Resultados do sistema de comércio de emissões da ue e lições aprendidas

O sistema de comércio de emissões da UE (EU ETS)
O Sistema de Comércio de Emissões da UE foi explicado.
O sistema de comércio de emissões da UE (EU ETS) é uma pedra angular da política da UE para combater as alterações climáticas e o seu instrumento fundamental para reduzir as emissões de gases com efeito de estufa de forma rentável. É o primeiro grande mercado de carbono do mundo e continua sendo o maior deles.
opera em 31 países (todos os 28 países da UE mais a Islândia, Liechtenstein e Noruega) limita as emissões de mais de 11.000 instalações que utilizam energia pesada (centrais elétricas e plantas industriais) e as companhias aéreas que operam entre esses países cobrem cerca de 45% das emissões de gases com efeito de estufa da UE emissões.
Para uma visão geral detalhada, consulte:
Um sistema 'cap and trade'.
O EU ETS trabalha no princípio do limite e comércio.
Um limite é definido na quantidade total de certos gases de efeito estufa que podem ser emitidos pelas instalações cobertas pelo sistema. O limite é reduzido ao longo do tempo para que as emissões totais caiam.
Dentro do limite, as empresas recebem ou compram licenças de emissão que podem negociar umas com as outras conforme necessário. Eles também podem comprar quantidades limitadas de créditos internacionais de projetos de redução de emissões em todo o mundo. O limite do número total de permissões disponíveis garante que elas tenham um valor.
Após cada ano, uma empresa deve entregar licenças suficientes para cobrir todas as suas emissões, caso contrário, multas pesadas são impostas. Se uma empresa reduz suas emissões, ela pode manter as licenças de reposição para cobrir suas necessidades futuras ou então vendê-las para outra empresa que não possui licenças.
O comércio traz flexibilidade que garante que as emissões sejam cortadas onde custa menos. Um preço robusto de carbono também promove investimentos em tecnologias limpas e de baixo carbono.
Principais características da fase 3 (2013-2020)
O EU ETS está agora em sua terceira fase - significativamente diferente das fases 1 e 2.
As principais mudanças são:
Aplica-se um único limite de emissões à escala da UE em vez do anterior sistema de limites nacionais O leilão é o método por defeito para atribuição de licenças (em vez de atribuição a título gratuito) e as regras de atribuição harmonizadas aplicam-se às licenças ainda gratuitas. os gases incluíram 300 milhões de licenças reservadas na New Entrants Reserve para financiar a implantação de tecnologias inovadoras de energia renovável e captura e armazenamento de carbono por meio do programa NER 300.
Setores e gases cobertos.
O sistema cobre os seguintes setores e gases com foco nas emissões que podem ser medidas, reportadas e verificadas com um alto nível de precisão:
dióxido de carbono (CO 2) da geração de energia e calor - setores intensivos em energia, incluindo refinarias de petróleo, siderúrgicas e produção de ferro, alumínio, metais, cimento, cal, vidro, cerâmica, polpa, papel, papelão, ácidos e produtos químicos orgânicos a granel Óxido nitroso (N 2 O) da aviação comercial a partir da produção de ácidos nítrico, adípico e glioxílico e de perfluorocarbonetos glioxálicos (PFC) a partir da produção de alumínio.
A participação no EU ETS é obrigatória para empresas nestes setores, mas.
em alguns setores, apenas plantas acima de um determinado tamanho são incluídas. Algumas pequenas instalações podem ser excluídas se os governos implementarem medidas fiscais ou outras medidas que reduzirão suas emissões em um valor equivalente no setor de aviação; até 2016, o EU ETS se aplica apenas a vôos entre aeroportos situados no Espaço Económico Europeu (EEE).
Entregando reduções de emissões.
O EU ETS provou que colocar um preço no carbono e comercializá-lo pode funcionar. As emissões das instalações do regime estão a diminuir como previsto - cerca de 5% em comparação com o início da fase 3 (2013) (ver dados de 2015).
Em 2020, as emissões dos setores abrangidos pelo sistema serão 21% menores do que em 2005.
Desenvolvendo o mercado de carbono.
Criado em 2005, o EU ETS é o primeiro e maior sistema internacional de comércio de emissões do mundo, respondendo por mais de três quartos do comércio internacional de carbono.
O EU ETS também está inspirando o desenvolvimento do comércio de emissões em outros países e regiões. A UE pretende ligar o EU ETS a outros sistemas compatíveis.
Legislação principal do EU ETS.
30/04/2014 - Versão consolidada da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho, relativa à criação de um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e que altera a Directiva 96/61 / CE do Conselho 23/04/2009 - Diretiva 2009/29 / CE do Parlamento Europeu e do Conselho que altera a Diretiva 2003/87 / CE no sentido de melhorar e tornar extensivo o regime de comércio de licenças de emissão de gases com efeito de estufa da Comunidade 19/11/2008 - Diretiva 2008/101 / CE do o Parlamento Europeu e o Conselho que altera a Directiva 2003/87 / CE de modo a incluir as actividades da aviação no regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade 27/10/2004 - Directiva 2004/101 / CE do Parlamento Europeu e do Conselho o Conselho que altera a Directiva 2003/87 / CE, relativa à criação de um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade, no âmbito dos mecanismos de projecto do Protocolo de Quioto 13/10/2003 - Directiva 2003/87 / CE do Parlamento Europeu e do Conselho ncil que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e altera a Directiva 96/61 / CE do Conselho.
Relatórios do mercado de carbono.
23/11/2017 - COM (2017) 693 - Relatório sobre o funcionamento do mercado europeu do carbono 01/02/2017 - COM (2017) 48 - Relatório sobre o funcionamento do mercado europeu do carbono 18/11/2015 - COM ( 2015) 576 - Relatório sobre o funcionamento do mercado europeu do carbono 14/11/2012 - COM (2012) 652 - A situação do mercado europeu do carbono em 2012.
Revisão do EU ETS para a fase 3.
04/02/2011 - Conclusões do Conselho Europeu de 4 de fevereiro de 2011 (ver conclusões 23 e 24) 18/03/2010 - Orientações sobre a interpretação do anexo I da Diretiva RCLE-UE (excluindo atividades de aviação) 18/03/2010 - Orientação documento para identificação dos geradores de electricidade 06/04/2009 - Comunicado de imprensa do Conselho sobre a adopção do pacote clima-energia 12/12/2008 - Conclusões da Presidência do Conselho Europeu (11 e 12 de Dezembro de 2008) 12/12/2008 - Conselho Europeu Declaração sobre a utilização das receitas dos leilões 23/01/2008 - Proposta de Directiva do Parlamento Europeu e do Conselho que altera a Directiva 2003/87 / CE de modo a melhorar e alargar o sistema de comércio de licenças de emissão de gases com efeito de estufa da Comunidade 23 / 01/2008 - Documento de trabalho dos serviços da Comissão - Documento de acompanhamento da proposta de diretiva do Parlamento Europeu e do Conselho que altera a Diretiva 2003/87 / CE no sentido de melhorar e alargar o sistema de comércio de licenças de emissão de gases com efeito de estufa - Avaliação de impacto.
Implementação.
04/07/2013 - Projecto de Regulamento Alterado relativo à determinação dos direitos creditórios internacionais 05/06/2013 - Projecto de Regulamento sobre a determinação dos direitos creditórios internacionais 05/05/2013 Regulamento (UE) n. º 389/2013 da Comissão, de 2 de maio de 2013, que cria um Registo da União nos termos do à Diretiva 2003/87 / CE do Parlamento Europeu e do Conselho, Decisões n. º 280/2004 / CE e n. º 406/2009 / CE do Parlamento Europeu e do Conselho e que revoga os Regulamentos (UE) n. º 920/2010 da Comissão e N. ° 1193/2011 Texto relevante para efeitos do EEE 18/11/2011 - Regulamento da Comissão que estabelece um Registo da União para o período de negociação com início em 1 de janeiro de 2013 e os períodos de comércio subsequentes do regime de comércio de direitos de emissão da União nos termos da Diretiva 2003/87 / CE Parlamento Europeu e do Conselho e Decisão 280/2004 / CE do Parlamento Europeu e do Conselho e que altera os Regulamentos (CE) n. º 2216/2004 e (UE) n. º 920/2010 - ainda não publicados no Jornal Oficial 07 / 10/2010 - Regulamento da Comissão (UE) no 920/2010 relativa a um sistema de registos normalizado e protegido, em conformidade com a Directiva 2003/87 / CE do Parlamento Europeu e do Conselho e a Decisão no 280/2004 / CE do Parlamento Europeu e do Conselho - versão não incluindo as alterações introduzidas pelo Regulamento de 18 de novembro de 2011 08/10/2008 - Regulamento (CE) n. o 994/2008 da Comissão relativo a um sistema de registos normalizado e protegido, nos termos da Diretiva 2003/87 / CE do Parlamento Europeu e do Conselho e Decisão n. º 280/2004 / CE do Parlamento Europeu e do Conselho - versão aplicável até 31 de Dezembro de 2011 26/10/2007 - Decisão Misto do Comité Misto do EEE n. º 146/2007, que liga o RCLE-UE à Noruega, à Islândia e ao Liechtenstein 13/11 / 2006 - Decisão 2006/780 / CE da Comissão, relativa à redução da duplicação das emissões de gases com efeito de estufa no âmbito do regime comunitário de comércio de licenças de emissão no âmbito do Protocolo de Quioto, nos termos da Directiva 2003/87 / CE do Parlamento Europeu e do Conselho (n sob nº C (2006) 5362) 21/12/2004 - Versão consolidada do Regulamento (CE) nº 2216/2004 da Comissão para um sistema de registos normalizado e protegido, com a redacção que lhe foi dada pelo Regulamento (CE) nº 916/2007 da Comissão, de 31 de Julho 2007, Regulamento (CE) n. o 994/2008 da Comissão, de 8 de Outubro de 2008, e Regulamento (UE) n. o 920/2010 da Comissão, de 7 de Outubro de 2010 - versão sem alterações introduzidas pelo Regulamento de 18 de Novembro de 2011.
