Transcript Giving wings to emission trading Inclusion of aviation under the EU ETS: Design and Impacts Ron Wit, ECCP II, Brussels 24th October 2005

Giving wings to emission trading
Inclusion of aviation under the EU ETS:
Design and Impacts
Ron Wit, ECCP II, Brussels 24th October 2005
Overview of talk
Objectives of study
Design
• Key design elements
• Pros and cons of elements
• Selection of policy options
Impacts
•
•
•
•
Impacts on ticket prices
Environmental impacts
Economic impacts
Marginal impact on EU ETS
Overall conclusion
Objectives of study
• Overarching objective:
– To develop concepts for amending
Directive 2003/87/EC to address the full
climate change impact of aviation
through emission trading
• Specific goals:
– How to address non-CO2 climate effects?
– Design viable systems
• Geographical scope
• Allocation and surrendering of allowances
• Monitoring, reporting verification, etc.
– Impact analysis
Design: key elements
•
•
•
•
•
•
•
Coverage of climate impacts
Geographical scope
Trading entity
Decision on allocation rules
Interplay with Kyoto Protocol
Allocation method
Monitoring method
• >> choices within each key design
element
Coverage of climate impacts (1)
• CO2 and nonCO2 climate
impacts from
aviation
• Overall radiative
forcing is 2 to 4
times larger
than CO2 alone
IPCC, 1999
Coverage of climate impacts (2)
Scenario 1: CO2 x multiplier (factor 2)
• GWP and RFI not a feasible multiplier, but
multiplier based on GTP may be feasible
• less efficient: no incentives to reduce non-CO2
impacts
Scenario 2: effect-by-effect
• Not feasible (yet) to estimate impacts on
individual flight level
Scenario 3: CO2 only, plus flanking instruments
• NOx LTO airport charge feasible: also reduces
NOx cruise emissions
• Don’t need to be compatible with EU ETS
• ATM Flight procedures: contrails
Scope: CO2 emissions under various
geographical scenarios
(EU-ETS approx: 2200 Mt)
CO2
emissions
in Mt in
2004
52 Mt
% of
emissions
in ETS
2) flights departing from
EU Airports
130 Mt
5.9%
3) EU airspace
114 Mt
5.2%
1) Intra-EU
4) Intra-EU and to/from KP 72 Mt
states
2.4%
3.3%
Trading entity?
• Aircraft operator most suitable
• Other options (fuel supplier, airport, ATM,
manufacturer) have one or more decisive
disadvantages
Decision on allocation rules
• Level to set total amount of
allowances and rules to distribute
allowances
• EU or member states?
• EU ETS: some degree of subsidiarity
• Two arguments for EU approach:
– International aviation not included in
EU’s Burden Sharing agreement
– Prevention of competitive distortions
Selection of policy options
Design element
Option 1
Option 2
Option 3
Climate impacts
CO2 x
multiplier
CO2 only plus
flanking
instrument
CO2 only
plus flanking
instrument
Scope
Intra-EU
Departing
from EU
EU airspace
Interplay KP
Buy
above
baseline
Unrestricted
Gateway
trading (AAUs
borrowed)
Allocation method
baseline
Benchmarking
auctioning
Impact assessment
• Assumptions:
– Emissions 2008 historic baseline
– Results for the year 2012
– Emissions growth 4% per annum
– permit price of 10 to 30
euro/tonne CO2
– Multiplier of 2 (option 1 only)
Impact on ticket prices in 2012
Return flight
and 10 to 30
euro/tonne
CO2 (lf=70%)
Short haul
Medium
haul
Long haul
Option 1 Option 2 Option 3
Intra-EU
100%
EU
and
departing airspace/
multiplier
flights
auctioning
0.4 – 9.2
0.2 – 4,6
1.5 – 4.6
0.9 – 18
0.4 – 9.0
3.0 – 9.0
0
1.0 – 19.8
2.3 – 6.9
CO2 reduction in 2012 compared to BaU
emissions in 2012 (permit price: € 30 t/CO2)
Option
1
Intra EU
Option 2
Option 3
all
EU
departures airspace
BaU emissions in 2012
71 Mt
178.5 Mt
156.5 Mt
BaU emissions in 2008
60.7 Mt
152.6 Mt
133.8 Mt
Total reduction, of
which:
20 Mt
25.9 Mt
22.7 Mt
Reduced within
aviation
sector
Purchased from other
sectors
0.7 Mt
3.2 Mt
5.6 Mt
19,3 Mt
22.7 Mt
17.1 Mt
Potential trade-offs of ‘CO2 only’
regime?
- Overall NOx emissions will probably
not increase
- Contrails may increase due to
cooler exhaust
Economic impacts
• All carriers irrespective of nationality and
operator are subject to the same scheme
• Decrease in growth by 0.2 to 1.3% (option
1), 0.4 to 2.1% (option 2) and 1.4% (option
3), (permit price € 30 per t/CO2 )
• Therefore no significant impact on EU
carriers’ economies of scale
• However: non EU carriers can more easy
fly most efficient (=new) aircraft on EU
routes
• Auction revenues: 1.3 to 4 billion euro
(based on 2008 emissions and a permit
price of 10 to 30 euro)
Marginal impact on EU ETS
- Aviation would buy about 1% of allowances
under the present EU ETS
- This percentage would be lower in case JI and
CDM markets are taken into account
- In the short term no significant rise in the
allowance price
- Long term impacts need further research
Overall Conclusion
• Inclusion of aviation in the EU ETS is feasible
• Effectiveness and economic impacts
depend on design choices
• Emission trading is a policy option that can
be considered alongside emissions
charges and fuel taxation to tackle the
climate impact of aviation.
achterpagina CE
Thank you!
E-mail: [email protected]
Final report and a separate management
summary can be downloaded from:
WWW.CE.NL