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IMPACT No 02 | 2012
IMPAC T EMISSIONS TRADING
China: Fighting climate change in Tianjin Designing a pilot emissions trading system
T aking EU ETS on the road Establishing a benchmarking methodology for Phase III
Gaining ground in North America California’s new cap-and-trade scheme
IMPACT No 02 | 2012
CONTENTS 03 Editorial 04 Fighting climate change in Tianjin: How Ecofys is helping Tianjin Climate Exchange design a pilot emissions trading system 06 Taking EU ETS on the road: Establishing a benchmarking Publisher
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Myth and reality — ETS development in China China is taking increasingly bold steps in its environmental agenda. Concerns about energy security, rising environmental damage and pressure to maintain the country’s competitiveness are all pushing in one direction – a greener future. The 11th Five-Year Plan tested the waters and the 12th Five-Year Plan (2011 – 2015) demonstrates China’s ambition to be a leader in environmental policy formulation.
Christian Ellermann
Talking about carbon trading in China
and market observers can expect variation
Chief Representative, Ecofys China
used to mean talking about the
between the various systems.
Clean Development Mechanism (CDM). Now carbon trading means so much
The most common error made by keen
more. There is a domestic consensus
China observers is to be too optimistic,
that carbon should have a price,
assuming that the Chinese pilot programs
and increasing confidence that a
are going to be a game changer for E TS
marketbased tool can ensure carbon
worldwide. The fact is that ETS piloting in
savings are delivered at the lowest
China is still in its infancy. And while ETS
possible cost.
is out there being practised on the ground, carbon taxation is waiting in the wings.
Seven cities and provinces are setting up pilots to test emissions trading
The best is yet to come. Perhaps the
systems (ETS). Since 2010 the National
right attitude towards China’s ETS is to
and Local Development and Reform
remain moderately optimistic – and if
Commissions, exchanges, think tanks,
possible, to join in the learning-by-
research institutions and academics
doing journey and together pave the way
have been gearing up to deliver those
for a sustainable and prosperous carbon
pilots. Despite being quick off the mark,
market in China in future.
the deadlines are tight. The original expectation was to start trading within
Besides looking at developments in
each region by 2013 and trade at a cross-
China, this issue of IMPACT also focuses
regional or even national level by 2015.
on how California plans to mitigate the impact of climate change through
Though the prospect of Chinese ETS is
its own cap-and-trade scheme, and
attracting attention, the details of these
how Ecofys is helping to establish a
emissions trading systems remain hidden.
benchmarking methodology for Phase III
Yet it is these details that matter most.
of the EU Emissions Trading System.
The success or failure of the Chinese pilots
We hope you enjoy your read.
will influence the pace and prospects of a China-wide ETS and will be critical in informing the debate around carbon pricing in general. The pilots are already
Christian Ellermann
showing signs of genuine experimentation
Chief Representative, Ecofys China sustainable energy for everyone
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IMPACT No 02 | 2012
Fighting climate change in Tianjin: How Ecofys is helping Tianjin Climate Exchange design a pilot emissions trading system As part of the 12th Five-Year Plan (2011 – 2015), China plans to launch seven emissions trading system (ETS) pilots in some of its biggest emitting cities and provinces – the municipalities of Beijing, Shanghai, Shenzhen, Tianjin and Chongqing, and the provinces of Guangdong and Hubei. This demonstrates China's firm will to tackle the environmental impact of its high-growth economy.
T
he Asian Development Bank (ADB) has given China a
“Ecofys is looking forward to working closely with Tianjin to build
grant to help launch a carbon market in the municipality
a solid carbon market," says Kornelis Blok from Ecofys. "For us
of Tianjin. This is the first major project commissioned by
this represents a significant and important project that will help
a large international donor that supports aspects of ETS development for one of the pilots in China.
China lead the way in building successful domestic emissions trading systems.” The team put together by Ecofys comprises some of the best-known and reputable domestic and international experts with ample experience working on ETS both in China and internationally. Some have supported the design of the EU ETS from the very beginning.