Aplicação do IVA.
História da Legislação da Directiva 2003/87 / CE.
Trabalhar antes da proposta da Comissão.
08/02/2000 - COM (2000) 87 - Livro Verde sobre comércio de emissões de gases com efeito de estufa na União Europeia Mandato e resultados do Grupo de Trabalho 1 da ECCP: Mecanismos flexíveis 04/09/2001 - Resumo Resumido do Presidente da reunião de consulta das partes interessadas (com a indústria ONG ambientais e ambientais 19/05/1999 - COM (1999) 230 - Preparação da aplicação do Protocolo de Quioto 03/06/1998 - COM (1998) 353 - Alterações climáticas - Rumo a uma estratégia pós-Quioto da UE Âmbito do RCLE UE : 07/2007 - Pequenas Instalações dentro do Sistema de Comércio de Emissões da UE 10/2006 - Inclusão de atividades e gases adicionais no Sistema de Comércio de Emissões da UE Maior harmonização e maior previsibilidade: 12/2006 - A abordagem para novos entrantes e encerramentos 10/2006 - Leilão de licenças de emissão de CO2 na EU ETS 10/2006 - Harmonização de metodologias de alocação 12/2006 - Relatório sobre a competitividade internacional Grupo de trabalho da ECCP sobre o comércio de emissões na revisão do EU ETS 15/06/2007 - Relatório final da 4ª reunião Ligação em Sistemas de Comércio de Emissões em Terceiros Países 22/05/2007 - Relatório final da 3ª reunião sobre Harmonização Adicional e Previsibilidade Aumentada 26/04/2007 - Relatório Final da 2ª reunião sobre Cumprimento e Cumprimento Robustos 09/03/2007 - Relatório final da primeira reunião sobre o âmbito da directiva.
Proposta da Comissão de Outubro de 2001.
22/01/2002 - Não-documento sobre sinergias entre a proposta de comércio de emissões da CE (COM (2001) 581) e a Directiva IPPC 23/10/2001 - COM (2001) 581 - Proposta de directiva-quadro relativa ao comércio de emissões de gases com efeito de estufa na Comunidade Europeia.
Reacção da Comissão à leitura da proposta no Conselho e no Parlamento (incluindo a posição comum do Conselho)
18/07/2003 - COM (2003) 463 - Parecer da Comissão sobre as alterações do Parlamento Europeu à posição comum do Conselho respeitante à proposta de directiva do Parlamento Europeu e do Conselho 20/06/2003 - COM (2003) 364 - Comunicação da Comissão ao Parlamento Europeu relativa à posição comum do Conselho sobre a adopção de uma directiva que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e altera a Directiva 96/61 / CE 18/03/2003 - Posição Comum ) 28.2003 - Posição Comum do Conselho sobre a adopção de uma directiva que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e altera a Directiva 96/61 / CE 27/11/2002 - COM (2002) 680 - Proposta alterada de directiva do Parlamento Europeu e do Conselho que estabelece um regime de comércio de licenças de emissão de gases com efeito de estufa na Comunidade e altera a Directiva 96/61 / CE do Conselho.
Abra todas as perguntas.
Perguntas e Respostas sobre o Sistema de Comércio de Emissões da UE revisado (dezembro de 2008)
Qual é o objetivo do comércio de emissões?
O objetivo do Sistema de Comércio de Emissões da UE (EU ETS) é ajudar os Estados Membros da UE a cumprir seus compromissos de limitar ou reduzir as emissões de gases de efeito estufa de maneira econômica. Permitir que as empresas participantes comprem ou vendam licenças de emissão significa que os cortes de emissões podem ser alcançados pelo menos pelo custo.
O EU ETS é a pedra angular da estratégia da UE para combater as alterações climáticas. É o primeiro sistema internacional de comércio de emissões de CO 2 no mundo e está em funcionamento desde 2005. A partir de 1 de Janeiro de 2008, aplica-se não só aos 27 Estados-Membros da UE, mas também aos outros três membros do Espaço Económico Europeu. - Noruega, Islândia e Liechtenstein. Actualmente, abrange mais de 10 000 instalações nos sectores da energia e da indústria, que são colectivamente responsáveis ​​por quase metade das emissões de CO 2 da UE e por 40% das suas emissões totais de gases com efeito de estufa. Uma emenda à Diretiva EU ETS, acordada em julho de 2008, trará o setor da aviação para o sistema a partir de 2012.
Como funciona o comércio de emissões?
O EU ETS é um sistema de limite e comércio, ou seja, ele limita o nível geral de emissões permitidas, mas, dentro desse limite, permite que os participantes do sistema comprem e vendam licenças conforme necessário. Essas permissões são a "moeda" de negociação comum no coração do sistema. Uma licença concede ao titular o direito de emitir uma tonelada de CO 2 ou a quantidade equivalente de outro gás com efeito de estufa. O teto do número total de permissões cria escassez no mercado.
No primeiro e segundo período de comércio ao abrigo do regime, os Estados-Membros tiveram de elaborar planos nacionais de atribuição (NAP) que determinam o nível total de emissões do RCLE e o número de licenças de emissão que cada instalação recebe no seu país. No final de cada ano, as instalações devem devolver licenças equivalentes às suas emissões. As empresas que mantêm suas emissões abaixo do nível de suas permissões podem vender seus excedentes de licenças. Aqueles que enfrentam dificuldades em manter suas emissões alinhadas com seus subsídios têm uma escolha entre tomar medidas para reduzir suas próprias emissões - como investir em tecnologia mais eficiente ou usar fontes de energia menos intensivas em carbono - ou comprar as permissões extras necessárias no mercado. , Ou uma combinação de ambos. Tais escolhas são provavelmente determinadas por custos relativos. Dessa forma, as emissões são reduzidas onde quer que seja mais econômico fazê-lo.
Há quanto tempo o EU ETS está operando?
O EU ETS foi lançado em 1 de janeiro de 2005. O primeiro período de comércio durou três anos até o final de 2007 e foi uma fase de 'aprender fazendo' para se preparar para o segundo período de comércio crucial. O segundo período de comércio teve início em 1 de janeiro de 2008 e dura cinco anos até o final de 2012. A importância do segundo período de comércio decorre do fato de coincidir com o primeiro período de compromisso do Protocolo de Kyoto, durante o qual a UE e outras os países industrializados devem cumprir suas metas para limitar ou reduzir as emissões de gases de efeito estufa. Para o segundo período de comércio, as emissões do RCLE-UE foram limitadas em cerca de 6,5% abaixo dos níveis de 2005 para ajudar a garantir que a UE como um todo, e os Estados-Membros individualmente, cumpram os seus compromissos de Quioto.
Quais são as principais lições aprendidas com a experiência até agora?
O EU ETS colocou um preço no carbono e provou que o comércio de emissões de gases de efeito estufa funciona. O primeiro período de comércio estabeleceu com êxito a livre negociação de licenças de emissão em toda a UE, criou a infraestrutura necessária e desenvolveu um mercado dinâmico de carbono. Os benefícios ambientais da primeira fase podem ser limitados devido à atribuição excessiva de licenças em alguns Estados-Membros e alguns sectores, devido principalmente a uma dependência das projecções das emissões antes de os dados das emissões verificadas se tornarem disponíveis no âmbito do RCLE-UE. Quando a publicação dos dados de emissões verificadas para 2005 destacou essa “superalocação”, o mercado reagiu como seria esperado, baixando o preço de mercado das permissões. A disponibilidade de dados de emissões verificadas permitiu à Comissão assegurar que o limite para as dotações nacionais na segunda fase seja estabelecido a um nível que resulte em reduções reais das emissões.
Para além de sublinhar a necessidade de dados verificados, a experiência até à data demonstrou que uma maior harmonização no âmbito do RCLE-UE é imperativa para garantir que a UE atinja os seus objetivos de redução de emissões pelo menor custo e com distorções de concorrência mínimas. A necessidade de mais harmonização é mais clara no que diz respeito ao modo como é estabelecido o limite para as licenças de emissão globais.
Os dois primeiros períodos de comércio mostram também que os métodos nacionais amplamente divergentes de atribuição de licenças a instalações ameaçam a concorrência leal no mercado interno. Além disso, é necessária uma maior harmonização, clarificação e aperfeiçoamento no que diz respeito ao âmbito do sistema, ao acesso a créditos de projectos de redução de emissões fora da UE, às condições de ligação do RCLE-UE aos sistemas de comércio de emissões noutros locais e à monitorização, verificação e requisitos de relatórios.
Quais são as principais mudanças no EU ETS e a partir de quando elas serão aplicadas?
As alterações de projeto acordadas serão aplicadas a partir do terceiro período de comércio, ou seja, janeiro de 2013. Embora o trabalho preparatório seja iniciado imediatamente, as regras aplicáveis ​​não serão alteradas até janeiro de 2013 para assegurar que a estabilidade regulatória seja mantida.
O EU ETS no terceiro período será um sistema mais eficiente, mais harmonizado e mais justo.
O aumento da eficiência é conseguido através de um período de comércio mais longo (8 anos em vez de 5 anos), um limite de emissões robusto e decrescente anual (redução de 21% em 2020 comparado a 2005) e um aumento substancial na quantidade de leilões. 4% na fase 2 para mais da metade na fase 3).
Foi harmonizada mais harmonização em muitos domínios, incluindo no que diz respeito à fixação de limites (limite máximo à escala da UE em vez dos limites nacionais nas fases 1 e 2) e às regras para a atribuição gratuita a título transitório.
A equidade do sistema foi substancialmente aumentada pela passagem para regras de atribuição de licenças de emissão em toda a UE para as instalações industriais e pela introdução de um mecanismo de redistribuição que permite aos novos Estados-Membros leiloar mais licenças.
Como o texto final se compara à proposta inicial da Comissão?
As metas climáticas e energéticas acordadas pelo Conselho Europeu da Primavera de 2007 foram mantidas e a arquitectura global da proposta da Comissão sobre o RCLE-UE permanece intacta. Ou seja, haverá um limite máximo a nível da UE sobre o número de licenças de emissão e este limite diminuirá anualmente ao longo de uma linha de tendência linear, que continuará para além do final do terceiro período de comércio (2013-2020). A principal diferença em relação à proposta é que o leilão de licenças será introduzido gradualmente.
