This briefing paper outlines the motivation and the initial findings of the Climate Strategies' study which looks at how advancing the innovation process for key technologies through so called Climate Innovation Centres (CICs) can accelerate the necessary low carbon technology transition in developing countries. This will enable them to meet their climate challeges more effectively and efficiently. 

This paper outlines the policy recommendations emerging from Climate Strategies’ 18 month study on sectoral approaches. The study concentrated on the steel sector applied in three key countries – China, India and Japan which represent over 50% of world production and consumption.

This summary note highlights key messages and policy recommendations from the Climate Strategies research project ‘Analytic Support to Target Based Negotiations’. This research study consists of four working papers and two synthesising briefs. It aims to assist the UNFCCC negotiations by offering clarification and insights on a range of quantitative and qualitative levels into pledges made by countries for 2020.

The issue of surplus emissions permits (Assigned Amount Units i.e. AAUs) under the Kyoto Protocol is emerging as one of the crucial sticking points in the negotiations. The excess of emissions permits that will be available to Countries of Central and Eastern Europe and the Former Soviet Union is fuelling EU and Japanese arguments that the Kyoto Protocol should be replaced. Addressing this problem is both politically and environmentally necessary, if a second commitment period of the Kyoto Protocol is to be agreed.

This paper sets out the position of all parties and draws following conclusions:

• The issue of surplus AAUs is shaping up as a crucial sticking point in the negotiations around the future climate regime.
• The Russian position contains several contradictions which may provide an entry point for negotiation on the future use of AAUs. Europe and developing countries will need to engage in these negotiations to find a workable solution.
• It is hard to see how the CEE member countries could really benefit from the carry over given the likely sub-prime value of these assets post 2012, and the fact that they cannot use them for their own post 2012 compliance. Instead a proposed potential avenue may be to establish a non-tradable strategic compliance reserve from the first commitment period surplus of AAUs.

This paper draws information from Paper 4 and Paper 5 in the Climate Strategies’ Analytic Support for Target-based Negotiations paper series, and other relevant reference material, with a view to understanding what the combination of (1) countries’ pledged targets in 2020, (2) their likely ‘emissions anyway’ in 2020 and (3) the foreseeable CER supply up to 2020, can tell us about demand and supply in the international compliance carbon market(s) in 2020.

This paper draws information from Paper 2 and Paper 3 in the  paper series on Analytic Support for Target-based Negotiations, and other relevant reference material, with a view to understanding how countries’ pledged targets in 2020 compare with their ‘likely anyway’ emissions. This can provide a beginning sense of the level of effort that these pledges represent.

This study was commissioned by the Greens/EFA Group in European Parliament to analyse the impact of carbon pricing on specific subsectors of the European economy and suggest suitable remedial policies when there is a risk of leakage.

The study shows that the carbon leakage challenge is not resolved by the approach taken so far under the revised EU Directive. From the in-depths analyses undertaken also by other studies, it becomes clear that a policy response should differ along sector characteristics.

The third paper in the series on Analytic Support for target-based negotiations looks at how economic growth, the recession or other factors influence greenhouse gas emissions.

The fourth paper in the series on Analytic Support for target-based negotiations analyses offset supply in the light of the Copenhagen agreement and looks at several hypothetical scenarios that may be in place before or after an international agreement is concluded. 

This working paper looks at the potential involvement of the Japanese steel sector in an international sectoral agrrement

A Government of India research paper put together by Ambuj D Sagar

Article published in Natural Resources Forum 33 (2009) 274–284

Ideas emerging from the roundtable 5th February 2010, Berlin

Background paper for the workshop Carbon Pricing and Investment Response, February 2010, Berlin

The paper reviews the different functions which CDM plays for domestic and international stakeholders (Section 1) and discusses in more detail the provisions for the use of CDM credits in Europe post-2012 (Section 2). Section 3 explores different strategies to limit the use of the CDM – from regional, sectoral, procedural and demand side perspectives. Section 4 concludes.

Chapter IV of this background document prepared for the Beijing High-level Conference on Climate Change: Technology Development and Technology Transfer was written by Ambuj Sagar, Cath Bremner and Michael Grubb.

