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EU Carbon Trading Policy Shifting From National To Regional Structure
24 April 2008
by Jack Rosebro
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| EU climate and energy policies, with existing policy in yellow and proposed post-2012 policy in blue. Click to enlarge. |
The Netherlands Environmental Assessment Agency (MNP) has released a report that evaluates current EU proposals to reform its Emissions Trading Directive (EU ETS) on carbon trading for industrial emissions after 2012. The report—Consequences of the European Policy Package on Climate and Energy—assesses the EU ETS reform scheme, and compares it to the Netherlands’ own Schoon en Zuinig (Clean and Efficient) greenhouse gas (GHG) reduction policy.
Although the EU’s own emissions reduction targets remain in place, national reduction targets for total GHG emissions will no longer be set by the Commission after 2012, shifting more of the responsibility for European climate policy to the European level, and away from separate member states. Only one EU-wide cap will limit the number of emission allowances, as opposed to the 27 national caps currently in use. The annual cap will decline over time.
The European Commission has set a 20% greenhouse gas reduction target by 2020 as compared to 1990 levels, while the Netherlands has set a tougher goal of 30% less GHG emissions by 2020 as compared to 1990.
Many of today’s GHG stabilization scenarios are as dependent on the peaking of emissions within the next 15 to 20 years as they are on the trajectory of decline.
While not as stringent as Dutch policy, the EU ETS reform “supports the Netherlands’ ambitions”, according to the report, by allowing member states to trade Guarantees of Origin for emissions, providing a legal framework for carbon capture and storage (CCS) and including CCS in the ETS directive, and reforming the rules for Environmental State Aid.
Assuming a perfect market for emission rights, the report finds that the revised carbon market will provide a leveling-out or “waterbed effect”: the EU-wide cap will cause extra GHG emission reduction initiatives in a given member state to be offset by an equal amount of additional emissions in other Member States).
The report finds that the Netherlands’ Government has three options for its climate targets if the Commission’s proposal for the ETS sector is approved by the European Council and European Parliament:
Maintain its 30% reduction target for GHG emissions, including carbon; offsets
Confine the national GHG reduction target to sectors not covered by the ETS; and
Redefine the national policy target on total GHG emissions.
The European Union Emission Trading Scheme (EU ETS) is the largest international emissions trading framework in the world. Beginning in 2005, around 10,000 industrial plants in the EU have been required to buy and sell permits to release carbon dioxide into the atmosphere. However, market prices for CO2 peaked in April 2006 at about €30 per tonne, but fell to €0.10 in September 2007, due to an oversupply of emissions credits on the market. The first ETS trading period ended in December 2007; the second trading period began on 1 January 2008 and will run to 2012.
Other emissions sectors, such as energy, transport, and buildings, are not covered by the EU’s current ETS. The post-2012 ETS will include the energy sector as well as other sectors, and will specifically encourage the deployment of renewable energy. As it stands, the post-2012 ETS is favorable to biofuels; that perspective will almost certainly be revisited in the wake of eroding support for biofuels as a carbon wedge within the EU.
Resources
Consequences of the European Policy Package on Climate and Energy (Netherlands Environmental Assessment Agency)
Questions and Answers on the Commission’s proposal to revise the EU Emissions Trading System
April 24, 2008 in Climate Change, Emissions, Europe | Permalink | Comments (21) | TrackBack (0)
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Comments
I'd call this the 'watering down' effect not the 'water bed' effect. If I understand it correctly if the Netherlands achieves 30% cuts by 2020 another EU country can burn more coal or make CTL because someone else has done the hard yards. Presumably the Netherlands gets some sort of payoff.
Unless I've got this wrong it seems like a serious backpedal on tough targets. Also I think each player needs to put in a matching effort to have some hope of meeting an overall target.
Posted by: Aussie | Apr 24, 2008 3:56:23 AM
Gee, I wonder if the next 10 years continues to show cooling temps alongside rising CO2 emissions, just like the last ten years, will someone finally notice the fact that emperor Gore has no clothes.