Quais são as principais alterações em relação à proposta da Comissão?
Em resumo, as principais alterações feitas na proposta são as seguintes:
Alguns Estados-Membros podem beneficiar de uma derrogação facultativa e temporária da regra segundo a qual não devem ser atribuídos licenças de emissão a geradores de eletricidade a partir de 2013. Esta possibilidade de derrogação está à disposição dos Estados-Membros que preencham determinadas condições relacionadas com a interconexão da sua eletricidade. rede, quota de um único combustível fóssil na produção de electricidade e PIB / capita em relação à média da UE-27. Além disso, o montante de licenças gratuitas que um Estado-Membro pode atribuir às centrais eléctricas está limitado a 70% das emissões de dióxido de carbono das instalações pertinentes na fase 1 e diminui nos anos seguintes. Além disso, a atribuição a título gratuito na fase 3 só pode ser concedida a centrais eléctricas em funcionamento ou em construção, o mais tardar no final de 2008. Ver resposta à pergunta 15 abaixo. A directiva conterá mais pormenores sobre os critérios a utilizar para determinar os sectores ou subsectores considerados expostos a um risco significativo de fuga de carbono e uma data anterior de publicação da lista da Comissão sobre esses sectores (31 de Dezembro). 2009). Além disso, sujeito a revisão quando for alcançado um acordo internacional satisfatório, as instalações em todas as indústrias expostas receberão 100% de licenças gratuitas na medida em que usem a tecnologia mais eficiente. A alocação gratuita à indústria é limitada à participação das emissões dessas indústrias no total de emissões em 2005 a 2007. O número total de permissões alocadas gratuitamente a instalações em setores industriais declinará anualmente de acordo com o declínio do limite de emissões. Os Estados-Membros podem igualmente compensar certas instalações por custos de CO 2 repercutidos nos preços da electricidade se os custos do CO 2 os pudessem expor ao risco de fuga de carbono. A Comissão comprometeu-se a alterar as orientações comunitárias em matéria de auxílios estatais a favor do ambiente. Veja a resposta à questão 15 abaixo. O nível de leilões de licenças para a indústria não exposta aumentará de forma linear, como proposto pela Comissão, mas, em vez de atingir 100% até 2020, atingirá 70%, tendo em vista atingir 100% até 2027. Tal como previsto Na proposta da Comissão, 10% dos subsídios para leilões serão redistribuídos dos Estados Membros com alta renda per capita para aqueles com baixa renda per capita, a fim de fortalecer a capacidade financeira destes últimos de investir em tecnologias amigas do clima. Foi adicionada uma provisão para outro mecanismo redistributivo de 2% das licenças de emissão em leilão, a fim de ter em conta os Estados-Membros que, em 2005, conseguiram uma redução de pelo menos 20% das emissões de gases com efeito de estufa em comparação com o ano de referência estabelecido pelo Protocolo de Quioto. A percentagem de receitas leiloadas que os Estados-Membros devem utilizar para combater e adaptar-se às alterações climáticas, principalmente na UE, mas também nos países em desenvolvimento, é aumentada de 20% para 50%. O texto prevê um complemento para o nível de uso permitido de créditos de IC / MDL no cenário de 20% para operadores existentes que receberam os orçamentos mais baixos para importar e usar tais créditos em relação a alocações e acesso a créditos no período 2008-2012. Novos setores, novos entrantes nos períodos 2013-2020 e 2008-2012 também poderão usar créditos. O montante total dos créditos que poderão ser utilizados não excederá, no entanto, 50% da redução entre 2008 e 2020. Com base numa redução de emissões mais rigorosa no contexto de um acordo internacional satisfatório, a Comissão poderá permitir acesso adicional às RCE e URE. para os operadores do regime comunitário. Veja a resposta à questão 20 abaixo. O produto do leilão de 300 milhões de permissões da reserva de novos operadores será usado para apoiar até 12 projetos e projetos de demonstração de captura e armazenamento de carbono, demonstrando tecnologias inovadoras de energia renovável. Várias condições estão associadas a este mecanismo de financiamento. Veja a resposta à questão 30 abaixo. A possibilidade de optar por pequenas instalações de combustão, desde que sujeitas a medidas equivalentes, foi alargada a todas as pequenas instalações independentemente da actividade, o limiar de emissões aumentou de 10.000 para 25.000 toneladas de CO 2 por ano e o limiar de capacidade que instalações de combustão tem que cumprir, além disso foi elevado de 25MW para 35MW. Com estes limiares aumentados, a percentagem de emissões abrangidas que potencialmente seriam excluídas do sistema de comércio de emissões torna-se significativa e, consequentemente, foi adicionada uma provisão para permitir uma redução correspondente do limite de licenças a nível da UE.
Ainda haverá planos nacionais de alocação (NAPs)?
Não. Nos seus PAN nos primeiros (2005-2007) e no segundo (2008-2012) períodos de comércio, os Estados-Membros determinaram a quantidade total de licenças a emitir - o limite - e como estas seriam atribuídas às instalações em causa. Esta abordagem gerou diferenças significativas nas regras de alocação, criando um incentivo para que cada Estado-Membro favoreça o seu próprio setor e tenha levado a uma grande complexidade.
A partir do terceiro período de comércio, haverá um limite único a nível da UE e as licenças serão atribuídas com base em regras harmonizadas. Os planos nacionais de atribuição não serão, portanto, mais necessários.
Como será determinado o limite de emissões na fase 3?
As regras para o cálculo do limite a nível da UE são as seguintes:
A partir de 2013, o número total de licenças diminuirá anualmente de maneira linear. O ponto de partida desta linha é a quantidade total média de licenças (fase 2 limite) a ser emitida pelos Estados Membros para o período 2008-12, ajustada para refletir o escopo ampliado do sistema a partir de 2013, bem como quaisquer instalações de pequeno porte Estados optaram por excluir. O fator linear pelo qual a quantidade anual deve diminuir é de 1,74% em relação ao limite da fase 2.
O ponto de partida para determinar o fator linear de 1,74% é a redução geral de 20% dos gases de efeito estufa em relação a 1990, o que equivale a uma redução de 14% em relação a 2005. No entanto, uma redução maior é exigida do EU ETS porque é mais barato reduzir as emissões nos sectores do RCLE. A divisão que minimiza o custo total de redução é:
uma redução de 21% nas emissões do setor RCLE-UE em relação a 2005 até 2020; uma redução de cerca de 10% em relação a 2005 para os sectores não abrangidos pelo RCLE-UE.
A redução de 21% em 2020 resulta em um teto ETS em 2020 de um máximo de 1720 milhões de permissões e implica um limite médio de 3ª fase (2013 a 2020) de cerca de 1846 milhões de permissões e uma redução de 11% em comparação com o limite da fase 2.
Todos os números absolutos indicados correspondem à cobertura no início do segundo período de negociação e, portanto, não levam em conta a aviação, que será adicionada em 2012, e outros setores que serão adicionados na fase 3.
Os valores finais para os limites anuais de emissões na fase 3 serão determinados e publicados pela Comissão até 30 de Setembro de 2010.
Como será determinado o limite de emissões além da fase 3?
O fator linear de 1,74% usado para determinar o limite da fase 3 continuará a ser aplicado além do final do período de comércio em 2020 e determinará o limite para o quarto período de comércio (2021 a 2028) e além. Pode ser revisto até 2025, o mais tardar. De fato, reduções significativas de emissão de 60% -80% em relação a 1990 serão necessárias até 2050 para alcançar o objetivo estratégico de limitar o aumento da temperatura média global a não mais que 2 ° C acima dos níveis pré-industriais.
Um limite de licenças de emissão para toda a UE será determinado para cada ano. Isto reduzirá a flexibilidade das instalações em causa?
Não, a flexibilidade para instalações não será reduzida de forma alguma. Em qualquer ano, as licenças de emissão a serem leiloadas e distribuídas devem ser emitidas pelas autoridades competentes até 28 de fevereiro. A última data para os operadores devolverem licenças é 30 de abril do ano seguinte ao ano em que as emissões ocorreram. Assim, os operadores recebem licenças para o ano em curso antes de terem de devolver as licenças para cobrir as suas emissões do ano anterior. As tolerâncias permanecem válidas durante todo o período de negociação e quaisquer provisões excedentes podem agora ser "depositadas" para uso em períodos de negociações subseqüentes. Nesse aspecto, nada mudará.
O sistema permanecerá com base nos períodos de negociação, mas o terceiro período de negociação durará oito anos, de 2013 a 2020, em oposição a cinco anos para a segunda fase, de 2008 a 2012.
Para o segundo período de comércio, os Estados-Membros decidiram geralmente atribuir quantidades totais iguais de licenças para cada ano. A redução linear a cada ano a partir de 2013 corresponderá melhor às tendências esperadas de emissões no período.

Esquema de Comércio de Emissões da UE (EU ETS)
Guia do Esquema de Comércio de Emissões da UE (EU ETS) e seu impacto nas empresas.
Conteúdo atualizado pela última vez: novembro de 2013.
O EU ETS - também conhecido como Esquema de Comércio de Emissões da União Europeia - coloca um limite no dióxido de carbono (CO2) emitido pelas empresas e cria um mercado e preço para as permissões de carbono. Abrange 45% das emissões da UE, incluindo setores intensivos em energia e aproximadamente 12.000 instalações.
