Environmental Engineering Reference
In-Depth Information
FUTURE RESEARCH DIRECTIONS
The bottom line is that the restricted use of
CERs for compliance within the EU ETS appears a
wise choice from the EU Commission's viewpoint,
in order
1)
to limit design inefficiencies that have
already affected the price path of EUAs during
Phase I (2005-2007) and
2)
to foster investments
at the EU level in less CO
2
-intensive production
processes.
In brief, future research in this field includes the
careful monitoring of the UNEP Risoe CDM
Pipeline, which allows tracking the delivery of
CDM credits on international emissions trading
schemes overtime. As the CDM develops, and
secondary credits get exchanged worldwide, it
is very likely that it will become the single “cur-
rency” against which the carbon price is fixed.
ACKNOWLEDGMENT
CONCLUSION
I wish to thank the Editor, Zongwei Luo, as well
as reviewers for support and useful comments
that led to an improved version of the chapter.
This chapter critically examines the role played
by Clean Development Mechanism projects
for compliance into the EU Emissions Trading
Scheme. We have highlighted risk factors specific
to each emissions market - additionality and pre-
dictability for CERs, grandfathering, compliance
events and banking provisions for EUAs - as well
as common risk factors - the ITL-CITL connec-
tion, the role played by the 1.7Gton import limit,
and uncertainties concerning future international
agreements on climate change.
Our conclusion gears towards a prudent ap-
proach concerning the use of CERs for compliance
within the EU trading system. On the one hand,
CERs foster investments in non-polluting tech-
nologies in non-Annex B countries. These project
thereby contribute to the “global public good” of
fighting climate change by cutting greenhouse gas
emissions with a maximum potential (as for HFC
destruction or large hydro projects) at lowest cost,
and should be encouraged from both economic
and environmental viewpoints. On the other hand,
the unlimited use of CERs for compliance within
the EU ETS would set a price floor for EUAs, and
drive down their price. This solution does not ap-
pear compatible with the necessary “price signal”
of emitting one ton of CO
2
in the atmosphere in
Europe, which should be high enough to provide
incentives for industries to cut back emissions
compared to their business-as-usual scenario.
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