-------- Original Message --------
Subject: [Nocarbontrade-l] European carbon trading "will not lead to
significant cuts in emissions by companies" in its 2nd phase any more
than it did in its 1st phase
Date: Mon, 26 Feb 2007 20:25:47 +0000
From: Larry Lohmann <[log in to unmask]>
To: [log in to unmask], [log in to unmask]
'"The EUETS has given no extra incentives for greenhouse gas reductions
or changes to the fuel mix," said Philip Luyten, environment manager at
Total Petrochemicals.'
ENDS Report
February 2007
EUETS will not drive abatement in phase 2
Even with a tight cap on emissions in the second phase, the EU emissions
trading scheme (EUETS) will not lead to significant cuts in emissions by
EU companies, delegates at ENDS’ second emissions trading conference
heard at the end of January.
Dr Joachim Schleich of the Fraunhofer Institute in Germany compared the
emissions caps in 23 national allocation plans (NAPs) with the verified
emissions from the scheme’s first year and projected emissions in 2010.
Presenting his findings at the ENDS conference, he highlighted the
differences between the 12 NAPs which have been amended by the European
Commission (ENDS Report 383, pp 46-47
<http://www.endsreport.com/article.cfm?ArticleRef=383068>), and the
remaining 11 NAPs so far published which have yet to be assessed.
On average, the caps in the 11 to be assessed are only 2% lower than
projected emissions in 2010, while the caps in the 12 amended NAPs are
set around 12% lower than projected emissions
He told delegates that even with the tougher caps the EUETS will require
only modest emissions reductions by installations in the second phase
because member states and the Commission have not set a tight limit on
the use of Kyoto credits.
The 11 NAPs yet to be assessed set caps around 42MtCO_2 lower than
business-as-usual emissions in 2010, but they propose to allow more than
300MtCO_2 , of Kyoto credits into the scheme, effectively requiring no
emissions reductions by the industries covered.
The 12 NAPs amended by the Commission are more demanding. Their combined
caps are 142MtCO_2 lower than business as usual, but even here the
Commission is proposing to allow more than 111MtCO_2 of Kyoto credits.
Thus 78% of the effort can be met by purchasing emissions reductions
outside the EU.
"In the second phase, even if there is a similar judgment for the
remaining plans, [installations] won’t need a lot of reductions," he
said. "The incentives to reduce internally may be weakened."
Delegates with direct experience of the scheme said the low price of
carbon in the first phase had not offered much incentive to cut emissions.
"Let’s be realistic and honest, the market was long in the first phase,
so the EUETS has given no extra incentives for greenhouse gas reductions
or changes to the fuel mix," said Philip Luyten, environment manager at
Total Petrochemicals.
He said that the high cost of energy had been much more of a driver
encouraging firms to cut emissions. However, he did reveal that many
companies are now factoring a cost of carbon into future investment plans.
German Environment Minister Sigmar Gabriel has announced his country
will accept the cap set by the Commission. The statement marks a u-turn
by the German government which had threatened a court challenge (ENDS
Report 384, p 12
<http://www.endsreport.com/article.cfm?ArticleRef=384013>). The German
decision leaves Slovakia isolated as the only member state considering
an appeal against the Commission’s cuts.
The price for allowances in the second phase remained stable at €14.60
on the news, but the price of current allowances continued to fall,
reaching a new low of just €1.23 as ENDS went to press.
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