Veja mais detalhes abaixo em:
O EU ETS: Fase II (2008-2012)
A fase II do EU ETS decorreu de 2008-2012 (o período de compromisso do Protocolo de Quioto). Durante esta fase, todos os estados membros da UE:
Desenvolveu um Plano Nacional de Atribuição (NAP). O Estado-Membro propôs um limite ('limite') do total de emissões de instalações relevantes. Os planos foram aprovados pela Comissão Europeia, em muitos casos após algumas revisões. Subsídios distribuídos O 'limite' foi convertido em subsídios, conhecidos como EUAs (1 tonelada de dióxido de carbono = 1 EUA). Os Estados-Membros distribuíram estes subsídios para as instalações do regime no seu país de acordo com o plano aprovado. Até 10% dos subsídios poderiam ser leiloados em vez de serem dados gratuitamente. Esses leilões foram maiores no Reino Unido e na Alemanha. Operado o Esquema As instalações foram obrigadas a monitorizar e reportar as emissões de carbono verificadas No final de cada ano, as instalações eram obrigadas a devolver licenças suficientes para cobrir as suas emissões e poderiam comprar licenças adicionais ou vender qualquer excedente de Implementação Conjunta e Mecanismo de Desenvolvimento Limpo ( CDM) poderiam ser utilizados no âmbito do regime, através da «Directiva de Ligação», acordada em 2004)
Como o EU ETS funciona agora (2013-2020)
A fase III começou em 2013 e vai até 2020. As maiores mudanças na Fase III são:
O regime deveria também ser alargado ao setor da aviação a partir de janeiro de 2013, abrangendo todos os voos que descolam e aterram na UE, incluindo os que provêm ou partem de países não pertencentes à UE. No entanto, em novembro de 2012, a Comissão Européia decidiu adiar a extensão do esquema para voos extra-UE até depois da Assembléia Geral da Organização Internacional de Aviação Civil (OACI) no outono de 2013, na expectativa de um acordo global de mitigação de gases de efeito estufa da aviação. ser alcançado. O ETS continua a ser aplicável aos voos intra-UE a partir de janeiro de 2013. As informações mais recentes sobre o RCLE-UE e a aviação podem ser encontradas em gov. uk. Excluir.
O DECC introduziu uma provisão de desativação para pequenos emissores e hospitais no Reino Unido, permitindo que eles passem para um esquema mais "leve", com custos administrativos mais baixos (que atingem empresas desproporcionalmente menores). O opt-out irá fornecer uma redução de carbono equivalente. Subsídios.
Pelo menos 50% das licenças serão leiloadas a partir de 2013 (em vez de dadas a instalações). O uso de licenças do Mecanismo de Desenvolvimento Limpo (MDL) será mais restrito a não mais do que 50% das reduções necessárias.
Relatórios do Carbon Trust EU ETS.
Data de publicação: 2004 - 2008.
Reduzindo o Carbono na Europa: os planos para 2020 e o futuro do EU ETS (CTC734)
Data de publicação: 01/06/2008.
Este relatório analisa as alterações ao esquema de comércio de emissões da UE (EU ETS) proposto pela Comissão Europeia em 23 de janeiro de 2008 e suas implicações para as empresas.
Conclui que as propostas são um passo ousado e significativo na direção certa, que corrige fraquezas no esquema atual e fornece o nível de certeza que as empresas e os investidores têm solicitado.
Impacto do EU ETS na lucratividade e no comércio (CTC728)
Data de publicação: 11/01/2008.
This report combines data on how business costs would be affected by carbon costs with analysis of the effect on prices and international trade in order to identify the small group of activities for which competitiveness is an issue for the environment, as well as for business, and to identify potential responses.
EU ETS Phase II allocation: implications and lessons (CTC715)
Publication date: 21/05/2007.
This report analyses the implications for the Phase II carbon market (and the resulting industrial abatement incentives) and the wider lessons to be learned from the allocation process.
Allocation and competitiveness in the EU Emissions Trading System: Options for Phase II and beyond (CTC609)
Publication date: 01/06/2006.
This report, based on collaborative research with Climate Strategies, examines the workings of the EU ETS to date and offers analysis and recommendations on its future development.
The study identifies seven key challenges to overcome for the second phase of the EU ETS and sets out the Carbon Trust's own conclusions and recommendations for the future of the EU ETS as an instrument that can both help business deliver emission reductions as efficiently as possible, and also protect and ultimately enhance business competitiveness in a CO 2 - constrained world.
The European Emissions Trading Scheme: Implications for Industrial Competitiveness (CT-2004-04)
Publication date: 30/06/2004.
This report explores in depth the implications of the EU ETS for industrial competitiveness in the UK and the wider EU. It presents our analysis of combined insights from economic modelling and a stakeholder interview programme.
Fundo.
The EU ETS scheme started in 2005 in order to help the EU meet its targets under the Kyoto Protocol (8% reduction in greenhouse gas emissions from 1990 levels).
The scheme is the world's largest carbon-trading scheme. It provides an incentive for installations to reduce their carbon emissions, because they can then sell their surplus allowances.
Installations are included in the scheme on the basis of their Carbon Dioxide (CO2) emitting activities. Industries that are covered include:
Electricity generation Iron & steel Mineral processing (for example: cement manufacture) Pulp and paper processing.
More information on the EU ETS can be found on the DECC website.

Lessons Learned from Three Decades of Experience with Cap and Trade.
Richard Schmalensee, Robert N. Stavins; Lessons Learned from Three Decades of Experience with Cap and Trade, Review of Environmental Economics and Policy , Volume 11, Issue 1, 1 January 2017, Pages 59–79, doi/10.1093/reep/rew017.
Faça o download do arquivo de citação:
& # 169; 2018 Oxford University Press.
This article presents an overview of the design and performance of seven major emissions trading programs that have been implemented over the past 30 years and identifies a number of important lessons for future applications of this important environmental policy instrument. A brief discussion of several other proposed or implemented emissions trading programs is also included.
Introdução.
Thirty years ago, many environmental advocates argued that government allocation of rights to emit pollution inappropriately legitimized environmental degradation, while others questioned the feasibility of such an approach (Mazmanian and Kraft 2009). At the time, virtually all pollution regulations took a command-and-control approach, either specifying the type of pollution control equipment to be installed or setting uniform limits on emission levels or rates.
Today, it is widely recognized that because emission reduction costs can vary greatly, the aggregate abatement costs under command-and-control approaches can be much higher than under market-based approaches, which establish a price on emissions—either directly through taxes or indirectly through a market for tradable emissions rights (called permits or allowances) established under a cap-and-trade policy. Market-based approaches tend to equate marginal abatement costs rather than emissions levels or rates across sources. This means that in theory, market-based approaches can achieve aggregate pollution control targets at minimum cost.
In this article, we examine the design and performance of seven of the most prominent emissions trading systems that have been implemented over the past 30 years in order to distill key lessons for future applications of this environmental policy instrument. We focus on systems that are important environmentally and/or economically and whose performance is well documented. We exclude emission reduction credit (i. e., offset) systems, which offer credits for emissions reductions from some counterfactual baseline, because while emissions can generally be measured directly, emissions reductions are unobservable and often ill-defined. It is worth noting, however, that offset systems have been fairly widely used, notably in the Clean Development Mechanism (CDM), an international offset system that is part of the Kyoto Protocol.
The seven emissions trading systems we examine are the U. S. Environmental Protection Agency’s (EPA’s) phasedown of leaded gasoline in the 1980s, the U. S. sulfur dioxide (SO 2 ) allowance trading program under the Clean Air Act Amendments of 1990, the Regional Clean Air Incentives Market (RECLAIM) in southern California; the trading of nitrogen oxides (NO x ) in the eastern United States, the Regional Greenhouse Gas Initiative (RGGI) in the northeastern United States, California’s cap-and-trade system under Assembly Bill 32, and the European Union (EU) Emissions Trading System (ETS). All these programs except the first are textbook cap-and-trade systems. 1 We review the design, performance, and lessons learned from each of the seven systems, and then briefly discuss several other cap-and-trade systems. In the final section we summarize key lessons for designing and implementing new cap-and-trade systems and present our thoughts about the potential role of cap-and-trade in global climate change policy.
Experience with U. S. National Cap-and-Trade Programs.
Beginning in the 1980s, the first emissions trading systems were developed and implemented at the federal level in the United States.
The Phasedown of Leaded Gasoline.
In the 1970s, there was growing concern about the use of lead as an additive in gasoline. Although it was later documented that lead oxide emissions were a serious human health threat, the original concern was that these emissions were fouling catalytic converters, which were required in new U. S. cars (starting in 1975) to reduce emissions of carbon monoxide and hydrocarbons. In the early 1980s, in response to this concern, the EPA began a phasedown of lead in gasoline to 10 percent of its original level.
In 1982, the EPA launched a trading program aimed at reducing the burden on smaller refineries, which faced significantly higher compliance costs than large refineries. Unlike a textbook cap-and-trade program, in which a fixed quantity of permits is given or sold to compliance entities, there was no explicit allocation of permits. Instead, the system implicitly awarded property rights on the basis of historical levels of gasoline production (Hahn 1989). More specifically, if a refiner produced gasoline with a total lead content that was lower than the amount allowed, it earned lead “credits” that the EPA allowed the refiner to sell. Under the program’s banking provision, lead credits could also be saved for later use. This created an incentive for refineries to make early reductions in lead content to help them meet the lower limits that took effect over time.
Atuação.
Overall, the trading program was successful in meeting its environmental targets, although it may have produced some temporary geographic shifts in use patterns (Anderson, Hofmann, and Rusin 1990; Newell and Rogers 2007), and it resulted in leaded gasoline being removed from the market faster than anticipated. In each year of the program (until the lead phasedown was completed and the program was terminated at the end of 1987), more than 60 percent of the lead added to gasoline was associated with traded lead credits (Hahn and Hester 1989). This high level of trading far surpassed levels observed in earlier environmental offset markets under the EPA’s Emissions Trading Program in the 1970s. The level of trading and the rate at which refiners reduced their production of leaded gasoline suggest that the program was also relatively cost effective (Hahn and Hester 1989; Kerr and Maré 1997; Nichols 1997). The EPA estimated that the lead trading program resulted in savings of approximately 20 percent relative to approaches that did not include trading (U. S. Environmental Protection Agency 1985). In addition, the program provided significant incentives for cost-saving technology diffusion (Kerr and Newell 2003).
Three major lessons emerge from the design and implementation of this program. First, as the first environmental program in which trading played a central role, the program served as proof of the concept that a tradable emission rights system could be both environmentally effective and economically cost effective.