Providing strategic policy advice on overall TETS design The key experts from Ecofys, China’s Energy Research Institute, Tsinghua and other well-know organisations are providing Tianjin Pradeep Perera,
Prof. Kornelis Blok,
Asian Development Bank
Ecofys
with an in-depth review of existing and planned ETS around the world, as well as of domestic and international climate change policies. This review is also taking a close look at the impact these
“This pilot project will offer valuable lessons for the design of a nationwide scheme to reduce the carbon intensity of the Chinese
policies will have on Tianjin. The project will develop methods to calculate the cost of such policies to the Tianjin economy and
economy,” says Pradeep Perera, Principal Energy Specialist in
illustrate how emissions trading stacks up against policy options.
ADB’s East Asia Department. The project has the potential to bring
Some examples of the very challenging questions the project
about real change and impact the development of ETS pilots in
team is tackling are detailed here. Chinese policy thus far has
China. Lessons drawn from this project, as well as the expertise
used an intensity-based emissions reduction target, but how can
accumulated by domestic experts, will be used in the development
this be translated into an absolute emissions cap? Alternative
of China's nation-wide ETS.
approaches that will help a cap-and-trade scheme fit into an intensity -based paradigm are also being explored. Moreover, it is
4
Ecofys, the international energy and climate consultancy, has been
important to consider how the ETS will interact with other policies
commissioned to provide technical assistance to the Tianjin Climate
aimed at reducing carbon and energy intensity, such as energy
Exchange (TCX) in designing the Tianjin ETS (TETS) pilot, trading
savings targets, and the penalties already in place for industries
rules, the regulatory framework and the trading platform. Tianjin
that operate inefficiently. The sectoral coverage of the ETS needs
is looking for ambitious and comprehensive support covering most
to be determined – a decision that should consider many factors,
elements of the design of an ETS.
including the sector’s competitiveness, its ability to reduce
Tianjin City, China
emissions and preparedness of sector
other ETS in China would enable emission allowances to be traded across several
entities to participate in the ETS. Last but
ETS and increase market liquidity.
not least, once the design of the ETS has been established, it will be important to
Commissioning design of TETS trading platform and registry
understand what the cost of compliance
SFW Ltd, a UK-based international IT consultancy, is leading the information technology
is likely to be for participants, and how it
work necessary to establish a functional registry and safe and secure trading
may impact on the economy as a whole.
platform for TETS. The work will commence by drawing up the technical specifications
Answering these questions will touch upon
for the trading platform and registry, and then the team will provide support in the
many elements of climate change policy,
commissioning of contractors to deliver the actual trading platform and registry.
including abatement costs, carbon leakage and long-term low-carbon investments. People’s Republic of China
Designing trading rules and regulatory systems The TETS needs a strong legal basis and clearly defined responsibilities. To this end, the Ecofys team will make very practical suggestions that should help the market to function properly. Advice will, for example, cover institutional arrangements for market regulation, procedures for issuing emission allowances to ETS participants as well as monitoring, reporting and verification (MRV) procedures. The practical advice Ecofys will provide will also cover the allocation methodology to distribute free allowances, the eligibility of offsets in the ETS and the
> Population: 1.3 billion > Area: 9.6 million square kilometres > Regions: 23 provinces, five autonomous regions, four central administrative authorities and two special administrative areas > Total CO ² emissions: 7,711 million metric tons in 2010 (source: Energy Information Administration); this makes China the world‘s largest emitter (in absolute terms) > Total investment in renewable energy: $ 48 billion in 2010 (source: Bloomberg New Energy Finance) Targets under the 12th Five-Year Plan (2011 – 2015): > Non-fossil fuel to account for 11.4 % of primary energy consumption > Water consumption per unit of value-added industrial output to be cut by 30 % > Energy consumption per unit of GDP to be cut by 16 % > CO² emissions per unit of GDP to be cut by 17 % > Forest coverage rate to rise to 21.66 % and forest stock to increase by 600 million cubic metres > Carbon intensity to be reduced by 40 – 45 % by 2020
potential to link TETS to other markets, including voluntary ones. Links with sustainable energy for everyone
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IMPACT No 02 | 2012
Taking EU ETS on the road: Establishing a benchmarking methodology for Phase III Ecofys, the international energy and climate consultancy, has played a major role in shaping the EU Emissions Trading System (EU ETS) – and particularly in the preparations for Phase III.