This short paper examines the GHG profile of manufacturing sectors in Poland and assesses which of them may merit further study into the competitiveness impacts of carbon pricing.

This paper offers a brief insight into the potential impacts of introducing carbon pricing to the Midwest US. The region is relatively more carbon intensive than the average levels for the US because of the high dependency on coal and concentration of manufacturing industries. Carbon pricing may disproportionately affect Midwestern industries' cost schedules in the short term.  However, in the mid-long term, carbon pricing may present a real opportunity for the region to reverse the trend of declining manufacturing output and employment in traditional industries and transform the region into a leader in low carbon production and 'green collar' jobs.

This paper offers a brief insight in to what the expected impact of carbon pricing may be for Japanese industry subsectors if a carbon price of 3000¥/t (approx 30 USD/t) was introduced. It identifies the 17 subsectors most at risk, comparing them to those identified by similar modelling exercises undertaken in other regions.
 

Challenges for the next days in Copenhagen

Please visit the 'ISDA' project page for more studies from the author.

Comparability of effort by Annex I Parties is a complex and contentious element within the Copenhagen negotiations that goes to the heart of any agreement on emission reduction targets. But assessing comparability in a precise and surgical manner is not possible. Simply put, there are too many ways, both quantitative and qualitative, in which countries’ efforts can be compared.

Our approach looks at emissions as defined in a Kyoto gas basket, and treats targets as responsibility targets, potentially allowing for flexibility in domestic land use, land use change and forestry (LULUCF), and international trading. This can require some translation of country pledges. Public finance for mitigation in developing countries that does not produce offsets is another element of effort that must be recognised in an overall package.

We analyse, in detail, indicators in two main categories:
(1) indirect indicators centred around emissions, population and GDP that have been the standard set used in addressing political equity concerns (including historical responsibility, CBDR and comparable effort); and
(2) trajectory indicators that focus on the consistency of national 2020 targets that include long term commitments to deep mid-century reductions, and on consistency between countries of implied inter-generational burdens.

Many countries including the US, Japan, Australia, Korea and others are now actively developing emissions trading systems. Europe has accumulated a rich experience with designing and implementing a cap and trade program, and policy makers elsewhere have an opportunity to look at this experience on key issues that continue to challenge consensus. Foremost amongst these are issues surrounding allocation, costs and competitiveness.

This report that examines the experience of the European Union’s Emission Trading System and suggests key lessons relevant to current debates in many regions, with associated recommendations.

The Japanese translation of the Executive Summary is also available for download (here).

Full Report and Executive Summary to the report on Sectoral Approaches and Agreements

Focus on the Steel Sector in China and India

Contributing Authors:
Greg Cook
Paul Zakkour
Mike Harfoot
Seton Stiebert

The Reformed Financial Mechanism of the UNFCCC
Architecture and Governance

Under the Authority of the COP?
The debate on institutional arrangements for climate finance  

Is There Room for Compromise?
The debate on institutional arrangements for climate finance

Link to article

Citation: van Asselt, H., Brewer, T., Addressing competitiveness and leakage concerns in climate policy: An analysis of
border adjustment measures in the US and the EU. Energy Policy (2009), doi:10.1016/j.enpol.2009.08.061 

Executive Summary

Please visit the 'Tackling Leakage in a world of unequal carbon prices' project page for the synthesis report and individual working papers, workshop presentations.  

Carbon Leakage and the EU ETS
Sectors at risk and the international context of emissions trading, trade flows and climate policy

Please visit the 'Tackling Leakage in a world of unequal carbon prices' project page for more studies on the issue.

As part of Climate Strategies’ project on 'Tackling leakage', Gregory Cook has written a working paper assessing sector emissions and policy responses to carbon prices.

Please visit the 'International Support for Domestic Action' (ISDA) project page for the policy summary and individual studies.

Synthesis Report for the project 'The Clean Development Mechanism in the post-2012 Climate Change Regime'

This report examines the experience of the European Union’s Emission Trading System (EU ETS) and suggests key lessons relevant to current U.S. debates, with associated recommendation.

