Transcript Slide 1
Energy Forum Allocation rules for Industry in EU ETS 2013 presented by Mukund Bhagwat Brussels 9 June 2011 1 General assessment • Benchmarks for industry: The right decision – but benchmarks severe, especially since they apply from 2013 no time for adaptation • Allocation rules… – … adequate for installations without production changes between 2005 – 2011 – … result partly in shortage of allowances or wrong incentives for installations with production changes EU experience has shown: To set up a benchmark system is challenging but feasible EU system can be a model for the world if benchmarks are phased in (time for adaptation) and allocation is based on actual production levels • safeguards right incentives, reduces complexity of allocation rules significantly etc. while maintaining carbon price signal 2 In detail: What’s good or was improved • Historical Activity Level: some flexibility • Significant Capacity Extension Threshold: > 10 % or 50.000 EUAs … • Allocation to heat consumer • Carbon leakage status of heat consumer considered • Efficiency improvement / Abatement measures will not lead to less allocation • No innovation and technology accelerator 3 In detail: What’s not implemented well • Constraints on production growth – No additional allocation in case of production growth without a physical change – No additional allocation in case of capacity increase below 10% – Complex and problematic determination of added capacity – There may be no allocation for new entrants/ capacity extensions in case New Entrants’ Reserve is used up – Extension of non-ETS heat consumers not sufficiently considered (sets inefficient incentives) – Capacity extensions of up- and downstream plants not considered 4 In detail: What’s not implemented well • Competitive advantage of industrial CHP reduced • Wrong calculation of “industry cap” may reduce free allocation – Total amount of free allocation independent of benchmarks and allocation rules • No hardship clause • No rationalisation rule • Lack of EU-harmonisation (esp. with regard to “installation” definition) Financial Compensation: still the missing link in the system 5