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ETS Talk| ETS & national targets: Building a fair post‑2030 climate architecture
Summary
The Oeko Institute report outlines a framework for aligning the EU Emissions Trading System (ETS) with national climate targets to achieve the EU's 2040 climate goals. It emphasizes a 90% reduction target compared to 1990 levels, with a focus on an 85% domestic net reduction. The report also discusses the role of Article 6 certificates in achieving these targets, although their inclusion remains uncertain.
The study identifies eight design options for national targets post-2030, focusing on various emissions metrics. It highlights the complexities of emissions distribution among member states, particularly the reliance on GDP per capita for target allocation, which may not reflect actual emissions reduction capabilities.
The discussion reveals the political challenges in maintaining climate ambition amid varying national interests and economic capacities. The reliance on negotiations to set national targets assumes good faith among member states, which may not always be the case.
The LULUCF sector's complexity necessitates targeted policies to enhance removals and reduce emissions, rather than relying on a net target that may obscure necessary actions. The effectiveness of proposed policies remains questionable without addressing the unique challenges posed by different sectors.
Perspectives
Analysis of the panel discussion on climate targets and policies.
Proponents of strong climate targets
- Advocate for a 90% reduction target by 2040 compared to 1990 levels
- Emphasize the importance of aligning national targets with the EUs climate goals
- Highlight the need for targeted policies in the LULUCF sector to ensure effective emissions reductions
- Argue that national targets provide flexibility and accountability for member states
- Stress the importance of public pressure to maintain climate ambition
Skeptics of current climate policies
- Question the effectiveness of Article 6 certificates in achieving climate goals
- Raise concerns about the political feasibility of stringent national targets
- Highlight the complexities of emissions distribution and the limitations of GDP per capita as a metric
- Express skepticism about the ability of member states to commit to ambitious climate targets
Neutral / Shared
- Acknowledge the need for a comprehensive approach to emissions reductions across all sectors
- Recognize the importance of participant feedback in shaping future climate discussions
- Identify the challenges posed by varying economic capacities among member states
Metrics
gross emissions
79% below 1990
gross emissions reduction target
This figure indicates the extent of emissions reduction needed.
79% below 1990
target
85% target
domestic net reduction target
Achieving this target is crucial for aligning with EU climate goals.
the ESR and ETS sectors decline in parallel until 2040 with the 85% target.
reduction
78 percent %
emissions reduction from 2005 levels by 2040
This significant reduction is crucial for meeting climate goals.
compared to 2005 the EU-gross emissions need to decline by 78 percent
spread
30 percent %
spread between Bulgaria and Ireland's emission targets
This spread indicates the disparity in reduction efforts required from different member states.
we just opted for 30 percent spread between Bulgaria and Ireland
emissions
411 megatons megaton
remaining gross emissions in 2050
Understanding future emissions is essential for long-term climate planning.
the remaining 411 megatons cross emissions in 2050
carbon_price
around 20 years per ton EUR
historical carbon price during the early years of the ETS
Understanding past carbon prices helps evaluate the economic landscape for future emissions reduction strategies.
the ETS price was at zero once but then around 20 years per ton
carbon_price
a hundred hundred fifty years EUR
projected carbon price scenarios for ETS 2
High projected prices indicate potential economic challenges for achieving emissions targets.
the ETS price had much more acceptable prices of a hundred hundred fifty years
emissions_reduction
90 percent target by 2040 %
EU's climate goals
Achieving this target is crucial for long-term climate stability.
effective contribution to achieve the 90 percent target by 2040
Key entities
Timeline highlights
00:00–05:00
The Öko Institute study presents a framework for national targets to support the EU's 2040 climate goals, emphasizing a 90% reduction target compared to 1990 levels. The study also discusses the role of Article 6 certificates in achieving these targets, although their inclusion remains uncertain.
- The event will feature a presentation of the Öko Institute study by Jakob Graichen and Sabine Gores, who have extensive experience with EU climate legislation. Following this, MEP Lena Schilling will provide comments from a policymakers perspective, highlighting her role in EU climate law negotiations
- The study focuses on how national targets can support the EUs 2040 climate goals, emphasizing the importance of understanding these targets and the concept of convergence among member states. It outlines a 90% reduction target for 2040 compared to 1990 levels, translating into an 85% domestic net target with a potential allowance for up to 5% of international certificates
- There is uncertainty regarding the inclusion of Article 6 certificates in the climate architecture, which is outside the studys scope but considered in the analysis assumptions. The climate policy aims for an 86% domestic net reduction, with Article 6 certificates contributing to achieving the overall 90% net reduction target
05:00–10:00
The study outlines a 90% reduction target for 2040 compared to 1990 levels, emphasizing an 85% domestic net reduction. It identifies eight design options for national targets post-2030, focusing on various emissions metrics.