Another report in this series examines the experience of the EU ETS and suggests key lessons relevant to current debates in Asian regions, with associated recommendations. (available for download here)

This paper is a technical annex to a Carbon Trust report: Global Carbon Mechanisms: Emerging lessons and implications.

This Annex is designed to support a larger Carbon Trust publication, “Global Carbon Mechanisms: emerging lessons and implications”. In this document two main sources of analysis are examined in detail that have been used as inputs to the Carbon Trust publication.   

WORKSHOP REPORT: Carbon Financing Prospects for the Republic of Belarus
Minsk, 19-20 November 2007

International carbon prices and financial flows: Analysis and sensitivity studies for a study of approaches to maintaining the Kyoto Protocol on climate change

The introduction of mandatory controls and a trading scheme covering approximately half of all carbon dioxide
emissions across Europe has triggered a debate about the impact of emissions trading on the competitiveness of European industry. Economic theory suggests that, in many sectors, businesses will pass on costs to customers and make net profits due to the impact on product prices combined with the extensive free allocations of allowances.
This study applies the Cournot representation of an oligopoly market to five energy-intensive sectors:
cement, newsprint, steel, aluminium and petroleum. By populating the model with empirical data, the results are shown for three future emissions price scenarios. The results encompass the extent of cost pass-through to customers, changes in output, changes in UK market share, and changes in firm profits. The results suggest that most participating sectors would be expected to profit in general, although with a modest loss of market share in the case of steel and cement, and closure in the case of aluminium.

Russian climate politics were certainly a talking point a few years ago due to the country’s decisive role in the entry into force of the Kyoto Protocol. The views of various potentially influential officials were reported by the world media almost on a daily basis. Since the ratification of the Kyoto Protocol by Russia in 2004, and its
entry into force, Russian climate politics have received less attention.  
 
In this paper the authors update our previous analyses of Russian climate politics and policies, and report the latest developments, including material from the discussions in the ‘JI in Russia’ workshop 26 March 2007 organised by Oxford Climate Policy in co-operation with Climate Strategies.

This report forms one of three research projects convened by Climate Strategies in immediate response to the collapse of The Hague negotiations in November 2000 and the subsequent statements by the new US Administration rejecting the Kyoto Protocol. 

It examines proposals which have emanated principally from the US following the debate about alternative approaches to the international climate change negotiations. 

This report is a collaborative venture between the named authors, convened by Climate Strategies.
The views and judgments expressed are the collective responsibilities of the named authors and do
not necessarily imply endorsement by other members of Climate Strategies.

WWF has commissioned Öko-Institut together with a consortium of co-operation partners from across Europe – AVANZI (Italy), EcoSolutionsConsulting (Poland), ILEX (UK) and ILEX Iberia (Spain) – to evaluate the allocation provisions from the National Allocation Plans for the pilot phase of the European Union Emissions Trading Scheme (EU ETS) with regard to their impacts on environmental effectiveness and economic
efficiency.
The purpose of this report is to provide an independent analysis of the National Allocation Plans in six Member States - Germany, Spain, Italy, the Netherlands, Poland, Spain and the UK – in terms of environmental effectiveness and economic efficiency.

This report forms one of three research projects convened by Climate Strategies in immediate response to the collapse of The Hague negotiations in November 2000 and the subsequent statements by the new US Administration rejecting the Kyoto Protocol. 

This report is a collaborative venture between the named authors, convened by Climate Strategies.
The views and judgments expressed are the collective responsibilities of the named authors and do not necessarily imply endorsement by other members of Climate Strategies. 

