CARBON EMISSIONS TRADING SYSTEMS A comparative study: CEF - AB32 - EU ETS

MACRO DATA COMPARISON

AUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Population 22.5 million (2011)

GDP US$ 1,507 billion (2011)

Nat. GHG inventory 543 million tCo2e (2010 ex LULUCF) (pg. 4)600 million -2009 incl LULUCF

Co2e per capita 27.3 tCO2e p.c / year (2009 incl LULUCF))

Energy production in Petajoule 17,769 PJ (2008-09)= 2.4% of world production

Energy consumption in Petajoule 5773 PJ (2009-09) (=32% of total production)

Exported energy value / Total Exports

A$68.5 bio / A$244.5 bio = 28% (2010) (page 18)

GHG intensity of economy 841 t Co2e incl LULUCF / US $1 million (2005)

Carbon intensity of electricity production

863.1 g Co2e / kWh (2005)

AUSTRALIA’S EMISSIONS PROFILE 2009

Electricity Generation 37%

Waste 3%Deforestation & Forestry 3%

Fugitive Emissions 7%

Industrial Processes 3%

Transport 15%

Agriculture 15% Direct fuel

combustion 15%

CALIFORNIA’S EMISSIONS PROFILE 2008

Transportation 36%

Not specified 3%Commercial 3%

Residential 6%

Agriculture & Forestry 6%

Electricity Generation (Imports)

12%

Industrial 21%

Electricity Generation (In State)

12%

Year 2008Total Gross emissions:

477.7MMT CO2e

EU27 EMISSIONS PROFILE 2008

Energy Supply 32.6%

Other 0.2%Waste 2.8%

Agriculture 9.6%

Transport 19.5%

Stationary Energy 27%

Industrial Processes 8.3%

ETS COMPARISONAUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

General Focus Focus: electricity + transport

2020 target Reach 1990 level (=427 million tCo2e)

2050 target 80% on 1990 level

Covered GHG inventory Reporting: 6 GH Gasses Cap and trade: 6 Kyoto GHGs + NF3 = 85% of state inventory

Reporting threshold Registration, reporting (Scope 1 +indirect energy purchases) and verification compulsory25,000 MTCO2/yr except for electricity (co)generation (2,500 MTCO2/yr)

ETS COMPARISON II

AUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Nr of entities reporting 777 (2010) 2011: 11,000

Trading threshold In general 25,000 tCO2e scope 1 but 10,000 tCO2e for certain landfills (page 105)

Thermal input > 20MW or activity specific capacity thresholds

Nr of entities trading 294 facilities 2011: 11,000

Start date 1st July, 2012 Period I: 01/01/2005Period II: 01/01/200801/01/12: Aviation Period III: 01/01/13

Phases 1st: July12 - June152nd: July15 - June183d: July18 - …

1st: 2005 - 20072nd: 2008 - 20123d: 2013 – 2020

Allowances issuance Caps May14: announce 2015-19 capsJune16: announce 2020 capJune17: announce 2021 capAT MINIMUM meet 5% target

2008-2012 = 2,086 Mio t2013-2020 = 2,039 Mio t - 37 Mio t per annum

ETS COMPARISON IIIAUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Carbon Unit denomination

Price (Px)

Cap / Floor Price

Domestic Offsets/ credits FIXED px period: can only use compliance ACCUs for up to 5% of liabilityFLEX px period: Min 50%up to max 100% of compliance must be met with domestic credits or permits

Max 8% per facility, initially NAFTA ONLY w/ quant. and qualitative restrictions:ARB offsetsSector offsets (incl forestry)Early action credits

(Theoretically): credits from projects reducing emissions not covered by the ETS (Q22)

Importing international units

CERs, ERUs and RMU’s will be acceptable subject to qualitative and quantitative restrictions (like EU ETS).

The possibility for linkage to external ETS’ and their approved offsets has been left open.

JI / CDM credits but (increasing) qualitative and quantitative restrictions

ETS COMPARISON IV

AUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Exporting domestic units/allowances

Banking/borrowing

Cycle

ETS COMPARISON V

AUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Auctions

Free allowances

ETS COMPARISON VI

AUSTRALIA CALIFORNIA EUROPEAN UNION

CEF AB 32 EU ETS

Penalties

Tax

Treatment of Fuel

ETS COVERED SECTORS/ACTIVITIESCEF AB 32 EU ETS

Combustion installations

Mineral oil refineries

Coke ovens

Metal ore roasting/sintering

Pig iron/steel

Cement clinker or lime

Glass including glass fibre

Ceramic products by firing

Pulp, paper and board

Agriculture

Land use sector

Transport sector

Carbon Dioxide suppliers

Cogeneration

Electricity - first deliverers

Electricity - Importers

Electricity self-generation

Hydrogen production

Nitric Acid production

Petroleum and Natural gas systems

Suppliers of liquefied petroleum gas -LPG

Suppliers of Natural gas

Suppliers of RBOB and distillate fuel oil

RATIONALE

We started this exercise to understand the upcoming Californian scheme and naturally compared it to the Australian scheme since that is our “home” scheme. However the decision to add the EU ETS was quickly made because of its importance. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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RATIONALE

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