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Climate Action EU ETS Outreach and Linking The Future of the International Carbon Market.

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Presentation on theme: "Climate Action EU ETS Outreach and Linking The Future of the International Carbon Market."— Presentation transcript:

1 Climate Action EU ETS Outreach and Linking The Future of the International Carbon Market

2 Climate Action International challenge: The Gap

3 Climate Action Role of the international carbon market Drive investments and achieve mitigation objectives at least cost; Incentivise more ambitious abatement action; Generate financial flows to developing countries; Need instruments that provide environmentally robust credits/allowances at scale and facilitate transition to comprehensive multi-sectoral cap-and-trade.

4 Climate Action EU Emission Trading System In place since January 2005 > 30 countries Covers half of EU emissions: power and manufacturing industry One single EU price Market value >100 bn € Linear reduction factor 1,74% of annual reduction

5 Climate Action EU ETS – the latest developments Phase 3 starting in 2013: Length: 8-year trading period (2013-2020) Central EU benchmarking-based allocation Common auctioning platform Single EU registry Auctioning - Backloading proposal 2012 Carbon Market Report Aviation – „stopping the clock“ for one year Linking discussions with Switzerland

6 Climate Action EU ETS – Australian Carbon Pricing Mechanism Linking (1) Agreed pathway towards linking Partial link: Interim step (July 2015 until no later than July 2018) AU businesses can use EUAs for compliance purposes (up to 50% of their liabilities under the Carbon Pricing Mechanism) Two-way link: No later than July 2018 Businesses can use carbon units from Australia or Europe for compliance under either system.

7 Climate Action EU ETS – Australian CPM Linking (2) EU: Commission to seek a negotiating mandate launched early December 2012 for formal linking Benefits of Linking Increases market liquidity and reduced price volatility Reduces costs of cutting emissions Supports global cooperation on climate change.

8 Climate Action Size of EU ETS and AU CPM Cap in Mio t Year AU cap not yet defined; used default cap from Clean Energy Act, section 17 & 18 YearAU Cap EU Cap 20153181964 20182821852 20202581777

9 Climate Action EU ETS Co-operation with China (1) Financing agreement for €5 million bilateral cooperation between the Commission and NDRC project length – 3 years Signed in September at the EU-China Summit Focus: Capacity building ETS building blocks Work could start in spring 2013

10 Climate Action EU ETS Co-operation with China (2) Direct technical assistance to the 7 Chinese ETS Pilots Technical workshops in MRV conducted EU MRV ETS legislation translated into Chinese Workshops on the Power Sector, MRV and Registries in Beijing 21-23 November Frequent visits by Chinese ETS pilots to Brussels

11 Climate Action EU ETS Co-operation with Korea Korean ETS to be launched in January 2015 Frequent expert level discussions Monthly visits by Korean delegations Discussions focussed on: ETS architecture Benchmarking excercise and data collection Registry

12 Climate Action World Bank Partnership for Market Readiness Bringing together developing and developed countries Building readiness for new and innovative market-based instruments Capacity building Piloting 10 contributing participants (eg European Commission, Australia, USA) Over 80 mln $ raised 15 implementing countries (eg China, India, Mexico, Brazil) Preparation phase funding 350 000 $ for each country

13 Climate Action A growing number of regions developing emission trading or cap-and-trade systems to deliver their 2020 pledge Need to clarify rules to measure progress to Quantified economy-wide emission reductions targets pledged by Annex I countries Key to develop robust market-based systems and clear accounting rules

14 Climate Action New Market Mechanism: objectives Scale up mitigation effort in developed and developing countries; Recognise own appropriate mitigation action by DCs; Move away from pure offsetting approach; Operate at broader scale than project-based approach; Host country ownership, flexibility at choosing method of implementation; Reduce transaction costs

15 Climate Action New Market Mechanism – how would it work? Many separate projects; No recognition of own contribution Broad segment of economy; Own contribution: convenient and cost-effective mitigation opportunities

16 Climate Action International carbon market: EC vision for post-2012 Link compatible domestic cap-and-trade systems to develop an OECD-wide market; New sectoral carbon market mechanism for (advanced) DCs as a step towards cap-and-trade systems; Reform and better focus CDM (focus on LDCs); EU remains strongly committed to the UNFCCC process; Progress with the New Market Mechanism in Doha?

17 Climate Action Further information EU ETS: http://ec.europa.eu/clima/policies/ets/index_en.htm http://ec.europa.eu/clima/policies/ets/index_en.htm


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