The European Directive on the EU ETS allows governments to auction up to 10% of the allowances issued in
phase II 2008–2012, without constraints being specified thereafter. This article reviews and extends the long-
standing debate about auctioning, in which economists have generally supported and industries opposed a
greater use of auctioning. The article clarifies the key issues by reviewing six ‘traditional’ considerations,
examines several credible options for auction design, and then proposes some new issues relevant to auctioning.
It is concluded that greater auctioning in aggregate need not increase adverse competitiveness impacts, and
could in some respects alleviate them, particularly by supporting border-tax adjustments. Auctioning within
the 10% limit might also be used to dampen price volatility during 2008–2012 and, in subsequent periods, it
offers the prospect of supporting a long-term price signal to aid investor confidence. The former is only possible, however, if Member States are willing to coordinate their decision-making (though not revenue-raising) powers in defining and implementing the intended pricing mechanisms.

This is a report produced by Entec for the Carbon Trust Investor Engagement programme.

This paper assesses the economic impacts of linking the EU Emission Trading Scheme (ETS) to emerging schemes beyond Europe, in the presence of a post-Kyoto agreement in 2020. Simulations with a numerical multi-country model of the world carbon market show that linking the European ETS induces only marginal economic benefits: As trading is restricted to energy-intensive industries that are assigned generous initial emissions, the major compliance burden is carried by non-trading industries excluded from the linked ETS. In the presence of parallel government trading under a post-Kyoto Protocol, excluded sectors can however be substantially compensated by international trading at the country level, thus increasing the political attractiveness of the linking process. From an efficiency perspective, a desirable future climate policy regime represents a joint trading system that enables international emission trading between ETS companies and governments. While the Clean Development Mechanism (CDM) cannot alleviate the inefficiencies of linked ETS, in a parallel or joint trading regime the access to abatement options of developing countries induces large additional cost savings. Restricting CDM access via a supplementarity criterion does not significantly decrease the economic benefits from project-based emission crediting.

This Commentary sets out four lines of evidence to argue both that emission forecasts are intrinsically uncertain, and that there is clear evidence of projection inflation in the forecasts of sector emissions used to underpin the setting of sector caps in emission trading systems. From a limited evidence base, the authors conclude that uncertainty is at least ±2%/year, overlaying an upward bias (projection inflation) on the order of 1%/year, cumulative. The Commentary concludes that this has important implications both for allocation approaches, and for some other design elements in the EU ETS. Forecasting uncertainty is not an inconvenience which is best ignored, but a fundamental fact that must be accommodated in the future design of the EU ETS and other CO 2 emission trading schemes.

Climate Policy 6 (2006) 495–501

Policies to cap emissions of carbon dioxide, such as the recently announced agreement among the
northeastern states of the USA, are expected to have important effects on the electricity industry and on the
market value of firms that own electricity generation assets. A study of the economics literature reveals potentially large efficiency advantages for initial distribution of tradable emissions allowances through an auction and direction of allowance value to public purposes. However, an auction raises the costs for the regulated firms. This article identifies rules for free distribution of a portion of the allowances that satisfy a compensation goal for firms while maximizing the value of allowances that can be directed to public purposes. The article employs a detailed simulation model to calculate numerical results for the market value of generation assets under the CO2 cap-and-trade programme in the northeastern USA.

Climate Policy 6 (2006) 477–493

In this article, the authors analyse the effects of emissions trading in Europe, with special reference to Germany. They look at the value of the flexibility gained by trading compared to fixed quotas. The analysis is undertaken with a modified version of the GTAP-E model using the latest GTAP version 6 database. It is based on the national allocation plans (NAP) as submitted to and approved by the EU. They find that, in a regional emissions trading scheme, Germany, Great Britain and the Czech Republic are the main sellers of emissions permits, while Belgium, Denmark, Finland and Sweden are the main buyers. The welfare gains from regional emissions trading – for the trading sectors only – are largest for Belgium, Denmark and Great Britain; smaller for Finland and Sweden, and smallest for Germany and other regions. When we take into account the economy-wide and terms-of-trade effects of emissions trading, however, (negative) terms-of-trade effects can offset the (positive) allocative efficiency gains for the cases of the Netherlands and Italy, while all other regions end up with positive net welfare gains. All regions, however, experienced increases in real GDP as a result of regional emissions trading.

