directive Aim of our Allocation study First results Conclusions.

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Dutch Pilot Allocation Plan for an European Emission Trading scheme

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  1. Dutch Pilot Allocation Planfor an European Emission Trading scheme Maurits Blanson Henkemans Ministry of Economic Affairs Netherlands Delhi 1-11-2002

  2. What I want to discuss • Dutch position EU directive • Aim of our Allocation study • First results • Conclusions

  3. Cost advantages of European Trade

  4. Dutch position • In General positive to directive • For mandatory system from 2005 but.. • Allocation must be fair • Crediting of Early actions • For the Direct approach Dutch industry • EU PSR system no CaP (!) for indirect approach.

  5. Aim of the study • Can we make an Allocation plan? • On the basis of EU Directive/ and PSR indirect Allocation Criteria (Annex III) • Propose improvements on the basis of the study Procedure • Consultant makes study • Advice from Industry/NGO

  6. EU allocation Burden Sharing Agreement participants IPPC + createria/correcties Allocation

  7. Who are the participants? What size is covert by EU directive? How to set the Cap How to Allocate - Direct or Direct and Indirect Allocate on basis of - Historic emissions/Grandfathering - Performance Standard Rate (PSR) Questions

  8. Definition of Participants • IPPC Def. • Cut through sectors • Lack of info Cogen e.c. • Add sector? > 20 MWth Definition: “installation” “energy activity” en “combustion installation”

  9. What is Covered

  10. What is Covered • Wide interpretation: 47% of Total Emissions • CHP = Chemical ind. included

  11. Set CAP for 2010 Cap: 90 Mt CO2 Reductie UK1: Ca. 4 Mt CO2 Statistieken

  12. National Climate Plan UK1 and UK 2 Benchmark Target = CaP for Participants/ DATA ??? Allocate 9o Mton 450 Mln EURO (5 EURO/CO2) Advantage Support from Industry Disadvantage: No Trade? Set a Cap 1

  13. Advantage Direct Simple/conform Kyoto Protocol Disadvantage Market Power for E-sector What will be Electricity-price Direct versus Indirect (1)

  14. Direct versus Indirect (2) Advantage Indirect: • Conform Benchmark • Stimulate Efficiency User Disadvantage : • CO2 content electrity used unknown

  15. Direct versus indirect

  16. Grandfathering Direct and Indirect Performance Standard Rate Direct/Indirect Allocation options

  17. 3,5 3,0 CO2 emission [ton/ton product] r 2,5 2,0 1,5 1,0 0 10 20 30 40 50 60 70 80 Number of companies Example of CO2 emissions and PSR

  18. Allocation on Basis of Historic emissions 2005 1990 WKK Production growth New Entrants Data availability Windfall profits Ownership Statistieken

  19. Performance Standard Rates Max. 300 PSRs Corrections for green/nuclear biomass Correction for indirect emissions complicated Europese Benchmarking: different fuelmix

  20. How to support early actions? 1995 with production adaptation Too many allowances Allocation = 2005 Emissions.No incentive for trade/ no support early actions Allocation = Actual emissions * (performance rate / performance standard rate) distance to world top Grandfathering options

  21. Directive Covers 47% Cut through sectors ( opt in) Lack of number on installation level Indirect approach impossible in one country Conclusions 1

  22. Grandfathering direct Actual dates correction for distance to world top (benchmark) E-sector should not get to much power Solution: big supply/low price/competition/CHP Big role Commission for fair competion Conclusions 2

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