These are the main ideas interesting to point out:
– Under the current new regulations of 2030 target of 40% GHG decrease, in reality a bigger decrease will happen of around 45%, taking into consideration current levels and also the linear reduction factor (LRF) of 2.2%;
– EU Emissions cap on 2030 will be around 1334 MtCO2 compared to the current 1,6 BtCO2. On 2050, the cap will be of just 370 Mt or only 14Mt (if LRF of 2.9% will apply);
– The analysts from Refinitiv pointed out that in the 2050 zero emissions concept target, the EU ETS CO2 price will either rise to 250-300 Euro/tonne or the EU ETS will no longer exist since its functionality might not have any sense;
– IETA pledged to lobby the European Commission to introduce an article in the EU ETS Directive regarding Article 6 from the Paris Agreement and international credits, to let these penetrate in the European market and to ask the EC if they agree with the Article 6 since this article is about linking international markets and accepting ITMOs into regional/national schemes. Thus, linking means the use of international credits into the EU compliance market;
– EUA prices will go up until 2022 or 2023 to reach then 30-35 Euro/EUA and then go down again due to the implementations of RES Directive and Energy Efficiency Directive, and from that date it’s expected to have again an excess of supply;
– Statkraft would like to propose to the EC an increase of MSR (Market Stability Reserve) to 24% and make the intake rate permanent;
– An interesting case was presented: Western Climate Initiative – the linkage scheme of California with Canada provinces Quebec and Ontario. Although, Ontario linked to the WCI on the 1st January 2018, they have already announced that they will exit the scheme this year due to technical and political reasons. Ontario estimate an increase in CO2 price till 40 Euro on 2030 from the current level of 16 Euro, which will destabilise its economy;
– Discussions on Brexit were also tabled, but the case seems too complicated even for UK nationals to foresee which scenario will be adopted, eventually. Yet, a hard Brexit will destabilise the EUA price compared to a Brexit with EU agreement. In the event of a hard Brexit, the idea of linking the future UK ETS with the EU ETS is an option.
– Switzerland approved to link its ETS with the EU ETS and implementation is expected to happen at the beginning of the next year.
Source: IETA, Brussels