12 Years of EU-ETS Lessons learned

Transcription

1 12 Years of EU-ETS Lessons learned Partnership for Market Readiness Turkey Project Roadmap for The Consideration of Establishment and Operation of A Greenhouse Gas Emissions Trading System in Turkey Closure Conference Dr. Roland Geres, FutureCamp Ankara, Dec 13 th FutureCamp Climate GmbH

2 FutureCamp: Emissions trading services for operators Strategic and operational support in the following areas: Emissions management / monitoring and reporting: Data collection Development of monitoring reports Set-up and process organisation, including all relevant corporate divisions Analysis of internal abatement measures Application for allocation of EU emissions allowances (EUAs) Emissions reporting and production notification Trading of allowances and credits (EUAs, ERUs, CERs): market monitoring implementation support assessment of options for action using markets 2016 FutureCamp Climate GmbH 1

3 EU-Emissions Trading a general view in year 12 of EU-ETS 1 EU-ETS is key instrument of EU Climate Policy It performs better than in it is perceived 2 3 ETS-introduction was not easy as it adds to an existing legal and economic environment New paradigm, new instrument, new processes The Learning Curve was steep, especially in the beginning. Meanwhile it is daily business for numerous operators as well as for authorities Source: Faszination Stahl, 01/ For companies, new functions, tasks and processes were necessary for avoiding costs but also for using chances Conclusion Introduction of ETS of course is not an easy task, but worth the effort, especially if compared to other political instruments! 2016 FutureCamp Climate GmbH 2

4 Lessons 1 st period ( ) Period of special rules Lessons learned on allocation: Regulator and operators need proper information of emissions before allocation decisions Too complex rules neither increase the fairness of allocation nor support the effectiveness of the system Unwanted windfall profits (for electricity utilities), paid by household sector as well as industrial operators Ex-post rules (Germany) proved effective in avoiding high over-allocations but were not in line with interpretation of ex-ante principle of EU- Commission Lessons learned on other issues: Clear definition of coverage on installation level is crucial Good governance on timetables and availability of information for regulated entities is very important, also in terms of acceptance ETS is not introduced greenfield but within an existing regulatory framework including regulation on balances, taxation, market oversight should be taken into account properly to ensure functioning of ETS 2016 FutureCamp Climate GmbH 3

5 Lessons 2 nd period ( ) Simplification & start of auctioning Operators had no or little different options for allocation: Benchmarking in the energy sector Grandfathering for the industry and for small installations Beginning of auctioning for electricity producers Less complexity for all participants None ex-post allocation rules (caused problems in economic crisis) Relevant shortages of free allocation for electricity plants (up to 50% for old coal plants) Industry facilities have either surplus or shortage, strongly dependent on production level (->role of economic / financial crisis) 2016 FutureCamp Climate GmbH 4

6 Lessons of 3 rd period ( ) European harmonization Auctioning as main allocation principle, 100% for energy sector (power production), growing share for industry Harmonized allocation rules for industrial operators, no different options for allocation: Challenging benchmarks used (52 product specific benchmarks plus heat and fuel benchmarks) Historical production levels ( or taking account of economic and financial crisis) More complex rules for many participants due to more detailed European legislation, especially for large industrial sites, challenging also for medium sized companies Ex-post reduction of allocation foreseen if production levels fall far below historical period used for allocation, but not flexible enough More industry facilities are short due to challenging benchmarks, strongly dependent on the production level, and the correction factor 2016 FutureCamp Climate GmbH 5

7 Carbon management processes for companies 2016 FutureCamp Climate GmbH 6

8 Typical Problems for Companies with EU-ETS Introduction Inside of a company: extent of issue sometimes underestimated: Often integrated in the form of classical environment issue not one with strong financial relevance; Lack or only slow provision of personal and / or financial capacities; Necessary processes not defined (e.g. who is responsible for what? ); Sometimes also excessive care for minor important (technical) details; Lack of or not well defined internal management systems. Related to government action: High time pressure; belated release of legal prescriptions/requirements; Some important business regulation appeared with considerable delay (e.g. treatment of EUAs within taxes and balances for companies). Accruing conditions like: Delay of registers; High dynamics in regulatory environment. Problem for performance and acceptance! 2016 FutureCamp Climate GmbH 7

9 2 nd period ( ) some more lessons learnt Lessons learnt on allocation and other regulations: Simplification supported the efficiency of the system and also the acceptance General economic development in Europe and missing ex-post adaptation possibilities again led to oversupply in the market, further fed by success of CDM and JI leading to rapid import of CERs and ERUs As trade volumes increased, market oversight issues have become more important Lessons learned within operators: For most operators managing emissions and ETS has become part of their business as usual More operators have become more active also in trading, made use of the instrument in order to co-finance investments, create revenues and even generate liquidity (economic crisis 2009!) 2016 FutureCamp Climate GmbH 8

10 Conclusions and Recommendations Try to avoid complexity especially on allocation as far as possible, concentrate more complicated rules on emission sources of relevance ETS is a market-based instrument needs framework and participants Price signals from ETS should influence investment decisions As emission reduction targets exist, ETS should be compared with other instruments, not with the status quo. Businesses should be aware that the alternative to an ETS is NOT nothing! Companies need some time to implement processes and adapt the new instrument Companies might have additional costs, but also might support business targets by making use of ETS 2016 FutureCamp Climate GmbH 9

11 Thank you Dr. Roland Geres Managing Partner FutureCamp Holding GmbH Aschauer Str Munich, Germany Phone +49 (89) Fax +49 (89) FutureCamp Climate GmbH 10