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CLIMATE CHANGE/ETS : EU'S GHG EMISSIONS DECREASED BY 2% IN 2011.

Emissions of greenhouse gases (GHG) from industrial installations participating in the EU's Emission Trading Scheme (ETS) decreased by 2% in 2011, notes the European Commission based on information provided by member state registries. "This is good news," commented Climate Action Commissioner Connie Hedegaard, who added that "this good result shows that the ETS is delivering cost-effective emissions reductions". She also highlighted the fact that the "ETS remains the engine to low-carbon growth in Europe".

The ETS covers more than 12,000 power plants and manufacturing installations in the EU27, Norway and Liechtenstein and, from 2012, emissions from airlines flying to and from airports in these countries (see separate article). Verified GHG emissions from these installations dropped to 1.889 billion tonnes of CO2-equivalent in 2011, more than 2% below the 2010 level.

Companies' overall level of compliance with ETS rules is high: less than 1% of installations did not surrender allowances covering all their 2011 emissions by the deadline of 30 April 2012. These installations are typically small and together account for less than 1% of emissions covered by the ETS. On this same date, 2% of installations had not reported their verified emissions for 2011.

The use of international credits in 2011 increased the number of unused allowances by some 450 million. In other words, more than 900 million more allowances were put into circulation than surrendered for compliance use over the period 2008-2011.

Since 2008, installations can surrender international credits (obtained through green' investments in the developing or transition economies under the Kyoto Protocol Flexibility Mechanisms) to compensate for part of their emissions (Clean Development Mechanism, CDM, and Joint Implementation, JI). Certified emission reduction units (CERs) accounted for 5.8% of all surrenders in 2008-2011. Cumulatively, the ETS has permitted the use of 456 million CERs, of which 267 million from China and 79 million from India (59% and 17%, respectively, of total use). Other CERs originated in South Korea (13%) and Brazil (6%). Twenty other countries accounted for the remaining 6%. During the same period, 100 million emission reduction units (ERUs) have been used, or 1.2% of all surrenders since 2008.

RAISING PRICE OF CARBON

The number of unused allowances continues to grow, however, lowering the price of carbon (currently ranging from 6 to 9 per tonne). Hedegaard therefore confirmed that "the Commission, as announced last month [informal meeting in Horsens, Denmark, on 19 April - see Europolitics 4410], is now reviewing the time profile of phase three auctions, which will begin on 1 January 2013, with a view to reducing the number of allowances for auction in the early years of phase three". She also confirmed that the Commission will anticipate revision of the ETS, set for the summer of 2013, by publishing this summer a report proposing "structural" adjustments to the ETS by the end of the year.

Background

Installations are required to submit their verified emissions data for each year to member state registries. For 2011, these data became publicly available on the Community Independent Transaction Log (CITL), on 2 April. From 15 May onwards, the CITL also displays compliance data, with information on whether installations have complied with their obligations to surrender an amount of allowances equal to last year's verified emissions.

Further information is available atec.europa.eu/clima/policies/ets/index_en.htm
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Publication:European Report
Date:May 16, 2012
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