Dutch Pilot Allocation Plan for an European Emission Trading scheme

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Dutch Pilot Allocation Planfor an European
Emission Trading scheme

• Maurits Blanson Henkemans
• Ministry of Economic Affairs Netherlands
• Delhi 1-11-2002

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What I want to discuss

• Dutch position EU directive
• Aim of our Allocation study
• First results
• Conclusions

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Cost advantages of European Trade
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Dutch position

• In General positive to directive
• For mandatory system from 2005 but..
• Allocation must be fair
• Crediting of Early actions
• For the Direct approach
• Dutch industry
• EU PSR system no CaP (!) for indirect approach.

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Aim of the study

• Can we make an Allocation plan?
• On the basis of
• EU Directive/ and PSR indirect
• Allocation Criteria (Annex III)
• Propose improvements on the basis of the study
• Procedure
• Consultant makes study
• Advice from Industry/NGO

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EU allocation
Burden Sharing Agreement
participants
IPPC createria/correcties
Allocation
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Questions

• Who are the participants?
• What size is covert by EU directive?
• How to set the Cap
• How to Allocate
• - Direct or Direct and Indirect
• Allocate on basis of
• - Historic emissions/Grandfathering
• - Performance Standard Rate (PSR)

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Definition of Participants

• IPPC Def.
• Cut through sectors
• Lack of info Cogen e.c.
• Add sector?

gt 20 MWth
Definition installation
energy activity en combustion installation
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What is Covered
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What is Covered

• Wide interpretation 47 of Total Emissions
• CHP Chemical ind. included

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Set CAP for 2010
Cap 90 Mt CO2
Reductie UK1 Ca. 4 Mt CO2
Statistieken
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Set a Cap 1

• National Climate Plan UK1 and UK 2
• Benchmark Target CaP for Participants/ DATA ???
• Allocate 9o Mton
• 450 Mln EURO (5 EURO/CO2)
• Advantage
• Support from Industry
• Disadvantage No Trade?

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Direct versus Indirect (1)

• Advantage Direct
• Simple/conform Kyoto Protocol
• Disadvantage
• Market Power for E-sector
• What will be Electricity-price

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Direct versus Indirect (2)

• Advantage Indirect
• Conform Benchmark
• Stimulate Efficiency User
• Disadvantage
• CO2 content electrity used unknown

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Direct versus indirect
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Allocation options

• Grandfathering
• Direct and Indirect
• Performance Standard Rate
• Direct/Indirect

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Example of CO2 emissions and PSR
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Allocation on Basis of Historic emissions
2005
1990
WKK Production growth New Entrants Data
availability
Windfall profits
Ownership Statistieken
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Performance Standard Rates
Max. 300 PSRs Corrections for green/nuclear
biomass
Correction for indirect emissions complicated
Europese Benchmarking different fuelmix
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Grandfathering options

• How to support early actions?
• 1995 with production adaptation
• Too many allowances
• Allocation 2005 Emissions.No incentive for
  trade/ no support early actions
• Allocation Actual emissions (performance rate
  / performance standard rate) distance to world top

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Conclusions 1

• Directive Covers 47
• Cut through sectors ( opt in)
• Lack of number on installation level
• Indirect approach impossible in one country

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Conclusions 2

• Grandfathering direct
• Actual dates correction for distance to world top
  (benchmark)
• E-sector should not get to much power
• Solution big supply/low price/competition/CHP
• Big role Commission for fair competion