基尔世界经济研究所-欧盟排放交易的未来（英文）-2020.9-16页_830kb

Summary of "The Future of (Negative) Emissions Trading in the European Union"

Core Content

This paper explores the future integration of negative emissions technologies (NETs) into the European Union Emissions Trading System (EU ETS), focusing on the legal, economic, and policy implications of such integration. It emphasizes the need for regulatory changes to enable the use of CO₂ removal credits in the EU ETS, which is currently structured around the surrender of allowances for emissions.

Main Viewpoints

• EU ETS Cap and Allowance Supply:
  The EU ETS is expected to phase out allowances by 2057 due to a linear reduction factor (LRF) of 2.2% per year. With the EU aiming for net-zero GHG emissions by 2050, the cap may become negative as early as 2045, requiring the use of CO₂ removal credits.

• Need for Legal Framework:
  The current ETS Directive does not provide a legal basis for generating CO₂ removal credits. Integrating these credits would necessitate fundamental amendments to the directive, potentially removing the mandatory link between emissions and abatement technologies.

• Integration Options:
  The paper outlines two integration approaches:

  • Unrestricted Integration: Allowing the supply of CO₂ removal credits to influence the carbon price, thereby making the cap elastic.
  • Restricted Integration: Setting separate targets for emissions abatement and CO₂ removal, which may lead to efficiency losses unless tied to market mechanisms.

• Specificity of BECCS:
  Bioenergy with carbon capture and storage (BECCS) is highlighted as a key technology for generating CO₂ removal credits. If the current exclusion of biomass-only installations from the ETS is repealed, BECCS could fall under the system, allowing for free allocation of biogenic credits.

• Market Mechanisms and Price Collars:
  The paper suggests that CO₂ removal credits could be used to support a price collar, similar to the Market Stability Reserve (MSR). This would involve the regulatory authority buying and selling credits based on observed market prices to stabilize the carbon price.

Key Information

• EU ETS Scope:

  • Currently covers ~40% of EU27 GHG emissions.
  • Excludes installations using only biomass.
  • Includes CCS for fossil fuel emissions, but not for CO₂ removal.

• NETs and Emission Caps:

  • Scenarios like 1.5TECH and 1.5LIFE predict net-negative emissions by 2050.
  • CO₂ removal credits would be needed to achieve these targets.
  • CO₂ removal is not currently incentivized under the ETS.

• Economic Implications:

  • Unrestricted integration could lower equilibrium carbon prices.
  • Restricted integration may lead to efficiency losses unless linked to market price mechanisms.
  • CO₂ removal could be more effectively supported through price-based incentives or subsidized integration.

• Policy Window:

  • The next opportunity for policy changes will open in 2021, following the EU's decision on a more ambitious 2030 emission reduction target.
  • A uniform market price could emerge if NETs credits are integrated alongside conventional allowances, but distributional effects would depend on allocation rules.

• Legal and Regulatory Considerations:

  • The ETS Directive needs to be amended to allow for CO₂ removal credits.
  • LULUCF (Land Use, Land Use Change and Forestry) is excluded from the ETS, but its credits can be used to offset emissions under the Effort Sharing Regulation (ESR).

Conclusion

The integration of CO₂ removal credits into the EU ETS is crucial for achieving net-zero and net-negative emissions targets. This requires legal reforms, market-based mechanisms, and policy design considerations to ensure efficiency, fairness, and long-term sustainability. The paper outlines various design options and their implications, suggesting that BECCS and DACCS are more likely candidates for early integration due to their higher verification standards and current cost levels.