Dutch Pilot Allocation Planfor an European Emission Trading scheme

Maurits Blanson HenkemansMinistry of Economic Affairs NetherlandsDelhi 1-11-2002

What I want to discussDutch position EU directiveAim of our Allocation studyFirst resultsConclusions

Cost advantages of European Trade

Chart1

20.5

9

6

Euro (bn)

Sheet1

1990Broeikasgassen per doelgroep incl. T-correctie

Landbouw26.2

Energiesector45.3

Industrie71.6

Consumenten22.5

Verkeer31

Overige26.7

Totaal223.3

1999Broeikasgassen per doelgroep incl. T-correctie

Landbouw26.2

Energiesector45.3

Industrie71.6

Consumenten22.5

Verkeer31

Overige3.1

Totaal199.7

199019951996199719981999

RIVM, CO2167179185179

RIVM, GHG216232237230

1999

Wegverkeer

Personenvervoer19.3

Goederenvervoer10.2

Speciale voertuigen0.325

Totaal29.825

1990161

1995176

1996184

1997181

1998181

1999174

1990219219

1995234

1997237

2010256206

Doelstelling

Mobiele bronnen CO2

199029

199533

199633

199734

199835

199936

201038

Tabel A4, MV5

198019901995201020202030

Industrie62.471.673.975.789.3

Verkeer en Vervoer26.63134.44251.4

Energiesector41.245.349.751.347.4

Landbouw24.926.12824.424.2

Overige doelgroepen44.9484946.545.6

Totaal

1980199019951999201020202030

Totaal broeikasgassen204222235235245266285

CO2160167179179206227244

PRIME, EU

Traditionele beleidsmaatregelen45

Nationale emissiehandel19.8

Emissiehandel op EU-niveau13.2

Conventioneel beleid20.511.5

Nationale emissiehandel9

Europese emissiehandel6

Sheet1

26.2

45.3

71.6

22.5

31

3.1

199.7

Sheet2

161

176

184

181

181

174

Mt

Sheet5

204160

222167

235179

235179

245206

266227

285244

Totaal broeikasgassen

CO2

Uitstoot in Mt

DSM

Miljard NLG

Sheet4

Miljard Euro

Sheet3

CO2E Mt1990CO2E Mt1999

Industrie71.6Industrie78.4

Energiesector45.3Energiesector48.6

Verkeer31Verkeer36.8

Landbouw26.2Landbouw25.8

Consumenten22.5Consumenten22.1

Afval13.6Afval11.1

HDO + overigen11.9HDO + overigen12.5

222.1235.3

Prognose MilieubalansV&VPrognose MilieubalansTotaal

1990311990222

199534.41995235

2010422010245

202051.42020266

2030285

Aandeel V& V CO2

199019951998199920102020

Verkeer en Vervoer29.132.13434.74150.4Verkeer en Vervoer

Andere sectoren137.9146.9151144.3165176.6Andere sectoren

Totaal167179185179206227Totaal

Aandeel V& V CO2 GC

19901995199819992010202019902020

Industrie5455.456.856.764.677.1Industrie54Industrie77.1

Verkeer en Vervoer29.132.13434.74150.4Verkeer en Vervoer29.1Verkeer en Vervoer50.4

