Environmental Engineering Reference
In-Depth Information
pushing the target to 30% however, European
industries will face a significant increase in their
abatement costs—currently €16/tonne for EUAs
but expected to rise as could this put EU industry
at competitive disadvantage, but it would likely
encourage the relocation of plants to countries
with less strict emissions controls, a term called
carbon leakage.
The amount of free allowances given away
in 2012 is also an uncertainty for companies at
this point—it will depend on whether the 30%
target is accepted as well as the emissions levels
over the next few years. It is clearly a difficulty
for strategic planning and budgeting within the
EU, but the member states are fortunate to have
at least the certainty of the market through 2020.
The certainty of the CDM is also a boon, as it is a
source of cheaper credits (CERs trade at roughly a
€2 discount to EUAs but can only be used to fulfil
a small percentage of emissions abatement), and
is likely to be the credit used fungibly throughout
global emission trading markets. In this sense,
the opacity and irregularity of non-EU emissions
markets is certainly an issue needing greater at-
tention. Companies, especially utilities who are
most at risk of facing increasing costs from climate
change effects and legislation, are finding it a
difficult internal battle to pre-empt this unknown
risk when their balance sheets are already tight
following the financial crisis. Developments in
the following markets should focus on clarifying
their existing platforms and catalyse private sector
spending on low carbon growth:
•
New Zealand, who has the only fully
functioning ETS outside of the EU since
2008 has amended their scheme and loos-
ened targets as they wait for Australia to
come on board. Provisions to require the
transport, energy and industrial sectors to
meet emissions requirements from July
2010 have resulted in a 'transitional phase'
through January 2013 requiring just a 50%
obligation and providing a fixed price of
$25/tonne carbon. Agriculture's inclusion
was delayed to 2015.
•
US carbon markets are expected to be the
largest source of demand in the world, tri-
pling the size of the EU ETS. However,
traction has been poor and climate change
bills have been written and discarded over
the last several years. The current itera-
tion of the Kerry-Graham-Lieberman bill
again changed form as Republican Senator
Graham dropped his support due to a
clause on oil drilling in the US he wanted
included. The BP oil spill in May as well
as pending immigration legislation took
the focus off of climate change yet again.
The US has several functioning regional
trading schemes in the Northeast, Midwest
and West—led by California—and expects
these to be good practice grounds for a fed-
eral scheme, now expected no sooner than
2011. President Obama has proposed cuts
of 17% from 2005 levels by 2020, taking
the US back to its 1990 level of emissions.
•
Japan had a well intended but poorly im-
plemented Voluntary Emissions Trading
Scheme launched in 2005 which incentiv-
ised participation but did not punish failure
to meet intended targets. Japan's ambitious
pledge to cut emissions by 25% from 1990
levels by 2020 has been met with contro-
versy given that it is the world's fifth big-
gest polluter and second largest economy.
The legislation to make these cuts and im-
pose mandatory cap and trade has passed
•
Australia, whose Carbon Pollution
Reduction Scheme was approved by
Parliament, overturned, then reintroduced
twice more with slightly different provi-
sions and timelines. Currently PM Rudd
has decided to wait until the end of the first
Kyoto commitment period in 2012 to en-
act carbon abatement legislation, but in the
mean time a carbon tax is under debate