P
hases I and II of the EU ETS were characterised by a
for each installation would be simple. However, this was not
reliance on historical emissions as the basis for free
the case in practice. Even though the methodology appeared
allowance allocation to participants. Ecofys consultants
straightforward, a great deal of additional guidance was
worked with the European Commission to establish a
needed, e.g.:
credible benchmarking-based methodology for free allocation to participants in the years that followed. This was to prepare for Phase III of the EU ETS (2013 – 2020). For over two years
> Choice of methodology: What processes are actually
(2010 – 2012), Ecofys supported the EU-27 Member States in
covered by dedicated product benchmarks? When should
applying these methodologies in order to calculate the free
a fallback approach such as a heat or fuel-based
allocation of allowances for individual installations. Ecofys
benchmark be used?
consultant Paul Blinde, who led the project, recalls how
> Heat flows: How should you deal with heat flows that
extensive this process was: “We produced over 500 pages of
cross installation boundaries? Who should receive
guidance, delivered 17 workshops throughout Europe, and
the emission allowances for this heat? And what if heat
ran a telephone and e-mail helpdesk.”
flows to or from entities outside the EU ETS? How should you deal with heating networks featuring multiple heat
The allocation methodology used in Europe for the period 2013
suppliers and / or consumers? Of course, no approach should
to 2020 is based on benchmarks. Dedicated benchmarks had to
lead to an oversupply of free emission allowances, but at the
be developed for a number of manufacturing processes. These
same time it should not reduce the incentives for efficiency
benchmarks are based on output, e.g. tonnes of bricks. In total, there are just over 50 of these so-called product benchmarks
improvements through heat integration. > Waste gases: What should you do with waste gases
in relation to the EU ETS. For all other processes, and there are
generated in one process and combusted in another?
many, fallback approaches that tend to focus on energy input
> Changes: How should you deal with capacity extensions,
are applied.
capacity reductions, newcomers and closures? > Data collection: What data need to be collected from
The benchmarking allocation framework may seem simple,
which installation? What should you do if data are missing
and indeed some people expected that once the benchmarks
or inaccurate?
were set, determining the amount of free emission allowances
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"We were very happy with the presentations from Ecofys at the workshop on free allocation. They offered a clear explanation of complex issues. I would recommend Ecofys for questions regarding the allocation of allowances. And we very much appreciated the way that Ecofys followed up on questions we put to the EU helpdesk." Matej GASPERIC Environmental Agency Republic of Slovenia
Since the Ecofys team worked on site in the countries, knowledge
and gratified by their valuable insights and the suggestions
could be directly transferred to those who were going to use
they have made," Paul Blinde says. "The writing of guidance
it. These local workshops revealed differences in organisation,
documents required us to be in touch almost daily with staff
culture, and the relationships between government and industry.
at the European Commission.”
Yet there were also definite similarities, as Paul Blinde points out: “Despite significant differences between countries, we
Once a month, progress was discussed in technical working
found that authorities were dealing with the same key questions
group meetings with representatives from national governments.
everywhere. For example: Has industry provided the right data? What should we do if data are missing or if there is a particular heat network?”
“These meetings provided excellent examples of how European policy can work in the environmental sphere," Paul Blinde adds. "We enjoyed being right at the heart of these negotiations. If 27 countries can agree on such complex issues under this kind
Needless to say, this work involved close interaction with
of time pressure, what can be achieved is surely only limited by
European and national authorities. “We were impressed
ambition."