In the EU emission trading scheme (EU ETS), the treatment of new entrants has proved to be one of the most
contentious issues. This article analyses the impact of allocation to new entrants in the energy sector, and identifies options for improved regulation in this field. The point of departure for the discussion is a comparative analysis of the allocation in phase I and phase II of the EU ETS to two hypothetical energy installations located in different EU Member States. The study focuses on the Nordic countries due to their integrated energy market. The quantitative analysis was complemented by interviews with policy-makers and industry representatives. The results suggest that current allocation rules can significantly distort competition. The annual value of the allocation is comparable to the fixed investment costs for a new installation and is not insignificant compared to expected revenues from sales of electricity from the installation. The study finds that the preferred option would be that Nordic countries should not allocate free allowances to new entrants in the energy sector. This should be combined with adjusted rules on allocation to existing installations and closures in order to avoid putting new installations at a disadvantage. A second, less-preferred choice would involve harmonized benchmarks across the Nordic countries.

Climate Policy 6 (2006) 423–440

Climate Policy 6 (2006) 361–394

Based on 18 national allocation plans (NAPs) submitted to the European Commission for phase II (2008–2012)
of the EU Emissions Trading Scheme (EU ETS), the authors find that, on average, the ET budgets in phase II are only about 2.6% below historical emissions in 2005, about 3.1% lower than the budgets in phase I (2005–2007), and 3% below projected emissions in 2010. While the EU-15 Member States (MS) intend to reduce emissions by about 8–11%, the implied excess allocation in the new Member States lies between 17% and 31%. Compared with a cost-efficient split of the required emission reductions, the ET budgets in the EU-15 MS are generally too large. Thus, in total, the burden for the non-trading sectors (households, tertiary and transport) is too high. Furthermore, the high shares of governments’ intended and companies’ possible use of Kyoto mechanisms challenge the supplementarity principle. The detailed analyses of the allocation methods of these NAPs (across countries and phases) suggest that MS should adhere to the concepts and methodologies developed in phase I. This implies that only a little progress has been made towards achieving more efficient and more harmonized allocation rules across MS. Untapped potentials to improve environmental effectiveness and economic efficiency crucially hinge on the outcome of the Commission’s review process.

Discussion paper CDM-7

Discussion paper CDM-6

Discussion paper CDM-8

This briefing paper aims to highlight the main findings of the report: ‘Carbon sinks and biomass energy: A study
of linkages, options and implications’, which is part of a number of studies convened by the Climate Strategies
network for applied climate policy research. 

Belarus has been at the margin of the Kyoto and Joint Implementation discussion so far. The presumption of investors may be that the same problems experienced with the Russian and Ukrainian governments and JI approval systems would be repeated with Belarus, just with the addition of the practical and political
difficulties related to cooperation with an authoritarian regime. However, Belarus has recently initiated a novel process to join the Annex B of the Kyoto Protocol in order to become eligible to trade.  
 
This paper focuses on:

• Why Belarus wants to join the Annex B of the Kyoto Protocol;
• The potential of the Belarusian amendment to the Annex B of the Kyoto Protocol to succeed;
• Belarusian preparedness and strategies on the Kyoto mechanisms; and
• Issues for and against the Belarusian participation in the Kyoto mechanisms during the first commitment period. 

A sample of 52 Indian CDM projects registered until May, 20, 2006 is analyzed with respect to the testing of additionality. While almost all projects do additionality testing, only half of them identify alternatives. Barrier testing is almost universal but only a third of the projects do an investment analysis. Small scale projects are less likely to look at the impact of CDM registration. A sub-sample of 19 projects is looked at in detail regarding barrier argumentation and treatment of the additionality test by the validators. Independent data sources are only used by one third of projects. Only about a fifth of projects provide a common practice analysis in sufficient detail. Less than half of large projects provide the relevant information on additionality in their PDD. While a technology barrier is mentioned most frequently, technology and institutional barriers, feedstock variability and lack of experience each affect a third of projects. Validators have problems in transparently evaluating barriers. The detailed case studies of two projects show that additionality assessment by the CDM Executive Board varies; if the project developer can obfuscate the attractiveness of the project, it is more likely to pass.