Second, the program demonstrated that transaction costs in such a system could be small enough to permit substantial trade. In contrast, in the 1970s, the EPA’s Emissions Trading Program (a set of emissions reduction credit systems) required prior government approval of individual trades, which hampered trading activity. The lack of such requirements was an important factor in the success of trading in the lead phasedown program (Hahn and Hester 1989).
Third, as in later programs, banking played a very important role. By enabling intertemporal substitution, provisions that allowed firms to bank permits contributed a significant share of the gains from trade.
The Sulfur Dioxide Allowance Trading Program.
During the 1980s, there was growing concern that acid precipitation—due mainly to emissions of SO 2 from coal-fired power plants—was damaging forests and aquatic ecosystems (Glass, Glass, and Rennie 1982). However, because the costs of emissions reductions differed dramatically among existing plants, legislative proposals to use command-and-control approaches failed to attract significant support.
Title IV of the Clean Air Act Amendments of 1990 addressed this issue by launching the SO 2 allowance trading program. Phase 1 (1995–1999) required emissions reductions from the 263 most polluting coal-fired electric generating units (larger than 100 MW), almost all of which were located east of the Mississippi River. Phase 2, which began in 2000, placed an aggregate national emissions cap on approximately 3,200 electric generating units (larger than 25 MW), nearly the entire fleet of fossil-fueled plants in the continental United States (Ellerman et al. 2000). This cap represented a 50 percent reduction from 1980 levels.
The government gave power plants permits to emit (called “allowances”) specific tonnages of SO 2 emissions; allocations were based primarily on actual fuel use during the 1985–1987 period. 2 If annual emissions at a regulated facility exceeded its allowance allocation, the owner could comply by buying additional allowances or reducing emissions by installing pollution controls, shifting to a fuel mix with less sulfur, or reducing production. If emissions at a regulated facility were below its allowance allocation, the facility owner could sell the extra allowances or bank them for future use. The EPA monitored emissions on a continuous basis and verified ownership of the allowances submitted for compliance.
This cap-and-trade system created incentives for facilities to reduce their SO 2 emissions at the lowest cost. Although government auctioning of allowances would have generated revenue that could have been used—in principle—to reduce distortionary taxes, thereby reducing the program’s social cost (Goulder 1995), this efficiency argument was not advanced at the time. Because the entire investor-owned electric utility industry was subject to cost-of-service regulation in 1990, it was assumed that the value of free allowances would be passed on to consumers and thus not generate windfall profits for generators. Just as important, the ability to allocate free allowances helped to build significant political support for the program (Joskow and Schmalensee 1998). Since the equilibrium allocation of pollution permits (after trading has occurred) is independent of the initial allocation (Montgomery 1972)—barring particularly problematic types of transaction costs (Hahn and Stavins 2012)—the initial allocation of allowances could be designed to maximize political support without compromising the system’s environmental performance or raising its cost.
Atuação.
The program performed exceptionally well across all relevant dimensions. SO 2 emissions from electric power plants decreased 36 percent between 1990 and 2004 (U. S. Environmental Protection Agency 2011), even though electricity generation from coal-fired power plants increased 25 percent over the same period (U. S. Energy Information Administration 2012). The program delivered emissions reductions more quickly than expected, as utilities made substantial use of the ability to bank allowances for future use. With continuous emissions monitoring and a $2,000 per ton statutory fine for any emissions exceeding allowance holdings, compliance was nearly 100 percent (Burtraw and Szambelan 2010).
Some worried that the geographic pattern of emissions would change so as to produce “hot spots” of unacceptably high SO 2 concentrations. However, the pattern of emissions reductions was broadly consistent with model predictions, and no significant hot spots were produced (Ellerman et al. 2000; Swift 2004).
The cost of the program was significantly reduced after the substantial deregulation of railroads in 1980, which caused rail rates to fall and thus reduced the cost of burning low-sulfur Western coal in the East (Keohane 2003; Ellerman and Montero 1998; Schmalensee and Stavins 2013). That being said, cost savings were at least 15 percent and perhaps as great as 90 percent of the costs of various alternative command-and-control policies (Carlson et al. 2000; Ellerman et al. 2000; Keohane 2003). In addition, there is evidence that the program reduced costs over time by providing incentives for innovation (Ellerman et al. 2000; Popp 2003; Bellas and Lange 2011). However, for a variety of reasons, the program’s costs were likely not as low as they could have been (Schmalensee and Stavins 2013).
Nevertheless, the SO 2 allowance trading program’s actual costs were much lower than under command-and-control regulation—if such an approach had been politically feasible. The program’s goals were achieved with less litigation (and thus less uncertainty) than is typical for traditional environmental programs, because firms that found it particularly costly to reduce emissions had the option to buy allowances instead. Moreover, firms could not complain about the EPA’s exercise of administrative discretion since the law gave the EPA very little discretion. However, subsequent regulatory actions, court decisions, and regulatory responses led to the virtual elimination of the SO 2 market by 2010 (Schmalensee and Stavins 2013).
The SO 2 reductions achieved benefits that were a substantial multiple of the program’s costs (Burtraw et al. 1998; Chestnut and Mills 2005). However, the program’s benefits were due mainly to the positive human health impacts of decreased local SO 2 and small particulate concentrations, not the ecological benefits of reduced acid deposition that were expected when the program was enacted (Schmalensee and Stavins 2013). Nevertheless, there were also significant ecological benefits (Banzhaf et al. 2006).
Even though the conclusion of the leaded gasoline phasedown trading program preceded the beginning of the SO 2 allowance trading program by a decade, the SO 2 system was, and still is today, often celebrated as the first important cap-and-trade program. Some of the lessons from the SO 2 program reinforce lessons from the lead phasedown program.
First, putting final rules in place well before the beginning of the first compliance period provides regulated entities with some degree of certainty, which facilitates their planning and limits price volatility in early years. In the case of the SO 2 allowance trading program, this was done 2 years prior to the implementation of phase 1.
Second, as with the lead trading program, the absence of requirements for prior approval of trades reduced both the uncertainty for utilities and the administrative costs for government, and it contributed to low transaction costs and substantial trading (Rico 1995).
Third, as with the lead trading program, banking of allowances was extremely important, accounting for more than half of the program’s cost savings (Carlson et al. 2000; Ellerman et al. 2000).
Fourth, when combined with unrestricted trading and banking, a robust allowance market can be fostered through a cap that is significantly below business-as-usual (BAU) emissions.
Fifth, allocation of free allowances can be very useful in building political support.
Sixth, intrasector emissions leakage from regulated to unregulated entities can be minimized, as it was in this program, by regulating all nontrivial sources.
Finally, high levels of compliance can be ensured through rigorous monitoring of emissions and significant penalties for noncompliance.
U. S. Regional and State Programs.
Over time, action on emissions trading in the United States has shifted to subnational programs, including the Regional Clean Air Incentives Market in southern California, NO x trading in the eastern United States, the Regional Greenhouse Gas Initiative in the northeast, and California’s cap-and-trade system.
The Regional Clean Air Incentives Market.
The South Coast Air Quality Management District, which is responsible for controlling emissions in a four-county area of southern California, launched the Regional Clean Air Incentives Market (RECLAIM) in 1993 to reduce NO x emissions and in 1994 to reduce SO 2 emissions from 350 affected sources, including power plants and industrial sources in the Los Angeles area that emitted four or more tons per year of either pollutant. RECLAIM replaced command-and-control regulations that were scheduled to bring the region into compliance with national ambient air quality standards (Ellerman, Joskow, and Harrison 2003).
RECLAIM Trading Credits (RTCs) were allocated for free, with initial allocations of NO x and SO 2 RTCs based on historical peak production levels and set at 40 to 60 percent above actual emissions until the year 2000. The NO x and SO 2 caps declined annually by 8.3% and 6.8%, respectively, until 2003, when the market reached its overall goal of a 70% emissions reduction (Ellerman, Joskow, and Harrison 2003; Hansjürgens 2011). The compliance period was a single year and banking was not allowed. An interesting aspect of this program’s design was its zonal nature: trades were not permitted from downwind to upwind sources.
Atuação.
RECLAIM was predicted to achieve significant cost savings via trade (Johnson and Pekelney 1996; Anderson 1997). And, by June 1996, 353 program participants had traded more than 100,000 tons of NO x and SO 2 credits, with a value of more than $10 million (South Coast Air Quality Management District 2016). Studies have found that emissions at RECLAIM facilities were some 20 percent lower than at facilities regulated with parallel command-and-control regulations, that hotspots did not appear, and that substantial cost savings were achieved (Burtraw and Szambelan 2010; Fowlie, Holland, and Mansur 2012).
In the program’s early years, allowance prices remained in the expected range of $500 to $1,000 per ton of NO x . During California’s electricity crisis in 2000–2001, however, some sources of electricity were eliminated, which required generation at some RECLAIM generating facilities to increase dramatically. This caused emissions to exceed permit allocations at those facilities and, in the absence of a pool of banked allowances, resulted in a dramatic spike in allowance prices—to more than $60,000 per ton in 2001 (Fowlie, Holland, and Mansur 2012). The program was temporarily suspended and prices returned to normal levels (less than $2,000 per ton) by 2002, with all sources rejoining the program by 2007. As of December 2015, the 12-month moving average of NO x prices was $1,642 per ton (South Coast Air Quality Management District 2016).
Three lessons emerge from the RECLAIM program. First, because the RECLAIM system included an upwind and a downwind zone, with trades allowed in only one direction, the program demonstrated that appropriate design can accommodate a nonuniformly mixed pollutant and attendant concerns about potential hot spots.
A second lesson from RECLAIM, which later became important for several carbon dioxide (CO 2 ) cap-and-trade systems, is that an overallocation of allowances eliminates a functioning spot allowance market. Third, provisions for the banking of allowances (along with other cost-containment elements, such as price caps) can be crucial for regulated entities to achieve compliance at a reasonable cost in years in which unanticipated circumstances cause emissions to be greater than expected.
NO x Trading in the Eastern United States.