"I would like to thank Ecofys so much for co-operation over the last few months and for all the effort that was put in towards development of Slovak NIMs. Ecofys provided us with valuable insights regarding the calculation of free allocation to installations in Slovakia. Their visit was more than helpful and I fully recommend Ecofys for questions regarding the allocation of allowances." Veronika Jaceková
"We very much appreciated the way that Ecofys followed up on the questions that we put to the EU helpdesk." Dr. Maria Martin Environmental Protection Agency Ireland
Ministry of Environment Slovak Republic
sustainable energy for everyone
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IMPACT No 02 | 2012
Gaining ground in North America: California’s new cap-and-trade schemee The State of California aims to reduce its emissions of greenhouse gases to 1990 levels by 2020. This amounts to a 30 % reduction in the projected emissions for 2020. Ultimately, the goal is to achieve a reduction of 80 % by 2050.
T
he Californian government is
In addition, California has put into place
taking a long-term view. Emissions
a cap-and-trade program that currently
reductions will reduce the adverse
covers over 500 facilities. The program
effects of greenhouse gases on the global
includes three compliance periods in
climate, and will also reduce local risks.
which the covered entities need to
California’s real estate assets, economy,
balance emissions with allowances. The
water supply and biodiversity are all set
first of these periods starts on 1 January
to face serious risks as a result of climate
2013 and ends in December 2014. The
change impacts. Apart from reducing
second period will start in 2015 and end
risks, the plan promotes improved public
in 2017. The third period will start in 2018
health by reducing harmful pollution.
and end in 2020. The program initially covers industrial facilities, electricity
California aims to achieve emission
generators, electricity importers and
reduction goals through a range of
suppliers of carbon dioxide. With the
policies, some of which are described
start of the second compliance period
below:
in 2015, the program will also include
> Transportation: 30 % reduction in
suppliers of fuels. Only entities that
vehicle greenhouse gas emissions by
need to balance annual emissions above
2016; 10 % decrease in carbon intensive
a threshold of 25 kt CO2 are included
vehicle fuels through the low-carbon
automatically. Entities with emissions
fuel standard by 2020
below this threshold may apply to be
> Electricity and energy (including imports): Improved appliance efficiency
program will cover 85 % of California’s
standards and other aggressive energy
emissions. A certain number of
efficiency measures; 33 % renewables
allowances will be given to industry
by 2020, including solar roofs, solar hot
for free in its transition to low carbon
water heating and other measures
technology and to avoid both loss of
> Industry: Audit of the 45 largest
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included via opt-in provisions. The
market share and new investments to
industrial sources to identify
regions with less stringent climate policy
greenhouse gas reduction opportunities
(so-called carbon leakage).
Emerging emissions trading systems around the world
A broad range of emissions trading systems (ETS), or proposed emissions trading systems, is emerging: > L aunched in 2009, the Regional Greenhouse Gas Initiative (RGGI) covers power generation emissions in 9 north-eastern states of the USA (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont). > Quebec’s ETS, which will be launched in 2013, will seek to be linked to the Californian program; both are part of the Western Climate Initiative (WCI) which several Canadian provinces are still considering. > New Zealand’s mandatory ETS, the second of its kind in the world, began with the forestry sector in 2009, and the phased rollout will ensure all sectors are covered by 2015. > In 2010 Tokyo introduced Japan’s first ETS covering 1,340 emitters and accounting for 1 % of businesses in Tokyo but 40 % of all CO2 emissions in the city. > Australia's carbon tax, which was introduced in July 2012, will be transformed into an ETS in 2015. > South Korea is developing the details of its ETS, which has now been approved by Parliament. > Vietnam, Thailand and Mexico have all announced their intention to establish an ETS, although the nature of some of these schemes has yet to be confirmed. > China is moving forward with seven regional ETS pilots and thus building the basis for a nation-wide ETS (the municipalities of Beijing, Shanghai, Shenzhen, Tianjin and Chongqing, and the provinces of Guangdong and Hubei).