The authors quantified the volume of free allowances that different national allocation plans proposed to allocate to existing and new installations, with specific reference to the power sector. Most countries continue to allocate based on historic emissions, contrary to hopes for improved allocation methods, with allocations to installations frequently based on 2005 emission data; this may strengthen the belief in the private sector that emissions in the coming years will influence their subsequent allowance allocation. Allocations to new installations provide high and frequently fuel-differentiated subsidies, risking significant distortions to investment choices. Thus, in addition to supplying a long market in aggregate, proposed allocation plans reveal continuing diverse problems, including perverse incentives. To ensure the effectiveness of the EU ETS in the future, the private sector will need to be shown credible evidence that free allowance allocation will be drastically reduced post-2012, or that these problems will be addressed in some other way.

Climate Policy 6 (2006) 411–422

The European emissions trading scheme (EU ETS) has an efficient and effective market design that risks being undermined by three interrelated problems: the approach to allocation; the absence of a credible commitment to post-2012 continuation; and concerns about its impact on the international competitiveness of key sectors.
This policy overview appeared in Climate Policy Journal 6 (2006) 7–30 summarizes key insights from the individual studies in this issue, and draws overall policy conclusions about the next round of allocations and the design of the system for the longer term. 

This report compares the publicly available national allocation plans (NAPs) for the period 2008-2012 with a best estimate for CO emissions by the installations covered by these NAPs.

This paper identifies governance challenges in a global carbon market, groups these in systematic categories, and proposes institutional functions for their adequate regulation.

The report highlights that while the EU ETS Directive foresees free allocation of emission rights for ‘sectors at risk of carbon leakage’ there are many issues with this approach and much attention has been paid in the research to alternative remedies, including the adjustment of carbon costs at the border.

Border Adjustments
Economics versus Politics - resolved with international cooperation? 

Please note that Climate Strategies will shortly be publishing a Synthesis report on 'Tackling Leakage in a World of Unequal Carbon Prices' that covers the topic more broadly.

The Clean Development Mechanism in the post-2012 Climate Change Regime
Summary for Policy makers

The aim of this study is to: (1) evaluate the feasibility of different forms of linking, with an emphasis on variations among bilateral and unilateral forms of linking; (2) assess the barriers and the time frames for implementing different forms of linkages; (3) determine the legal and institutional requirements for successful trading across jurisdictions; and (4) ascertain the roles for linking in post-2012 climate architectures.

The ‘climate doctrine’ recently discussed by the Russian Cabinet could mark a shift in the thinking of the Russian high-level policy-makers similar to that of the Stern review in the UK. The costs of climate change were first time reported in the headlines, and it was argued that mitigation policies would be good for the Russian economy. But to re-enforce these positive Russian developments they should be recognized internationally. This paper provides an update on Russian climate policy following the Climate Strategies ‘East-West Investment’ project, which was completed last year.

Carbon Leakage from the EU Emission Trading Scheme - a comment on the Cement sector. 

Draft version- please do not quote 

Climate Strategies ‘Issues and Options’ briefs seek to outline current policy issues and response options, drawing on a wider body of CS research. They represent views of the named CS Project Leader, agreed with the CS Research Director and/or Chair, after short consultation with other relevant CS researchers and stakeholders.

Climate Strategies ‘Issues and Options’ briefs seek to outline current policy issues and response options, drawing on a wider body of CS research. They represent views of the named CS Project Leader, agreed with the CS Research Director and/or Chair, after short consultation with other relevant CS researchers and stakeholders.

Agenda for the Final Workshop held in March 2009 in Paris.

Abstract
Australia is establishing an economy-wide emissions trading scheme, with a detailed proposal tabled by the government in December 2008 and a scheme start planned for mid-2010. The proposal provides for unilateral linking through the Clean Development Mechanism and Joint Implementation, but not for initial bilateral linkages. Concerns about permit prices rising too high are prominent, and are reflected in a ban on permit sales and a price cap provision. This paper evaluates the proposed Australian scheme with regard to international emissions trading and linkages. Different scenarios for the Australian permit price under unilateral linking are considered. Options for bilateral linking with the European Union and New Zealand schemes are evaluated, including regarding access to ‘hot air’ units. The paper argues that Australia should dismantle obstacles to linking such as the price cap, and move toward bilateral linking with suitable schemes.