Under EPA guidance, and enabled by the Clean Air Act Amendments of 1990, in 1999 eleven northeastern states and the District of Columbia developed and implemented the NO x Budget Program, a regional NO x cap-and-trade system. Given the significant adverse health effects of ground-level ozone (i. e., smog formed by the interaction of NO x and volatile organic compounds in the presence of sunlight), the goal of the program was to reduce summertime ground-level ozone by more than 50% relative to 1990 levels (U. S. Environmental Protection Agency 2004). Some 1,000 electric generating and industrial units were required to demonstrate compliance each year during the summer ozone season (May–September).
The region covered by the program was divided into upwind and downwind zones and allowances were given to states to distribute to instate sources. Sources could buy, sell, and bank allowances within limits reflecting the seasonal nature of the ozone problem. Upwind states were given less generous allowance allocations as percentages of 1990 emissions. However, trading across zones was permitted on a one-for-one basis, and the two zones made similar reductions from baseline emissions levels (Ozone Transport Commission 2003).
In 1998, the EPA issued the NO x State Implementation Plan (SIP) Call, which required 21 eastern states to submit plans to reduce their NO x emissions from more than 2,500 sources. The call included a model rule, which, if adopted by a state, would enable it to meet its emission reduction obligations by participating in an interstate cap-and-trade program, known as the NO x Budget Trading Program. All affected states adopted the model rule and the trading program went into effect in 2003, replacing the NO x Budget Program. As in the earlier program, states were given allowances to allocate to instate sources. In 2009 the NO x Budget Trading Program was effectively replaced by the Clean Air Interstate Rule (CAIR), and in January 2015, CAIR was replaced by the Cross-State Air Pollution Rule (CSAPR).
Atuação.
At the outset, the NO x Budget Program market was characterized by uncertainty, because some trading rules were not in place when trading commenced. This resulted in high price volatility during the program’s first year, although prices stabilized by the program’s second year (Farrell 2000). Overall, under the NO x Budget Program and the NO x Budget Trading Program, NO x emissions declined from about 1.9 million tons in 1990 to less than 500,000 tons by 2006, with 99% compliance (Butler et al. 2011; Deschenes, Greenstone, and Shapiro 2012). For the 1999–2003 period, abatement cost savings were estimated at 40 to 47 percent relative to conventional regulation, which did not include trading or banking (Farrell 2000).
Four lessons stand out from the NO x trading program. First, in order to avoid unnecessary price volatility, which imposes unnecessary risk on affected sources and thus raises costs, all of the components of an emissions trading program should be in place well before the program takes effect.
Second, a well-designed multistate process with federal guidance can be effective in coordinating what are legally state-level goals.
Third, the history of NO x trading in the eastern United States provides a precedent and model for expanding the coverage of a cap-and-trade system over time to include additional jurisdictions, such as neighboring states.
Fourth, states can be given the flexibility to allocate allowances among instate sources without necessarily compromising environmental goals.
The Regional Greenhouse Gas Initiative.
Nine northeastern U. S. states participate in the RGGI, the first U. S. cap-and-trade system to address CO 2 emissions. The RGGI is a downstream program that focuses only on the power sector. It began in 2009 with the goal of limiting emissions from regulated sources to 2009 levels through 2014. The emissions cap was then set to decrease by 2.5 percent each year from 2015 to 2019, when the cap would have declined to 10 percent below 2009 emissions. It was originally anticipated that meeting this goal would require a reduction of approximately 35 percent below BAU emissions (13 percent below 1990 emissions).
Due to the recession and the drastic decline in natural gas prices relative to coal prices, the emissions cap quickly ceased to be binding, and it appeared unlikely to become binding through 2020. In response, in 2012, in a preplanned review of the program, the RGGI states agreed to establish a lower cap for 2014, with 2.5% annual cuts thereafter to 2019. Reflecting these economic and policy changes, allowance prices fell from approximately $3 per ton of CO 2 at the first auction in 2008 to the floor price of $1.86 per ton in 2010, and rose to $5.50 per ton in 2015.
Under the RGGI program, participating states must auction at least 25 percent of their allowances and use the proceeds to invest in energy efficiency, renewable energy, and related efforts. Auctioning was required mainly to avoid the windfall profits that would generally result from free allocation of allowances in deregulated electricity markets (Sijm, Neuhoff, and Chen 2006). In practice, states have auctioned virtually all allowances.
There is a ceiling on allowance prices via a cost containment reserve, from which additional allowances were sold when auction prices reach specified levels. There is also a price floor below which allowances are not sold at auction. Any unsold allowances are permanently retired after 3 years, thus automatically tightening the cap if there is a chronic allowance surplus. This combination of a price ceiling and a price floor serves as a price collar, thus making the RGGI program somewhat of a hybrid of a cap-and-trade system and a carbon tax.
Atuação.
Because the cap was not binding during the program’s first compliance period (2009–2011), and has been barely binding since then, the direct impact of the RGGI program on power sector CO 2 emissions has been small, at best. However, the program’s auctions have generated more than $1 billion in revenues for the participating states. Some of this revenue has been used to finance government programs aimed at reducing energy demand and hence CO 2 emissions and the demand for allowances (Hibbard et al. 2011).
Monitoring costs have been very low because U. S. power plants were already required to report their hourly CO 2 emissions under the federal SO 2 allowance trading program. The penalty for noncompliance is that entities must submit three allowances for each allowance they are short.
Because of the geographically limited scope of the RGGI system, combined with interconnected electricity markets, emissions leakage has been a significant concern (Burtraw, Kahn, and Palmer 2006). One study found that if the program were fully binding, power imports from Pennsylvania to New York could result in emissions leakage of as much as 50% (Sue Wing and Kolodziej 2008).
Three lessons have emerged from this program. The first, which has not been lost on policymakers, is that a cap-and-trade system that auctions its allowances can generate substantial revenue for government, whether or not the system has much effect on emissions.
Second, the leakage problem is potentially severe for any subnational program, particularly a power sector program, because of the interconnected nature of electricity markets (Burtraw, Kahn, and Palmer 2006).
Third, a changing economy can render a cap nonbinding (causing allowance prices to fall) or drive allowance prices to excessive levels. This suggests an important role for price collars. In the case of the RGGI, an effective price floor was established through the use of a reservation price in allowance auctions. The price ceiling has not been tested, however, and may be less effective because of the limited size of the cost containment reserve.
California’s Cap-and-Trade System.
In 2006, California enacted Assembly Bill 32 (AB-32), which required the California Air Resources Board to establish a program to cut the state’s greenhouse gas (GHG) emissions to 1990 levels by the year 2020. The program includes energy efficiency standards for vehicles, buildings, and appliances; renewable portfolio standards that increase renewables’ share of electricity supply from 20 to 33 percent; a low-carbon fuel standard that requires refineries to reduce the carbon content of motor vehicle fuels; and a cap-and-trade system (California Environmental Protection Agency 2014).
The AB-32 cap-and-trade system began in 2013, covering all electricity sold in California, no matter where it was generated, 3 and large-scale manufacturing. The program was expanded to include fuels in 2015, thereby covering 85% of the state’s emissions. The cap declines annually until 1990 emission levels are achieved in 2020. Initially, most allowances were distributed for free, with greater use of auctions over time. Banking is allowed, and regulated entities may use approved offsets of emissions reductions from forestry, dairy digestion, and ozone-depleting substances reduction to account for up to 49 percent of their emissions reductions.
A price ceiling is established by releasing allowances from a reserve when auction prices reach specified levels. A price floor is created through an auction reservation price, with unsold allowances held until the reservation price is exceeded for six consecutive months. This combination produces an effective price collar, creating a hybrid cap-and-trade and carbon tax system. In addition, the program addresses competitiveness concerns in energy-intensive, trade-exposed (EITE) industries by granting free allowances in proportion to production levels in previous periods.
In 2014, California’s system was linked to a very similar system in Quebec (Kroft and Drance 2015), with mutual recognition of allowances for trading and compliance and joint allowance auctions.
Performance and lessons.
Because California’s cap-and-trade system was only launched in 2013, it is too early to assess its performance, other than to note that the auction mechanisms and other design features have functioned as anticipated. Thus the lessons from the AB-32 cap-and-trade system are related to its design rather than its performance.
First, the California system has demonstrated that using an initial free allowance allocation to build political support can transition over time to greater auctioning of allowances.
Second, the California experience is a reminder of the political pressures not to use auction revenues to reduce distortionary taxes. As of May 2015, the AB-32 auctions had generated more than $2 billion and were expected to generate nearly $4 billion by the end of 2016 (California Legislative Analyst’s Office 2015). Assembly Bill 1532 (2012) requires that these funds “be used to reduce GHG emissions and, to the extent feasible, achieve co-benefits such as job creation, air quality improvements, and public health benefits.”
Third, as the first CO 2 (or GHG) cap-and-trade system to be essentially economy-wide, 4 California’s AB-32 system has demonstrated that this approach is as feasible as less efficient approaches that treat different sectors differently.
Fourth, the AB-32 system greatly limits price volatility by employing an effective price collar. As noted earlier, although emissions levels are less certain under such hybrid systems, lower price volatility reduces compliance costs.
Fifth, California has employed an effective mechanism to address concerns about competitive impacts on EITE sectors. Granting free allowances to firms in specific sectors in proportion to their production levels in a previous time period subsidizes production and thus directly affects competitiveness. Of course, this subsidy of EITE sectors introduces its own inefficiencies. On the other hand, simply granting extra allowances to firms in EITE sectors (as in the EU’s ETS) has no effect on competitiveness because marginal production costs are not affected. 5
Sixth, California’s strong interest in linking its cap-and-trade system with those in other jurisdictions (including its recent linkage with Quebec) illustrates the desirability of using such linkages to reduce abatement costs, price volatility, and market power (Ranson and Stavins 2013).