sustainable energy for everyone
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IMPACT No 02 | 2012
Developing benchmarks for distribution of emission allowances Ecofys is currently leading a consortium that is helping California to achieve its ambitious goals by advising its Air Resources Board (ARB). Over a period of 18 months, an international
The challenge of benchmarking in the refinery
consortium, which includes the University of California,
industry
Berkeley, will help the ARB to establish output-based benchmarks for the distribution of free emission allowances
Although all refineries process crude to make a broadly
to industrial activities. Ecofys also helped develop the output-
similar range of products (LPG, gasoline, kerosene,
based benchmarks used for free allocation in the EU Emissions
gasoil / diesel and fuels oils), they may produce these
Trading System (EU ETS). Distributing free allowances based
products in differing relative and absolute quantities,
on benchmarks rewards facilities that are more efficient or
and also differ in the types of process units and their
use cleaner fuels to reduce greenhouse gases relative to the
relative and absolute size. More complex refineries
benchmark.
are typically more capable of producing a higher share of lighter products. A specific product can be made
California's Cap-and-Trade Regulation defines product-based
in different ways with a resultant variety of carbon
benchmarks for 23 activities. Facilities that perform one or more
footprints. Consequently, a refinery's CO2 emissions
of these activities receive a certain number of allowances based
performance does not readily correlate with simple
on the relevant annual output (expressed in units of output
indicators such as crude throughput, product portfolio
per year) and the corresponding benchmark (expressed in
or the like, and a lower emissions intensity based on
allowances per unit of output), a cap adjustment factor and an
these indicators does not necessarily mean a higher
assistance factor. The number of allowances is updated each year
efficiency. This poses challenges in comparing the
to reflect changes in output, cap adjustment and the assistance
emissions efficiency of refineries. Other challenges
factor. For industrial activities not covered by a product-based
include:
benchmark, facilities receive a specific number of allowances
> Differences in the proportion of emissions from
based on steam and fuel consumption in an historical baseline
> Imports and exports of electricity and steam
units per year) and one or two energy-based benchmarks. Unlike
> Transfer of intermediate fractions from one refinery
the allowances distributed via product-based benchmarks, the number of allowances distributed via energy-based benchmarks
to another > Integration and overlap with the petrochemical
is calculated only once and not updated each year to reflect
industry (steam cracking, production of hydrogen
changes in output.
and synthesis gas, propylene and aromatics)
One of the main results of the Californian project will be output-based benchmarks for selected sectors, for which no such benchmarks currently exist (mainly food processing). A major part of the project focuses on the benchmarking approach for refineries in the period after 2015 (for more details see box).
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on-site production of electricity
period (steam and / or fuel expressed in million British thermal
A major part of the project focuses on the benchmarking approach for refineries
sustainable energy for everyone
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IMPACT No 02 | 2012
Emissions Trading growing up You can say what you like about it, but emissions trading is here to stay. Policymakers the world over seem to love this marketbased approach, which was born out of a desire to reduce emissions as cost effectively as possible. As existing emissions trading systems (ETS) are expanded and refined, a whole new generation of systems is joining their ranks, and the momentum shows no signs of slowing down.
T
he largest ETS is the EU Emissions
But where does this confidence in
In the light of these challenges, the
Trading System (EU ETS), which
emissions trading come from, and is
arguments for an alternative to
commenced in 2005 and will enter
it really justified? If we look back at
emissions trading are becoming stronger.
its third trading period in 2013. This
the performance of these systems, we
Some argue that a carbon tax provides
ETS has evolved significantly since its
see a volatile market that has failed to
greater predictability, transparency
inception and also increased in terms
live up to its potential. Critics of the
and simplicity than an ETS, and allows
of scope and coverage by incorporating
EU ETS will point to market failures,
less room for perverse incentives and
new sectors (e.g. aviation) and green-
such as the over-allocation of free
exploitation by special interests.
house gases.