Abstract
A number of greenhouse gas emissions trading schemes have been implemented or proposed for Canada, the United States and Mexico. Links among those schemes make sense given the close economic ties between the countries. All of the existing and proposed schemes, except Alberta, include provisions for unilateral use of credits and/or allowances from other schemes with quantity and qualitative restrictions. A federal scheme in the United States is likely to replace state schemes, with the possible exception of a few states with more stringent schemes, especially if states are given a role in implementation of the federal scheme. In Canada provinces that want, and are able, to establish that their schemes are equivalent to the federal scheme could continue to operate. Canada will have to modify its proposed scheme to achieve its expressed desire of linking with regulatory-based emissions trading schemes in the United States and Mexico.

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

Presented at 'Tackling Leakage in a World of Unequal Carbon Prices: Final Workshop'
19th-20th February 2009, Berlin 

This paper illustrates that land-use and biomass projects would bring about large socioeconomic co-benefits for the country. While for the proposed bioenergy projects there are pros and cons to carrying them out either under JI or a GIS, for projects in the land-use sector major barriers under JI could be removed under a GIS.

The present paper provides an overview of potential bioenergy GIS projects in Bulgaria, in particular fuel switching programmes for households or municipalities. The paper illustrates that Bulgaria has very large biomass resources which are currently underutilized.  Biomass projects would bring about large socioeconomic co-benefits for the country, which in contrary to JI could be subsidized under a GIS due to a lower need for high cost-efficiency of the financed greenhouse gas reduction.

North-South Cooperation and Private-Public Partnership: A Case Study of China's Wind Power Industry. 

This study analyses the cost increases if the Chemical industry has to buy CO2 allowances and faces higher electricity costs due to the impact of emission trading on the power sector.

Please see International Support for Domestic Climate Policies: Phase I for further information including the Policy Summary, Executive Summary, Policy Case Studies and Institutional Papers.

International Support for Domestic Climate Policies: Policy Summary

Concentrated Solar Power in South Africa 

For further information please visit http://www.joanneum.at/climate/linking/

For further information please visit http://www.joanneum.at/climate/linking/

This paper summarises the discussion that took place during a one day workshop organised by Climate Strategies and hosted by the South Centre in Geneva, September 10. Expert discussion revealed marked differences in the international perception of the objectives of border adjustments, their impact on future climate negotiations as well as preferred approaches to their implementation and legal justification. These differences became the basis for discussion about possible international cooperation on border adjustment that seeks to limit and possibly harmonise their use to a narrowly defined and therefore more widely acceptable scale and scope.

This report explains the economic rationale for auctioning, and examines the practical implications.

For further information please visit http://www.joanneum.at/climate/linking/

For further information please visit http://www.joanneum.at/climate/linking/ 

For further information please visit Joanneum Research

Forecasts of environmental control costs, and of energy demand / emissions, have persistently turned out to be too high. This note examines the lessons and their implications for carbon price projections. The EC’s Impact Assessment estimates carbon prices rising from €26/tCO2 in 2013 to €39/tCO2 by 2020, and some modelling studies conducted this year have projected higher prices. This note explains why, for the proposed emissions cap, realised prices are likely to be much lower than the models suggest, in the lower part of the range €20-40/tCO2.

Shortly after completing this paper, Bernhard Schlamadinger tragically passed away. Climate Strategies and GHG Offset Services mourn deeply the loss of a great and towering colleague, friend and companion.
We hold this paper dearly as his last research contribution, and as a tribute to him in the field of analysis which he did so much to create and inspire.

Options for improving the treatment of LULUCF in a Copenhagen agreement: forest and wetland degradation, factoring out, harvested wood products, and approached for fuller accounting.
The workshop and paper were organized and coordinated by Climate Strategies, Joanneum Research and Canadian Parks and Wilderness Society.