Finally, although policies that address energy-related market failures can reduce costs, California’s AB-32 system illustrates that some “complementary policies” are more likely to increase costs with no effect on emissions. For example, the state’s low-carbon fuel standard (LCFS) requires that California refineries produce fuel with, on average, no more than a set amount of lifecycle carbon content. But refineries and transportation fuels are already covered by the cap-and-trade system, so the LCFS cannot reduce emissions in the short run unless it makes the allowance price floor binding. Because the LCFS is a binding constraint on refiners, refiners achieve additional CO 2 emission reductions beyond what would be achieved through the cap-and-trade system alone. However, unless the price floor becomes binding, this “complementary” policy—the LCFS—will produce 100 percent leakage to other sectors when allowances are sold. In any case, marginal abatement costs are not equated across sectors and sources, 6 so aggregate abatement costs will increase. In addition, allowance prices will be depressed, raising concerns about the ability of the cap-and-trade system to encourage technological change—except in the refinery sector. In short, the LCFS is a “complementary” policy that mainly increases abatement costs and lowers allowance prices (Goulder and Stavins 2011). Many other so-called complementary policies have similar perverse effects. 7
THE EU Emissions Trading System.
The EU ETS, a cap-and-trade system focused on CO 2 , is the world’s largest and first multicountry emissions trading system (European Commission 2012). The EU ETS was adopted in 2003 and covers about half of EU CO 2 emissions in 31 countries 8 (Ellerman and Buchner 2007). More than 11,000 entities are regulated, including electricity generators and large industrial sources. Competitiveness concerns were largely addressed by the allocation of free allowances to a long list of selected sectors. The EU ETS excludes most sources in the transportation, commercial, and residential sectors, although some aviation sector emissions were brought under the cap in 2012.
The EU ETS was designed to be implemented in phases: a pilot phase 1 from 2005 to 2007, a Kyoto phase 2 from 2008 to 2012, and a series of subsequent phases that are now being extended through 2030. Penalties for violations increased from €40 per ton of CO 2 in the first phase to €100 in the second phase. The first phase allowed trading only in CO 2 , but the second phase broadened the program to include some other GHGs.
The allocation process was initially decentralized (Kruger, Oates, and Pizer 2007), with each member state responsible for proposing its own national cap, subject to approval by the European Commission. This created incentives for member states to set high caps (Convery and Redmond 2007).
Atuação.
The EU ETS has performed as might have been anticipated. In January 2005, the phase 1 allowance price per ton of CO 2 was approximately €8; by early 2006, it exceeded €30, reflecting anticipated increases in demand. However, once it became clear that the generous allocation of allowances in 2005 had exceeded actual emissions, the allowance price fell by about half during one week in April 2006, fluctuated and soon returned to about €8, and then collapsed to zero in 2007 (Convery and Redmond 2007). This volatility was attributed to the absence of good emissions data at the beginning of the program, a surplus of allowances, and energy price volatility; the collapse was attributed to the inability to bank allowances from phase 1 to phase 2 (Market Advisory Committee 2007).
The first and second phases of the EU ETS required member states to distribute almost all of the emissions allowances for free. However, since 2013, member states have been required to auction increasing shares of their allowances. The initial free distribution of allowances led to complaints about “windfall profits” for electricity generators when electricity prices increased significantly in 2005. But higher fuel prices also played a role in the electricity price increases, and some generators’ profits reflected their ownership of low-cost nuclear or coal generation in areas where the market electricity price was set by higher-cost natural gas plants (Ellerman and Buchner 2007).
The system’s cap was tightened for phase 2 (2008–2012) and its scope was expanded to cover new sources in countries that had participated in phase 1 as well as countries that joined the EU in 2007 and 2013. In addition, three nonmember states — Norway, Iceland, and Liechtenstein—joined the EU ETS in 2008. Allowance prices in phase 2 increased to more than €20 in 2008 and then fell when the recession reduced energy demand, thus reducing demand for allowances. Demand also declined because of the heavy use of offsets produced under the Kyoto Protocol’s CDM. By the fall of 2011, prices had fallen to €10 and have remained in the €5 to €10 range since then.
The EU ETS has been extended through its phase 3 (2013–2020) with a more stringent, centrally determined cap (20% below 1990 emissions), auctioning of a larger share of allowances, tighter limits on the use of offsets, and unlimited banking of allowances between phases 2 and 3. Free allocation of allowances continues in phase 3 for EITE sectors (Sartor, Lecourt, and Palliere 2015).
There continues to be concern in the EU regarding low allowance prices (Löfgren et al. 2015). These prices reflect the weak European economic recovery and the lack of a price floor. In addition, other binding EU policies, particularly renewable generation and energy efficiency standards, reduce emissions under the cap. As noted earlier, in the absence of a binding price floor, such “complementary” policies raise costs and reduce allowance prices without affecting total emissions.
Five main lessons have emerged from our experience with the EU ETS thus far. First, the availability of good data is important for sound allowance allocation and cap-setting decisions. Had such data been available in phase 1 of the EU ETS, it might have been possible to avoid the overallocation that occurred.
Second, to avoid an artificial price collapse at the end of a compliance period, it is necessary to allow for banking from one period to the next. Because the EU ETS did not allow banking in phase 1, it was hardly surprising that phase 1 allowance prices fell to zero at the end of phase 1.
Third, like the AB-32 California system, the EU ETS illustrates the perverse outcomes that result when “complementary” policies are applied to reduce emissions that are also covered under the cap, particularly in the absence of a price floor. Unless such complementary policies apply to sources outside the cap or address other market failures, they relocate emissions, drive up aggregate abatement costs, and depress allowance prices.
Fourth, although granting free allowances can help address distributional concerns as well as serving other political purposes, it is ultimately insufficient for dealing with international competitiveness concerns, because unless allocations are linked to production, they do not affect marginal production costs.
Finally, the history of the EU ETS shows that it is possible to move over time from a regime of generally free allowances to one in which most allowances are auctioned.
Other Cap-and-Trade Systems.
Other cap-and-trade systems have been implemented, planned, or at least contemplated in many nations. Under the 1987 Montreal Protocol, several countries implemented systems of tradable rights for ozone depleting substances (ODS) during the ODS phasedown from 1991 to 2000 (Klaassen 1999; U. S. Environmental Protection Agency 2014). In addition, an international CO 2 cap-and-trade system has nominally operated since 2008: countries with emissions reduction commitments under the Kyoto Protocol (the “Annex I countries”) that have ratified the protocol can, in effect, sell emission reductions that go beyond their compliance obligations to other Annex I parties that have outstanding compliance obligations. However, because the trading agents are nations rather than firms, not surprisingly there has been little activity (Hahn and Stavins 1999). There has been more international private sector activity in emissions offsets under the Kyoto Protocol’s CDM.
Currently, there are CO 2 cap-and-trade systems at various stages of development in a number of countries around the world, including Japan (Sopher and Mansell 2014a), South Korea (Park and Hong 2014), Kazakhstan (Kossoy et al. 2014), and Switzerland (Sopher and Mansell 2014b). Most importantly, China began municipal and provincial pilot trading systems in 2013 (Kossoy et al. 2014), and on September 25, 2015, President Xi Jinping announced that in 2017 China will launch a national CO 2 cap-and-trade system covering key industries (Cunningham 2015).
Cap-and-trade systems have also been proposed in other countries at levels of governance that range from submunicipal to national (Kossoy et al. 2014; Organization for Economic Cooperation and Development and World Bank Group 2015). Notably, the government of Ontario (Canada) recently announced a CO 2 cap-and-trade system to be linked to Quebec’s system, and thus to California’s system (Government of Ontario 2015). Finally, in August 2015, the United States finalized the Clean Power Plan (CPP), which is aimed at CO 2 emissions from electricity generators and both enables and encourages state-level and multistate emissions trading (U. S. Environmental Protection Agency 2015). However, on February 9, 2016, the U. S. Supreme Court halted implementation of the CPP, pending the resolution of legal challenges to it, and thus its ultimate fate is unclear.
Sumário e conclusões.
This article has examined 30 years of experience with emissions trading systems. Overall, we have found that cap-and-trade systems, if well designed and appropriately implemented, can achieve their core objective of meeting targeted emissions reductions cost-effectively. But the devil is in the details, and design as well as the economic environment in which systems are implemented are very important. Moreover, as with any policy instrument, there is no guarantee of success.
Based on the lessons we have identified in our discussion, several design and implementation features of cap-and-trade programs appear critical to their performance.
Key Features for System Design and Implementation.
First, it is important not to require prior approval of trades. In contrast to early U. S. experience with emissions offset systems, transaction costs can be low enough to permit considerable efficiency-enhancing trade if prior approval of trades is not required. Second, it is clear from both theory and experience that a robust market requires a cap that is significantly below BAU emissions. Third, to avoid unnecessary price volatility, it is important for final rules (including those for allowance allocation) to be established and accurate data supplied well before commencement of a system’s first compliance period. Fourth, high levels of compliance in a downstream system can be achieved by ensuring there is accurate emissions monitoring combined with significant penalties for noncompliance. Fifth, provisions for allowance banking have proven to be very important for achieving maximum gains from trade, and the absence of banking provisions can lead to price spikes and collapses. Sixth, price collars are important. A changing economy can reduce emissions below a cap, rendering it nonbinding, or a growing economy can increase emissions and drive allowance prices to excessive levels. Price collars reduce price volatility by combining an auction price floor with an allowance reserve. The resulting hybrid systems will generally have lower costs (as more stable prices facilitate investment planning) at the expense of less certain emissions reductions. Finally, economy-wide systems are feasible, although downstream, sectoral programs have been more commonly employed.
Political Considerations that Affect Cap-and-Trade Design.
Thirty years of experience with cap-and-trade also indicates the importance of political considerations for the design of cap-and-trade programs. First, because of the potentially large distributional impacts involved, the allocation of allowances is inevitably a major political issue. Free allowance allocation has proven to help build political support. And, under many circumstances, the equilibrium allowance distribution, and hence the aggregate abatement costs of a cap-and-trade system, are independent of the initial allowance allocation (Montgomery 1972; Hahn and Stavins 2012). This means that the allowance allocation decision can be used to build political support and address equity issues without concern about impacts on overall cost-effectiveness.
Free allowance allocation does forego the opportunity to cut overall social costs by auctioning allowances and using the proceeds to cut distortionary taxes. On the other hand, experience has shown that political pressures exist to use auction revenue not to cut such taxes, but to fund new or existing environmental programs or relieve deficits. Indeed, cap-and-trade allowance auctions can and have generated very significant revenue for governments.
