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EU ETS Framework 2030: Enhancing Climate Action Efficiency

Discover how the EU ETS is progressing toward the 2030 framework, focusing on reducing emissions, renewable energy, energy efficiency, and key indicators. Learn about policy updates, the market stability reserve proposal, the structural reform debate, and carbon leakage rules. Understand the ongoing developments, international carbon markets, and the importance of aligning with the Paris Agreement for a greener future.

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EU ETS Framework 2030: Enhancing Climate Action Efficiency

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  1. EU ETS #EU2030 Jos Delbeke DG CLIMATE ACTION Carbon Expo 2014 – Cologne 28 May 2014

  2. EU overachieves Kyoto commitments

  3. GHG emissions were reduced while GDP increased GDP Over the period 1990-2012: • GDP grew by more than 44% • while GHG emissions decreased by 19% • GHG intensity reduced by almost half GHG emissions GHG intensity

  4. Climate policies are key + 1.1 % Due to population increase – 2.4 % Due to fall in GDP per capita Change in emissions – 5.1 % Due to reduced energy intensity (efficiency, structural) 2008–2012 -9.2 % change – 2.8 % Due to less carbon-intensive fuels (incl. renewables) Source: EEA

  5. EU economies have become less emission intensive From highest to lowest emission intensity (2012 values) Source: EEA

  6. EU’s GHG emissions per capita decreased by 24% EU average down from 12 to 9 tCO2 eq per capita

  7. 2030 framework : EU prepares for Paris 2015 -20 % GreenhouseGas Emissions 20% RenewableEnergy 20 % EnergyEfficiency 2020 - 40 % GreenhouseGas Emissions New Key Indicators Review 2014 At least 27 % RenewableEnergy 2030 Domestic New governance system

  8. Improved ETS architecture inphase 3 (2013 to 2020) The EU ETS is working well from a technical point of view Starting last year, it saw a major overhaul • Cap-setting is an EU process • Auctions are a daily routine • Harmonised free allocation to industry and carbon leakage provisions • Single registry is operational • New rules for recognising international credits • Improved protection against fraud (allowances covered by new MiFID)

  9. ETS elements of the 2030 framework • In conjunction with the proposed 40% greenhouse gas emissions reduction target: • Increase linear reduction factor as of 2021 from 1.74 % to 2.2% to align the EU ETS cap to proposed 2030 target • Addressing structural reform • Improved and better focused rules against carbon leakage

  10. The structural reform debate Back-loading Persistent surplus Rapid accumulation * Blue columns represent actual data;Green columns represent projections.

  11. The market stability reserve proposal • Dual purpose • address the current surplus • If not addressed, the imbalance would profoundly affect ability to meet the medium-term target in a cost-effective manner • make the ETS more resilient to possible future demand shocks • More flexible auction supply through • putting allowances in the reserve in case of too high surplus • releasing allowances from the reserve when allowances get scarce Carbon price will be more strongly driven by the mid- and long-term emission reductions

  12. What free allocation and carbon leakage rules for 2030? • Workedso far, but needs to be focused • Sectoral2050 low-carbon roadmaps illustrate technological options to cut emissions further • Financial/innovation support (e.g. via an expanded NER300 system) to complement free allocation can help unlock new potentials • Stakeholder consultation (3 meetings and an online questionnaire)

  13. Timeline • 2030 framework • April-May: Member States' assessments of the 2030 framework; work in progress • June: European Council will take stock of progress on the points raised in the conclusions of the March Council. • October: final decision on the framework • Market stability reserve is independent of how the 2030 framework rules will look like - no regret measure • Important to have a decision as early as possible

  14. International carbon markets • Experience in the EU ETS informs new or emerging systems • e.g. Korea, China • EU support to the development of domestic carbon markets (e.g World Bank Partnership for Market Readiness) • Aviation • Within the International Civil Aviation Organization, development of a global market-based mechanism by 2016, for operation from 2020 onwards. • International Framework - Paris Agreement • Should facilitate further development of carbon markets by provisions enabling the use of carbon markets for compliance by countries, boosting demand and providing supply.

  15. Thank you for your attention For the EU ETS regulatory updates, subscribe to: http://ec.europa.eu/clima/rss/news_regulatory_en.xml 2030 framework: http://ec.europa.eu/clima/policies/2030/index_en.htm

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