allowances in the early years, leading to initial windfall profits for some, and
Cap-and-trade schemes primarily aim
The EU ETS builds on the success of
ultimately to an allowance price close
to reduce emissions at the lowest overall
earlier smaller-scale trading systems
to zero. Despite tightening the cap
cost to industry. However, schemes can
such as the US cap-and-trade scheme
and revising the allocation process for
also be designed to create a long-
for sulphur emissions, known as the Acid
the second phase (2008 – 2012), the
term price signal to drive low carbon
Rain Program. Studies claim that this
global economic downturn has led to a
investment. With proper compliance
program reduced policy costs by up to
further lack of demand for allowances,
systems, a cap on emissions will, by
50 % compared to command-and-
dampening the intended impact of the
definition, guarantee a certain
control measures such as taxation. 1
EU ETS. Low prices resulting from caps
environmental outcome, achieving the
being set when industrial production
first objective mentioned above. However,
Many other newer cap-and-trade
and emissions were considerably higher
achieving the second objective has
schemes are now emerging. The
than they are today are currently a
proved more challenging. Carbon prices
announcement of a link between the
characteristic of almost all emissions
around the world have plummeted to
Australian scheme and EU ETS, and
trading systems.
new depths, mirroring the global reces-
the link planned between Quebec and
sion. For industry, the business case for
California are now demonstrating in
A further criticism of cap-and-trade
low carbon investment appears much less
practice that these smaller schemes
schemes centres around the potential for
urgent if predicted long-term carbon
could be the building blocks for a global
price manipulation and in extreme cases
prices drop from ¤ 100 / metric ton (mt)
carbon market.
fraud, all of which can undermine the
to ¤ 20 / mt.
environmental objectives of the scheme.
1 Acid Rain Program Benefits Exceed Expectations, US Environmental Protection Agency, http://www.epa.gov / capandtrade / documents / benefits.pdf
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The reputation of the EU ETS took a
In cap and trade’s defence, it is unlikely
significant knock following proof of
that any policy measure can deliver
large-scale carousel frauds and the theft
two key objectives immediately. Both
of allowances from electronic accounts.
established systems and more recent
ones are learning from past mistakes
existing systems edge closer to maturity
the mechanism is not yet perfect, but it
to create tighter and more effective
the potential to link them to create a
does have the potential to make a real
instruments. Phase III of the EU ETS
truly global carbon market becomes
contribution to emissions reductions.
beginning in 2013 will tackle the most
greater, although this creates its own
Policymakers must continue to learn
significant problems so far, particularly
new set of challenges.
from experiences over the past ten years,
in relation to security.
and allow emissions trading systems Emissions trading is certainly growing
to adapt to external pressures. Having
As the mechanism moves into its next
up. Despite teething problems, it has
made it this far, the odds are that
stage of development, a new set of goals
become an integral tool in the battle to
emissions trading will make it further
and challenges must be addressed. As
mitigate climate change. It is clear that
still.
sustainable energy for everyone
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IMPACT No 02 | 2012
NEWS & MARKET EU: 252 million UN carbon credits forecast for 2012
no details of the structure or scope of the scheme were finalised. Possible approaches include bilateral offset schemes,
Participants in the EU Emissions Trading
or sectoral plans for action in cutting
System (ETS) are predicted to use over
emissions within global economic sectors
250 million UN-backed carbon credits
such as cement, power or shipping.
in 2012, an increase of 84 % on 2011. ETS
Discussions of the new mechanism will be
participants can let the carbon credits
a key point on the agenda of the 2012
count towards a percentage of their
UN Climate Conference in Qatar.
target instead of buying more expensive EU allowances or reducing emissions internally. This large increase is the result of new rules in the EU ETS from
Australian carbon pricing scheme introduced
2013, when many existing credits will no longer be eligible. So ETS participants
After years of debate, the Australian
are keen to use them while they are still
carbon pricing scheme is set to become
valid.
law following approval by Australia's Senate (upper house) and Parliament. The scheme began in July 2012 as a
New UN climate mechanism under discussion
carbon tax and from summer 2015 will become an emissions trading system. On 28 August 2012 the Australian and
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Discussion continues over the design
EU governments announced that
of a new UN market-based climate
there would be a link between the
mechanism. The introduction of a new
EU Emissions Trading System and the
mechanism was agreed at the UN Climate
Australian scheme. Initially, there will
Conference in Durban in 2011, although
be a partial link, enabling Australian
participants to purchase EU emission allowances for compliance and, subject to an agreement between the Australian and EU governments, a two-way link will be in place by 2018 at the latest.
