1. Integrated Environmental-Economic Accounts for Tradeable Carbon Dioxide Emission Permits Thomas Olsen, Statistics Denmark Conference on Climate Change, Development and Official Statistics Seoul, Republic of Korea 11 – 12 December 2008

2. Emission permits: Climate Change, Development and Official Statistics Purpose To introduce the Environmental-Economic Accounting framework as a means for organizing data on CO 2 permits

3. Emission permits: Climate Change, Development and Official Statistics Outline Why account for permits? Features of the Emission Trading Scheme The System of Environmental-Economic Accounting (SEEA-2003) Physical CO 2 permits accounts Monetary CO 2 permits accounts

4. Emission permits: Climate Change, Development and Official Statistics Why Account for Permits? Analyse the impact on the economy The permits are the link between the emissions in the emission inventories and the emission targets obliged to in the Kyoto-protocol

5. Emission permits: Climate Change, Development and Official Statistics Link between Danish emissions and targets Extra permits explain the gap Difference explained in bridge table

6. Emission permits: Climate Change, Development and Official Statistics Emission Trading Schemes Cap on the total emissions The permits gives the right to emit 1 ton of CO 2 The permits are tradeable The market will lead to efficient reductions

7. Emission permits: Climate Change, Development and Official Statistics Emission Trading Schemes cont’. The European emissions trading scheme is one of the means for meeting the European reduction obligations committed to under the Kyoto-protocol Came into force in 2005 Covers electricity, heat and manufacturing industries Amended to include international air transport from 2012 In principle, everyone can trade with the permits

8. Emission permits: Climate Change, Development and Official Statistics Emission Trading Schemes cont’. Different participants on the market Different types of permits –Permits / Credits (from CDM / and JI) Global market –Japan (voluntary scheme) –United States (mandatory scheme among north-eastern states) –Australia is also setting up a scheme Physical as well as monetary aspects

9. Emission permits: Climate Change, Development and Official Statistics SEEA-2003 Satellite system of the System of National Accounts (SNA) Set of definitions, classifications, statistical accounts and tables Allows incorporation of environment and energy statistics into the national accounting framework Analyse interaction between environment and economy and between environmental domains

10. Emission permits: Climate Change, Development and Official Statistics The permits’ flow through the economy The creation of the permits Agents in the Emission Trading Scheme Other agents

11. Emission permits: Climate Change, Development and Official Statistics Other Agents Government Foreign Economies CDM / JI Mechanisms ECONOMY Losses Emissions Trading Scheme The Tradeable CO 2 Emissions Permits’ Flow Through the Economy Grandfathering Sold to residents Trade Investments Used permits Unused permits Surrendered

12. Emission permits: Climate Change, Development and Official Statistics Physical CO 2 permits accounts Data source: The CO 2 permit registry Link to the National Accounts industry classification Statistics on the CO 2 permits Link to the Environmental Accounts Link to the National Accounts

13. Emission permits: Climate Change, Development and Official Statistics Questions that could be answered What are the origins of the CO 2 permits? From where have the industries received the permits? Who owns the permits? Who is trading with the permits?

14. Emission permits: Climate Change, Development and Official Statistics Questions that could be answered, cont’. Relationship between the use of energy and the CO 2 emissions Relationship between CO 2 emissions and permits Relationship between CO 2 permits and environmentally related taxes and subsidies Economy: Output, Gross Value Added, Employment

15. Emission permits: Climate Change, Development and Official Statistics Results from a Danish experience

16. Emission permits: Climate Change, Development and Official Statistics Physical flows +÷+++÷÷=

17. Emission permits: Climate Change, Development and Official Statistics Monetary CO 2 permits accounts The corresponding monetary values based on the physical CO 2 permits accounts Valued at the average CO 2 permit price The basis for the description in the National Accounts

18. Emission permits: Climate Change, Development and Official Statistics Global carbon market 2007: c $ 50 bn. 2008: c $ 75 bn. European market constitutes approximately two thirds

19. Emission permits: Climate Change, Development and Official Statistics Demand / supply of permits / credits Some countries will tend to need more permits Some countries, part of an emissions trading scheme or not, will be able to supply credits to other countries Countries who are able to supply credits could also benefit from structuring the information on their potential supply of credits

20. Emission permits: Climate Change, Development and Official Statistics Summary Complex market for CO 2 permits Integrated Environmental-Economic Accounting is a way of structuring information Enables to systematically analyse the impact of the economy on the environment, and vice versa Enables consistent analyses of the economic activity, the use of energy, the associated CO 2 emissions, environmentally related taxes and subsidies as well as the CO 2 permits

21. Emission permits: Climate Change, Development and Official Statistics Summary, cont’. Important not only for the countries who are already part of an emission trading schemes to structure information on the permits, but also for countries who are able to supply credits to other countries Finally, accounting for the permits are crucial in order to understand the link between the emission inventories reported to the UNFCCC and the reduction obligations laid down in the Kyoto-protocol

22. Emission permits: Climate Change, Development and Official Statistics Contact information Thomas Olsen, Statistics Denmark E-mail: Tol@dst.dkTol@dst.dk