Posted by: Esabre | Apr 24, 2008 4:19:02 AM
Europe has announced a sharp increase in the future use of coal and some EU countries plan to DOUBLE their coal use. It's like they don't believe in global warming or something.
Posted by: Hybrid Fan | Apr 24, 2008 5:43:06 AM
The chart fails to illustrate that emitting less fossil carbon benefits energy supply security in two ways:
a) it reduces competition with other energy consumers, notably the US and China. This relieves some of the tremendous upward pressure on oil prices and, reduces the risk of military conflict over remaining resources at some point later this century.
b) it will let a given production capacity for sustainable biofuels command a larger share of the total fuels market, specifically in the transportation sector.
@ esabre -
climate change happens on a scale of many decades to centuries. Superimposed on that are higher frequency variations, which may be of the same or greater magnitude - especially on a local or regional level. Examples include the El Nino and La Nina ocean circulation patterns in the Pacific.
A few years of exceptionally warm or exceptionally cool weather really prove nothing either way. Unfortunately, politicians and the general public - including, apparently, yourself - find it difficult to deal with the long time scales involved in climate research & policy. The trouble is that if you wait until you have certainty, it may be too late to take corrective action.
That's why it's smarter to base energy policy on securing supply by reducing demand and hence, the need for imports from countries with unsavory regimes. Any benefits for the climate are then gravy.
Posted by: Rafael Seidl | Apr 24, 2008 8:07:02 AM
More bad news for global warming kooks:
http://www.theaustralian.news.com.au/story/0,25197,23583376-7583,00.html
Posted by: terry | Apr 24, 2008 9:27:01 AM
Sometimes I think it's useful to simply remove totally from the "debate" on climate change any mention of air temperatures or weather or climate. It seems to be too difficult a concept for folks such as asabre. It is known that the ocean pH has decreased by .11 units since the industrial age began. I don't know of anyone who argues with that fact, nor the methodology involved with pH measurement/trends, nor the mechanism by which this has happened; the absorption of CO2 and conversion to carbonic acid by the ocean. It is also obvious to just about everyone that humans burden the atmosphere with 2 billion tons of carbon per year...over and above what can be reabsorbed back into the ecosystems. A 2 billion ton net increase per year as a result of human behavior. The effects can be measured as pH changes in the ocean, in this case a decrease of .11, which incidentally is very serious.
Posted by: BJ | Apr 24, 2008 10:00:14 AM
Esabre:
According to NASA, the hottest 6 years ON RECORD, in descending order, are 2005, 2007-1998, 2002, 2003, 2006.
Which temperature decline are you referring to?
Posted by: Tim | Apr 24, 2008 10:11:54 AM
There's an article at the New York Times (http://www.nytimes.com/2008/04/23/world/europe/23coal.html?scp=1&sq=Europe+Coal&st=nyt)
that describes how Europe is swerving to Coal. 50 new Coal Powerplants in the next 5 years. Obviously their cap and trade system is a joke and not structured to push decisions away from cheap and CO2 emitting. Where the rubber meets the road cheap still wins, even with them.
If climate treaty Europe is doing this, what expectations can people have of the rest of world?
Posted by: Sasparilla | Apr 24, 2008 10:23:43 AM
Terry's link to NASA astronaut Phil Chapman's article makes several interesting points re solar radiation and sunspots. It also states the following:
"All four agencies that track Earth's temperature (the Hadley Climate Research Unit in Britain, the NASA Goddard Institute for Space Studies in New York, the Christy group at the University of Alabama, and Remote Sensing Systems Inc in California) report that it cooled by about 0.7C in 2007."
@ Raphael,
I noted movement since your April 6th post re IPCC emissions scenario problems toward socially oriented reasoning for mitigating energy use. The points you made then and today are far more defensible in making long term energy policy than with AGW. The problem for any energy policy following disclosure of AGW exaggeration, will be credibility.