South Korea approves ETS In May 2012 South Korea's Parliament approved a long-delayed bill to start trading CO2 emissions in 2015. The legislation approved in May 2012 means South Korea will become one of the first Asian countries to implement a nationwide cap-and-trade scheme. The Bill was first introduced to Parliament in April 2011, but was delayed by strong objections from industry groups in the country. Shopping district in South Korea
sustainable energy for everyone
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IMPACT No 02 | 2012
DEVELOPMENTS & Facts Implementing ETS in industry
implemented within a relatively short
projects were supported by institutions
time. By outsourcing all relevant
such as the Danish Energy Agency, the
With the third trading period of
compliance issues such as monitoring
Dutch and German Environmental
the EU ETS starting in January 2013,
and reporting, application for free
Ministries, the German organisation for
companies are facing additional
allowances and communication with
international collaboration (GIZ) and the
implementation pressures. Ecofys, the
authorities, companies are able to
Inter-American Development Bank. In
international energy and climate
concentrate on their core business.
2007, all parties to the United Nations
consultancy recognised as a founding
Framework Convention of Climate Change
father of the European ETS, has been supporting energy-intensive companies
(UNFCCC) agreed on the concept of NAMAs
Supporting NAMA implementation
from various industries (power,
cooperation on climate change. NAMAs
cement, glass, paper, chemicals, iron
Ecofys recently supported pilot projects on
promise to serve as a bridge between
and steel) since 2005. The underlying
nationally appropriate mitigation actions
developed and developing countries,
legislation that has to be adopted is
(NAMAs) in various countries, including
following the principle of ‘common but
often very complex and has to be
Tunisia, Chile, Peru and Mexico. Those
differentiated responsibilities’.
Participatory Workshop, Ecofys
16
as a new instrument in international
Identifying carbon leakage risks
White certificate trading schemes
reporting and verification (MRV) of emissions is an essential part of any
Major changes in the allocation
Ecofys has supported the German and
emissions trading system, and is indeed
methodology for Phase III of the EU ETS
Swiss governments in assessing whether
crucial to many climate change policies.
(as of 2013) may have a significant impact
white certificates might be the right
The MRV requirements of the EU ETS
on the competitiveness of industry, as
approach in their particular policy
were important in delivering robust
a significant number of credits will no
contexts. Energy efficiency policies are
emissions information from industrial
longer be issued for free. This may even
very closely related to emissions trading
participants right from the start. Over
lead to relocation and hence cause
systems. The recently approved EU
time the MRV guidelines have been refined.
so-called carbon leakage, i.e. a shift in
Energy Efficiency Directive (EED) includes
production, and thus emissions, from
a so-called sector obligation on utilities
one region with a strict climate policy to
to deliver downstream energy efficiency
a different region with a less strict policy.
improvements. The EED also calls
Domestic offsetting
Recently, Ecofys supported a number of
upon EU governments to consider the
The Irish, Dutch and German govern-
European industries concerned about
applicability of such an obligation with
ments have hired Ecofys to look at the
their international competitiveness
the option of a tradable element, i.e. a
potential for different types of domestic
by evaluating their figures to identify
white certificate scheme.
offsetting schemes. Domestic offsetting
any possible carbon leakage risk. The
harnesses market-based mechanisms to
salt, ceramics, mineral wool, dairy and
deliver emissions reductions in sectors
processed potatoes industries made use of Ecofys expertise to demonstrate
Monitoring, reporting and verification
not covered by a capped trading scheme. The use of offsets from other regions is an important consideration in many
this risk to the European Commission. The respective companies may receive
Together with the Vienna-based
emissions trading systems, and offers
compensation for increased production
Environment Agency Austria and
an attractive opportunity to stimulate
costs if a structured, bottom-up review
PricewaterhouseCoopers (PwC), Ecofys
homegrown reductions.
of the emissions and financial profile of
recently updated the EU ETS Monitoring
the sector in question actually provides
and Reporting Regulation for the
evidence of such carbon leakage risks.