Abstract

Combining efforts of an international team of experts, the available Second Phase National Allocation Plans are evaluated against detailed criteria. The information and data collected are presented in tables to facilitate easy evaluation and comparison. The analysis includes calculations of the volume of allowances allocated to a standard sample power plant (existing and new entrant) under the different NAP2s. 

More information: Comparison of National Allocation Plans for the Period 2008-2012

The EU ETS is the only credible mechanism for establishing a common carbon price across Europe. Through this report, the authors conclude that
(1) the fundamentals of the EU-ETS Directive do not need to be renegotiated in principle,
(2) Free allocation should be greatly reduced,
(3) The Directive should stipulate a minimum not maximum level of auctioning by member states,
(4) Non-zero free allocation should constitute a temporary derogation for a few specific sectors whilst intergovernmental negotiations are pursued to explore the possibilities for state-based sector agreements and international agreement on border adjustments specifically designed to reduce leakage.

The workshop in Berlin discussed about the issues of leakage and competitiveness distortions arise from different CO2 prices in different countries. It addressed the methodologies and empirical data to assess which sub-sectors could be affected and what strategies would be available in the post 2012 regime.

The authors report that where leakage concerns are strong, voluntary sectoral agreements are unlikely to succeed. If sectoral agreements increase the confidence of market participants that CO2 prices will be internalised, then it can address many of the leakage effects.

For further details please click here.

The author argues that uncertainly about the evolution of climate policy and carbon prices is related to the regulatory uncertainty about the decisions of government. 

For further details please click here.

Presented at: Roundtable 1: Impact of CO2 price uncertainty on investment decisions (7th May, 2007 held in IDDRI, Paris).  

Presented at: Roundtable 1: Impact of CO2 price uncertainty on investment decisions (7th May, 2007 held in IDDRI, Paris).   

Presented at: Roundtable 1: Impact of CO2 price uncertainty on investment decisions (7th May, 2007 held in IDDRI, Paris).   

This study compilation is an attempt to present the policy options available in this possible future situation of different levels of ambitions in climate policies. It asks the question whether competitive distortions and leakage present a realistic danger in a world of different carbon prices. The prevailing assumption is that a considerable (and possibly growing) part of allowances in EU-ETS are auctioned as of 2013.

Authors: Makipaa, A., Neuhoff, K., Czarencki, R., Mehling, M., Meyer-Ohlendorf, N., Monjon, S., Quiron, P., Lenr, U., and Lutz, C

Available for download at europa.eu 

Workshop Agenda - 4 Feb 2008, Paris

Under the current EU ETS the competitiveness and leakage effects of a unilateral climate policy for industry with trade exposure have been under discussion. While leakage is of major concern to climate policy makers, industry and industrial policy makers pronounce competitive disadvantages from carbon pricing. Leakage effects are becoming increasingly relevant for the EU ETS after 2013 and the next unilateral climate policy steps in a number of other countries (Australia, New Zealand, Canadian and US provinces). Different carbon pricing gives room for leakages, either by a shift of consumption of carbon-intensive goods towards cheaper import substitutes, entailing more CO2-intensive production in regions without carbon pricing, or by a (re)location of industrial production to these areas.
In a world of unequal carbon prices more certainty for effective emission reduction is needed, especially when it comes to investment in sectors with carbon-intensive production. A commitment to a longer term ETS and other national measures thus needs to consider remedies against leakage as long as the international climate policy does not lead to a level playing field. At the same time, any measure taken by large countries will have an impact on other countries, be it in terms of climate policy approaches or due to the impact on trade in goods.
The Climate Strategies Project on Tackling Leakage in A World of Unequal Carbon Prices addresses four major issues.

1. Illustrating leakage and competitiveness effects from unilateral climate policies;
   
2. Free allocation to address leakage and competitiveness;
   
3. Border adjustment policy;
4. Implications for international climate policy.  

Workshop on 4 Feb 2008 in Paris

Within the Side Event at the COP13 in Bali possible linkages between different ETSs and with offsets markets were discussed setting a focus on legal, economic and institutional questions.

Presentations for download are available here.

BRIEFING PAPER

Outline and experiences