The challenge now is to regroup and convince policy makers that the path to energy conservation and a lowered energy footprint has significant near and long term benefits. With the alleviation of Gorean hysteria, more sober, considered actions can be pursued. One of those actions should be to carefully review the entire Cap and Trade/ETS scheme. This is one idea that looks to be a colossal boondoggle benefiting a very few commodity traders.
As to long term climate effects I refer you to Chris Monckton's "Fluctuating CO2 but Stable Temperature" (Figure 2.) chart drawn from palaeoclimatological data starting in the Cambrian period tracking up through present.
http://climatesci.org/category/guest-editor-weblogs/
Posted by: gr | Apr 24, 2008 10:31:10 AM
@ Terry,
I guess you must believe everything you read in the media. You may also notice that the author of this article never refers to actual papers or reports where these climatologists actually state that temperatures have dropped by 0.7 degrees. If you are going to provide "evidence" to contradict climate change then at least use some scientifically peer reviewed source and not some journalist's rant. If you have any brain at all you should be familiar with the media's amazing ability to get the facts wrong time after time.
If you have any credible sources contradicting climate change I would love to read them as I do like to get a balanced perspective on these issues.
Thanks
JS
Posted by: js | Apr 24, 2008 10:53:15 AM
@gr
RE "Fluctuating CO2 but Stable Temperature"
This shows that everything being equal, CO2 has no influence on the Earth's temperature.
Which is a really duff assumption given that tectonic plates have moved, the land surface has been colonised by plants (affecting albedo), ocean circulation has changed innumerable times, the Earth's orbit has varied and, hey, lets not forget, THE SUN HAS GOT WARMER (http://en.wikipedia.org/wiki/Stellar_evolution).
Trying to mislead people by slapping two variables on a graph out of context fails to even rate as bad science. It is disingenuous manipulation of information.
Posted by: Thomas Lankester | Apr 24, 2008 11:19:38 AM
Raf: ...find it difficult to deal with the long time scales involved in climate research & policy. "
You display an arrogance quite in line with algore's GPA of C average.
Climate research as a serious science has really only developed after WWII. During the last 50 - 60 years with improving technology, computers and satellites, some more 'reliable' measurements were possible. Too many flawed computer models during that time had the same lot screaming that we are heading into another ice age and then the poles are melting and we'll all drown because CO2 makes it too hot. Considering the 'long time scales', 60 years in the overall time span of the planet's existence doesn't even register as a blip. Todays technology needs to be much more refined and data collected for at least another 100 - 200 years before you can even start to draw any reliable conclusions.
Take those core samples that are interpreted with temperatures about 1000 years ago (when the Vikings found Greenland and possibly the American continent), to have been considerably higher than today. Also CO2 peaking just before a considerable cooling period 200 years later would indicate the exact opposite to the global warming scam.
So much for 'long time scales'. Until there is more substantial and reliable information, I will keep my money and not have some stupid politicians tax me to hand it to a bunch of 'carbon credit traders'.
Posted by: hansb | Apr 24, 2008 11:52:28 AM
@Rafael,
I'm all for trying to move away from the use of oil, for some of the reasons you state, energy independence, rising cost of gas, political stability etc... However, that doesn't mean I don't want an honest debate. Perpetuating the Global Warming Hoax could cost untold trillions, without producing any result other than poverty. Also, I note that 1, 2 or even 10 years of no warming or cooling is a "fluke", but one day of warming is proof of global warming. If you really want to look at historical data, what about the many periods of warming and cooling before man started producing CO2 on any large scale, or the fact that previous warming periods always came before increases in CO2. Before we spend trillions of dollars and tank our economy at least let's have an honest discussion about the costs and benefits.
Posted by: ESabre | Apr 24, 2008 11:54:06 AM
@Thomas:
"Trying to mislead people by slapping two variables on a graph out of context fails to even rate as bad science."