- The study outlines a 90% reduction target for 2040 compared to 1990 levels, with an emphasis on achieving an 85% domestic net reduction. One percentage point of this target is reserved for member states to utilize for national targets, representing one of several methods to meet overall emissions reduction goals
- Eight design options for national targets post-2030 were identified, focusing on gross emissions, gross removals, and net emissions. These options include continuing current systems, proposing reduced ESR targets, and suggesting economy-wide targets that encompass all emissions sources
10:00–15:00
The G version proposes diverse climate targets for specific sources based on gross emissions or removals, including new targets for technical solutions like bio CCS. It reserves one percentage point of 1990 emissions, equating to 47 million tons, for national targets crucial for the ECL review in 2027.
- The G version proposes diverse climate targets for specific sources, based on gross emissions or gross removals, including potential new targets for technical solutions like bio CCS. This aligns with the emphasis on ensuring nearly all emissions are included in the European climate law
- The analysis indicates that the follow target aligns with a nearly net zero target, derived from the commissions numbers, while highlighting target failures observed so far. An assumption of one percentage point of 1990 emissions is reserved for national targets, equating to 47 million tons, crucial for the ECL review in 2027
15:00–20:00
Option A proposes to maintain the current system for 2040, resulting in a 71% reduction below 2005 levels. The distribution of this reduction across member states can either follow existing parameters or be recalculated based on updated methodologies.
- Option A proposes to continue with the current system for 2040, maintaining the same sectoral scope based on GDP per capita. This would result in a 71% reduction below 2005 levels, which is 31 percentage points more than the 40% target for 2030
- The commissions assessment indicates that both the ESR and ETS sectors will decline in parallel until 2040, aligning with the 85% target. The distribution of the 71% reduction across member states can be approached by maintaining current parameters or recalculating using updated methodologies
- Maintaining current parameters for distribution would provide consistency, while recalculating could reflect updated GDP projections. The spread between the poorest and richest member states is crucial for ensuring solidarity, as richer countries are expected to contribute more
- If poorer member states exceed their targets through the ETS, they can sell surplus emission quantities, enhancing solidarity. Not all countries need to achieve net zero by 2050 simultaneously, allowing for flexibility in emissions reductions
- The high spread between member states emphasizes the importance of the ETS, which ensures a gradual contraction towards net zero at different rates. A consistent governance system will be necessary to meet the targets
20:00–25:00
The proposed distribution for the Fairness and Ambition (FHA) in 2040 includes scenarios that maintain the current approach or recalculate based on flexibility for member states. Agriculture is projected to account for three-quarters of the FHA sharing emissions by 2040, with waste being the largest remaining block.
- The proposed distribution for the Fairness and Ambition (FHA) in 2040 includes scenarios that maintain the current approach or recalculate based on flexibility for member states. This flexibility could lead to a more equitable distribution of responsibilities among member states
- Option B suggests a reduced FHA regulation that only covers emissions outside of the ETS 1 and ETS 2, evolving into an agriculture-focused FHA sharing as emissions from other sectors decline
- The agriculture sector is projected to account for three-quarters of the FHA sharing emissions by 2040, with waste being the largest remaining block. Current regulations effectively address emissions in waste and F-gases, making agriculture the primary focus for future emissions reductions
- Option C introduces economy-wide cross-emission targets that could utilize GDP per capita for distribution. This approach faces challenges due to the contentious nature of agricultural emissions, which are tied to dietary habits and livestock numbers
25:00–30:00
The proposed economy-wide gross emission targets may favor countries with significant economic restructuring, particularly Eastern European nations. A distribution model suggests a 78% reduction from 2005 levels by 2040, with notable disparities among member states.
- The proposed economy-wide gross emission targets could be based on GDP per capita, favoring countries that underwent significant economic restructuring, particularly Eastern European nations that reduced emissions post-1989. Using 2005 as a reference aligns with the ETS base and effort-sharing framework, as EU-wide emissions from 1990 to 2005 are nearly identical, but differences among countries are pronounced
- A distribution model for emissions in 2040 suggests a 78% reduction from 2005 levels, with a proposed 30% spread between Bulgaria and Ireland. The distribution of emissions reductions appears almost linear between Bulgaria and Denmark, reflecting the more converging nature of ETS-1 compared to ETS-2 in the effort-sharing sector
- Projections for 2030 indicate that Greece expects to reach its 2040 emission levels by 2030, while Ireland faces a steep reduction requirement by 2040. The analysis suggests that member states with lower reductions by 2040, like Greece and Bulgaria, would face greater challenges in 2050, incentivizing them to increase efforts before 2040