Energiesector41.345.848.345.349.646.4Energiesector41.3Energiesector46.4

Consumenten22.121.820.821.420.919.8Consumenten22.1Consumenten19.8

Overigen20.723.925.120.93033.2Overigen20.7Overigen33.2

Totaal167.2179185179206.1226.9

1999

Industrie56.7

1.3058419244Verkeer en Vervoer34.7

1.1924398625Energiesector45.3

Consumenten21.4

Overigen20.9

19801985199019951999

Personenauto's13.11415.317.218.5

Lichte bedrijfsvoertuigen1.231.442.12.834.16

Zware bedrijfsvoertuigen5.385.275.616.526.85

Motoren en bromfietsen0.2310.1940.2420.2810.287

Totaal19.94120.90423.25226.83129.797

Sheet3

0

0

0

0

0

0

0

19801990199519992010

Totaal CO2e204222235235245

N2O1720222319.7

N20199019951999

Industrie323236

Landbouw222826

Verkeer5.66.86

Overig5.45.55.3

DSM

CO28

N2055.09268

Totaal13

0

0

Mt CO2

Mt N20 in CO2e

13Mt CO2

1980199019951998199920102020

Industrie555455.456.856.764.677.1

Verkeer en Vervoer25.229.132.13434.74150.4

Energiesector36.841.345.848.345.349.646.4

Consumenten26.822.121.820.821.420.919.8

Overigen1620.723.925.120.93033.2

Totaal159.8167.2179185179206.1226.9

19801990199519981999

CO2159.8167.2179185179

Totaal GHG204222235241235

Overige gassen44.254.8565656

Industrie555455.456.856.7

Verkeer en Vervoer25.229.132.13434.7

Energiesector36.841.345.848.345.3

Consumenten26.822.121.820.821.4

Overigen1620.723.925.120.9

Huishoudens15210

Eigen vervoer31823

Landbouw14174

Industrie sheltered21240

Industrie exposed58240

Vervoer26196

HDO33239

Overig en afronding3028

Totaal203150

00000

00000

00000

00000

00000

Industrie

Verkeer en Vervoer

Energiesector

Consumenten

Overigen

000

000

000

000

000

CO2

Totaal GHG

Overige gassen

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

5429.141.322.120.7

55.432.145.821.823.9

56.83448.320.825.1

56.734.745.321.420.9

64.64149.620.930

77.150.446.419.833.2

Industrie

Verkeer en Vervoer

Energiesector

Consumenten

Overigen

CO2-emissies in Mt

56.7

34.7

45.3

21.4

20.9

1999

CO2-uitstoot 1999

77.1

50.4

46.4

19.8

33.2

2020

CO2-emissies in 2020

13.11.235.380.231

141.445.270.194

15.32.15.610.242

17.22.836.520.281

18.54.166.850.287

Personenauto's

Lichte bedrijfsvoertuigen

Zware bedrijfsvoertuigen

Motoren en bromfietsen

CO2-emissies in Mt

219219

2341995

2371997

256206

Mt CO2e

29

33

33

34

35

36

38

Mt CO2

29

33

33

34

35

36

Mt CO2

Dutch positionIn General positive to directiveFor mandatory system from 2005 but..Allocation must be fairCrediting of Early actions For the Direct approachDutch industryEU PSR system no CaP (!) for indirect approach.

Aim of the studyCan 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 studyProcedureConsultant makes studyAdvice from Industry/NGO

EU allocationBurden Sharing AgreementparticipantsIPPC + createria/correctiesAllocation

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

Definition of Participants

IPPC Def.Cut through sectorsLack of info Cogen e.c.Add sector?

> 20 MWthDefinition: installation energy activity encombustion installation

What is Covered

What is CoveredWide interpretation: 47% of Total EmissionsCHP = Chemical ind. included

Set CAP for 2010Cap:90 Mt CO2Reductie UK1:Ca. 4 Mt CO2Statistieken

Set a Cap 1National Climate Plan UK1 and UK 2Benchmark Target = CaP for Participants/ DATA ???Allocate 9o Mton450 Mln EURO (5 EURO/CO2)Advantage Support from IndustryDisadvantage: No Trade?

Direct versus Indirect (1)Advantage DirectSimple/conform Kyoto ProtocolDisadvantageMarket Power for E-sectorWhat will be Electricity-price

Direct versus Indirect (2)Advantage Indirect:Conform BenchmarkStimulate Efficiency User Disadvantage : CO2 content electrity used unknown

Direct versus indirect

Gas

Electriciteit

Gas

Electriciteit

Allocatie

Allocatie

Kosten

3 t

3 t

1

10 t

9 t

10 t

3 t

10 t

2 t

1

Bedrijf A

Bedrijf B

Allocation optionsGrandfathering Direct and IndirectPerformance Standard Rate Direct/Indirect

Example of CO2 emissions and PSR

Allocation on Basis of Historic emissionsWKKProduction growthNew EntrantsData availabilityWindfall profitsOwnershipStatistieken19902005

Performance Standard RatesMax. 300 PSRsCorrections for green/nuclear biomassCorrection for indirect emissions complicated

Europese Benchmarking: different fuelmix

Grandfathering options How to support early actions?1995 with production adaptation Too many allowancesAllocation = 2005 Emissions. No incentive for trade/ no support early actionsAllocation = Actual emissions * (performance rate / performance standard rate) distance to world top

Conclusions 1Directive Covers 47%Cut through sectors ( opt in)Lack of number on installation levelIndirect approach impossible in one country

Conclusions 2Grandfathering direct Actual dates correction for distance to world top (benchmark)E-sector should not get to much power Solution: big supply/low price/competition/CHPBig role Commission for fair competion