Yet this is exactly what Al Gore's CO2 slide show does. I don't think Chris' chart is meant to misinform. His references at the close of his paper are substantial. He guest-writes on Roger Pielke's climate site. Roger was one of three authors of a paper published in Nature challenging IPCC's Reference Emission Scenarios. The basis of their argument can be found on GCC April 6, 2008 under the title: "Devil Is In The Details: How Realistic Are The IPCC’s Reference Emissions Scenarios?"
It is fair to assume that these authors published in Nature are reasonable scientists. From the way you describe a "duff" argument - you seem to have no disagreement with Chris' conclusion.
Posted by: gr | Apr 24, 2008 12:25:26 PM
How long will it take for the "Global Cooling" Kooks to be relegated to the dust heap of history? Of course in their mind, it will never happen.
Posted by: GdB | Apr 24, 2008 2:15:03 PM
gr, Thomas's point still stands. It is a standard tactic of denialists to cite non-correlations of historical CO2 with climate. Only simpletons are going to fall for it. Either you are a simpleton or you are deceitful. Which is it?
Posted by: marcus | Apr 24, 2008 6:24:49 PM
Out lumbers the TROLL.
Posted by: | Apr 24, 2008 6:37:39 PM
Rafael:
ENSO events are short-lived, up to 18 months, but there are couple of longer multidecadal oscillations of ocean/atmosphere heat exchange, the primary one being PDO.
Take a look, for example, here:
http://icecap.us/docs/change/OceanMultidecadalCyclesTemps.pdf
If one to subtract ocean-driven oscillations from global temperature, very small room to AGW remains.
Posted by: Andrey Levin | Apr 24, 2008 10:38:18 PM
This entire discussion on AGW is been done before and said before. You have a small but vocal minority who in every article that even has the mention of AGW basically saying the same things.
Every arguement against AGW is old and freaking tired. It is accepted by every national and international recognized organization that AGW is real although the one with the petroleum scientists dispute the extent. Any surprise? So all this posturing about these so called fantastic points have been raised and considered and dismissed and AGW is still considered valid.
The naysayers all refer to each other as if this will increase their own credibility. Grow up. Look at the names. It's the same names over and over. The number of peer reviewed papers goes substantially for AGW. The anti AGW members papers barely touch AGW and try to gnaw on some border points which wouldn't affect the overall validity of AGW.
@gr,
"...year 2007 the 10th warmest year for the contiguous U.S...since 1895...global surface temperature for 2007 was the fifth warmest since records began in 1880."
http://lwf.ncdc.noaa.gov/oa/climate/research/2007/ann/ann07.html
So that while the temperature may have dropped, the overall trend was still hot.
ESabre,
the overall trend is heating, not cooling. 1997 was an exceptionally hot year. By comparing this to subsequent years, of course it looks like the trend flatlined but that is giving a false impression of what is happening. A better look is to lower the low frequency "noise" of changes in individual years by using moving averages for instance. This shows trends and trends are of increasing temperature, not stabilization or lowering. It is but one method denialists try to make it look like there is no problem.
Lastly, I would add that this article is about the carbon trading scheme of the EU. It is a relatively new concept at the scale it is in and is still being tweaked. It is far from being completely effective but is far better than no scheme. Some critiques of this can be scene is a recent Scientific American analysis of carbon trading and some of the negative aspects on the way it is being done. For example it is discussed that too many credits were given out especially to Germany which led to a temporary drop in the trading market a couple of years ago and an undervaluing of carbon.
Posted by: aym | Apr 25, 2008 11:48:12 AM
Wait a minute buster... If CO2/GW is empirically indefensible I'm gonna have to find a new research grant!! Do science for a living? Not while the AGW pork is rollin' in!!!
Posted by: sulleny | Apr 26, 2008 7:23:55 AM
Even if you do not believe in GW, smaller displacement engines produce less CO2 while consuming less fuel and producing less pollution. I think most people can agree that using less oil and having cleaner air are good ideas. So the phrase "it's all good" may apply, if it is not taken to any extremes.
Posted by: SJC | Apr 28, 2008 1:08:49 PM