European Commission. Monitoring, sustainable energy for everyone
17
IMPACT No 02 | 2012
PEOPLE Alyssa Gilbert
Maarten Neelis
Martijn Overgaag
Alyssa Gilbert manages the Market-based
Maarten Neelis manages the recently
Martijn Overgaag is currently coordinating
Mechanisms unit at Ecofys. Alyssa has
established Industrial Processes unit at
projects in the potatoes, dairy and
been working in emissions trading for
Ecofys. After leading the Carbon Market
mineral wool industries. Before joining
nearly ten years with a focus on policy
Strategies unit for two years, he is now
Ecofys in 2008, he worked as a chemical
design elements of the EU ETS, including
focusing on supporting corporate clients
engineer in the chemical and brewing
the mid-term review, new entrant issues,
in the field of industrial energy efficiency
industries. His ambition in joining Ecofys
support in implementation (e.g. in
through monitoring or identifying
was to support industry in sustainability
Romania) and linking. The new issues she
energy-saving potentials in sectors such
transitions. With a clear focus on ETS,
is tackling include domestic offsetting in
as chemicals. He is also supporting public
his background allows him to assist
Europe and new market mechanisms. She
clients in designing and implementing
industries, industry associations and
is also now applying her EU ETS experience
energy and carbon policies for the
policymakers in developing and applying
to other regions, including the USA,
manufacturing sector.
methods that work.
China and other parts of Asia. The clients include the European Commission, the UK government and environment agencies.
Lina Li Lina Li joined the Chinese team of Ecofys to support development of the ETS business in China early in 2011. She holds a Master's degree from Peking University, where she majored in international environmental politics, and previously worked in various functions for multinational companies such as Shell, Bosch and Daimler. Her expertise includes climate and low carbon policy, ETS and carbon markets, and international climate negotiations.
18
Jan Martin Rhiemeier
Paul Blinde
Christian Ellermann
Jan-Martin Rhiemeier has led the
Paul Blinde is leading the consortium
Christian Ellermann was appointed
German-based team of the Industrial
developing benchmarks for the
Chief Representative of Ecofys in China
Processes unit at Ecofys since January 2012.
Californian cap-and-trade scheme for
in 2011. He majored in Chinese Studies
He is an expert on EU ETS implementation
the California Air Resources Board. Paul
and Economics in Germany, writing his
and his team supports energy-intensive
has been working on the development
graduate thesis on the CDM in China.
industries through their ample experience
and implementation of emissions
Christian joined Ecofys in 2006 and
in the field of monitoring and reporting
trading systems since 2008. For the
mainly worked on projects in the area of
of CO2 emissions. Since the start of the
European Commission he was involved
post-Kyoto climate change policy. These
EU ETS, his team has supported various
in establishing and implementing
projects often involved extensive work
clients from the power sector, the mineral
the rules for the allocation of free
on greenhouse gas data as well as the
industry, the chemical industry and the
allowances for the third trading period
design of mitigation mechanisms. Given
cement industry. As emissions trading
of the EU ETS (2013 – 2020). He also
his specific interest in Chinese energy and
systems emerge around the world, this
supported the design of the Swiss ETS
climate change policy, he is now building
knowledge is also being increasingly
and the pilot emissions trading project
up the Ecofys business in the Chinese
applied in global assignments outside
in Shanghai.
region, mainly working on domestic
Europe.
emissions trading systems and broader low carbon development topics. Noémie Klein Noémie Klein joined the Market-based Mechanisms team at Ecofys in September 2012. Noémie is an expert on carbon markets, international climate policies and climate change adaptation. Before joining Ecofys, she ran her own consultancy business in Hong Kong, advising multilateral organisations, governments and the private sector on climate change mitigation and adaptation. Before moving to Asia, Noémie worked for EcoSecurities in the UK where she managed the team providing technical and policy assistance for the development of carbon projects.
sustainable energy for everyone
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sustainable energy for everyone