Second, the possibility of emissions leakage and adverse competitiveness impacts has been a prominent political concern in the design of cap-and-trade systems. Of course, virtually any meaningful environmental policy will increase production costs and thus could raise these concerns, but this issue has been more prominent in the case of cap-and-trade instruments. In practice, leakage from cap-and-trade systems can range from nonexistent to potentially quite serious. It is most likely to be significant for programs of limited geographic scope, 9 particularly in the power sector because of interconnected electricity markets. Attempts to reduce leakage and competitiveness threats through free allocation of allowances does not per se address the problem, but an output-based updating allocation can do so.
Third, although carbon pricing (through cap-and-trade or taxes) may be necessary to address climate change, it is surely not sufficient. In some cases, abatement costs can be reduced through the use of complementary policies that address other market failures, but the types of “complementary policies” that have emerged from political processes have instead addressed emissions under the cap, thereby relocating rather than reducing emissions, driving up abatement costs, and suppressing allowance prices.
Identifying New Applications.
Cap-and-trade systems are now being seriously considered for a wide range of environmental problems. Past experience can offer some guidance as to when this approach is most likely to be successful (Stavins 2007).
First, the greater the differences in the cost of abating pollution across sources, the greater the likely cost savings from a market-based system—whether cap-and-trade or tax—relative to conventional regulation (Newell and Stavins 2003). For example, it was clear early on that SO 2 abatement cost heterogeneity was great, because of differences in the ages of plants and their proximity to sources of low-sulfur coal (Carlson et al. 2000).
Second, the greater the degree of mixing of pollutants in the receiving airshed (or watershed), the more attractive a market-based system, because when there is a high degree of mixing, local hot spots are not a concern and the focus can thus be on cost-effective achievement of aggregate emissions reductions. Most cap-and-trade systems have been based on either the reality or the assumption of uniform mixing of pollutants. However, even without uniform mixing, well-designed cap-and-trade systems can be effective (Montgomery 1972), as illustrated by the two-zone trading system under RECLAIM, at the cost of greater complexity.
Finally, since Weitzman’s (1974) seminal analysis of the effects of cost uncertainty on the relative efficiency of price versus quantity instruments, it has been well known that in the presence of cost uncertainty, the relative efficiency of these two types of instruments depends on the pattern of costs and benefits. Subsequent literature has identified additional relevant considerations (Stavins 1996; Newell and Pizer 2003). Perhaps more importantly, theory (Roberts and Spence 1976) and experience have shown that there are efficiency advantages of hybrid systems that combine price and quantity instruments in the presence of uncertainty.
Implications for Climate Change Policy.
Two lessons from 30 years of experience with cap-and-trade systems stand out. First, cap-and-trade has proven itself to be environmentally effective and economically cost effective relative to traditional command-and-control approaches. Moreover, less flexible systems would not have led to the technological change that appears to have been induced by market-based instruments (Keohane 2003; Schmalensee and Stavins 2013) or the induced process innovations that have resulted (Doucet and Strauss 1994). Second, and equally important, the performance of cap-and-trade systems depends on how well they are designed. In particular, we have emphasized the importance of reducing unnecessary price volatility and argued that hybrid designs offer an attractive option if some variability of emissions can be tolerated, since substantial price volatility generally raises costs.
These lessons suggest that cap-and-trade merits serious consideration when regions, nations, or subnational jurisdictions are developing policies to reduce GHG emissions. And, indeed, this has happened. However, because any meaningful climate policy will have significant impacts on economic activity in many sectors and regions, proposals for such policies have often triggered significant opposition.
In the United States, the failure of cap-and-trade climate policy in the Senate in 2010 was essentially collateral damage from a much larger political war that has decimated the ranks of both moderate Republicans and moderate Democrats (Schmalensee and Stavins 2013). Nevertheless, political support for using cap-and-trade systems to reduce GHG emissions has emerged in many other nations. In fact, in the negotiations leading up to the Paris conference in late 2015, many parties endorsed key roles for carbon markets, and broad agreement emerged concerning the value of linking those markets (codified in Article 6 of the Paris agreement).

The eu emissions trading system results and lessons learned

Place: Sarajevo, Bosnia and Herzegovina.
Organizer: ECRAN Secretariat with EC TAIEX Unit.
Improved understanding of the European policy framework for greenhouse gas mitigation and selected policy instruments to achieve targeted emission reductions; Understanding on the EU Emissions Trading System (EU ETS): the concept, main responsibilities and lessons learned; Requirements for operators on ETS implementation and the potential impact and opportunities of ETS for their activities.

Experience with linking greenhouse gas emissions trading systems.
Two emissions trading systems (ETS) are linked if a participant in one system can use an allowance or a credit issued by either system for compliance. Linking ETS offers a number of potential benefits including, lower overall compliance cost, price protection, greater liquidity in the allowance market, and reduced emissions leakage. It is useful to distinguish: (a) A unilateral link—one ETS accepts the allowances of another ETS for compliance purposes, but not vice versa. Any link to an offset system, such as the Clean Development Mechanism (CDM), is a unilateral link for the ETS that accepts those credits. (b) A bilateral link—each ETS accepts the allowances of the other ETS for compliance purposes. Another way to implement a bilateral link is to adopt a common compliance instrument. The European Union ETS (EU ETS) has a single compliance instrument—the EU allowance—that is used in all 31 participating countries. Several national and subnational jurisdictions have established an ETS for one or more greenhouse gases (GHGs). Some of these ETS also issue offset credits for GHG emission reductions achieved by specified sources. In addition, the international CDM and Joint Implementation (JI) mechanisms issue offset credits for GHG emission reductions. Most ETS have established unilateral links, mainly to the CDM and JI, but also to other ETS. Apart from the systems that are part of the EU ETS and Regional Greenhouse Gas Initiative (RGGI) only one bilateral link, between the California and Quebec ETS, has been established. This study summarizes the experience with linking GHG ETS. WIREs Energy Environ 2016, 5:246–260. doi: 10.1002/wene.191.
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MIT analysts say European system for cutting CO2 emissions is working well.
Lessons to be learned for U. S., globe.
Nancy Stauffer, MIT Energy Initiative.
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In a bid to control greenhouse gas emissions linked to climate change, the European Union has been operating the world's first system to limit and to trade carbon dioxide. Despite its hasty adoption and somewhat rocky beginning three years ago, the EU "cap-and-trade" system has operated well and has had little or no negative impact on the overall EU economy, according to an MIT analysis.
The MIT results provide both encouragement and guidance to policy makers working to design a carbon dioxide (CO2)-trading scheme for the United States and for the world. A key finding may be that everything does not have to be perfectly in place to start up similar systems.
"This important public policy experiment is not perfect, but it is far more than any other nation or set of nations has done to control greenhouse-gas emissions--and it works surprisingly well," said A. Denny Ellerman, senior lecturer in the MIT Sloan School of Management, who performed the analysis with Paul L. Joskow, the Elizabeth and James Killian Professor in the Department of Economics.
The cap-and-trade approach to controlling emissions is not new. For years, the United States has operated highly successful cap-and-trade systems for emissions of sulfur dioxide and nitrogen oxides. Based on a national emissions cap, facilities that emit those pollutants receive a limited number of emissions permits, or allowances, for a given period. Facilities that emit more than their allowed limit must buy allowances from facilities that emit less. Markets for trading allowances operate smoothly and facilities have reduced their emissions significantly.
Despite such success, setting up a U. S. cap-and-trade system for CO2 emissions has proved challenging. Carbon emissions are so central to energy consumption that the idea of imposing a policy to limit them raises serious concerns. Could putting a price on carbon emissions lead to serious economic effects? Might the outcome be the equivalent of energy rationing? Such questions loom large as Congress debates the merits of several climate-change bills containing proposed CO2 cap-and-trade systems.
To help address those questions and advance the debate, Ellerman and Joskow performed an in-depth study of the EU Emissions Trading Scheme (ETS) to date.
Already, the EU ETS is far larger than either of the U. S. programs for sulfur dioxide and nitrogen oxides. Further, the EU ETS operates internationally. Allowances are traded by facilities in 27 independent nations that differ widely in per capita income, market experience and other features. As a result, "I think the EU ETS has a lot to tell us about how a global system might actually work," Ellerman said.
What are some of the lessons to be learned from the European experience? First, it shows that the economic effects--in a macroeconomic sense--have not been large.
Second, permitting "banking and borrowing" will make a cap-and-trade system work more efficiently. Within the EU ETS, facilities can bank (save some of this year's allowance for use next year) or borrow (use some of next year's allowances now and not have them available next year). Many facilities took advantage of the opportunity to trade across time. But they always produced the necessary allowances within the required time period. Concerns that facilities would postpone their obligations indefinitely have proved unwarranted.
A third lesson is that the process of allocating emissions allowances is going to be contentious--and yet cap-and-trade is still the most politically feasible approach to controlling carbon emissions. In a cap-and-trade system, those most affected--the current polluters--receive some assets along with the liabilities they are being asked to assume.
Finally, the MIT analysis shows that everything does not have to be perfectly in place to start up. When the EU ETS began, the overall EU cap had not been finally determined, registries for trading emissions were not established everywhere, and many available allowances--especially from Eastern Europe--could not come onto the market. The volatility of prices during the first period reflects those imperfections.
"Obviously you're better off having things all settled and worked out before it gets started," said Ellerman. "But that certainly wasn't the case in Europe, and yet a transparent and widely accepted price for CO2 emission allowances emerged rapidly, as did a functioning market and the infrastructure to support it."
This report was commissioned by the Pew Center for Global Climate Change. The more extensive research project on which it is based is funded by the Doris Duke Charitable Foundation.
The full report, The European Union's Emissions Trading System in Perspective, is available at pewclimate/eu-ets.
The MIT Energy Initiative is an Institute-wide initiative designed to help transform the global energy system to meet the challenges of the future. It includes research, education, campus energy management and outreach activities, an interdisciplinary approach that covers all areas of energy supply and demand, security and environmental impact.