Danish Energy Industries Federation Annual Conference 30 th April 2009 European climate change policy beyond 2012

Danish Energy Industries Federation

Annual Conference 30th April 2009

European climate changepolicy beyond 2012

The objectives of Task Force are:

1. To develop a long-term view about optionsfor climate change policy in Europe;

2. To deliver long-term scenarios of GHG-emissions and abatement technologies

including abatement costs and influence on energy prices;

3. To develop a view on the further development of the EU emissions trading scheme after 2012

Terms of Reference

Study chair Stefan Ulreich (Germany)Czech Republic Mr. Tomáš ChmelíkFrance Christine Faure-Fedigan

Nicole DelleroGermany Christian Güthert

Uwe MaassenHeimo FriedeHans-Wilhelm Schiffer

Italy Federico RossiAlessandro ClericiFrancesca MassaraMassimo Ceccariglia

Netherlands Theo. W. FensSerbia Dr Miodrag MesarovicSlovenia dr. Tomaž ŠtokeljSweden Leif HalvorsenSwitzerland Prof. Eberhard Jochem

Dr. Marco BergInternational Org. Paul Bulteel

Nicola RegaJohn Scowcroft

WEC Simon GodwinObserver Jean-Eudes Moncomble

Members of the Task Force

Main sectors in EU-27:

Energy supply and transport

General background

European share on global GHG-emissions

General background

USA21%

OECD-Europe15%

Japan4%

Russia9%

China21%

India4%

Other Asia5%

Middle East5%

Africa3%

Latin America3%

Rest10%

Comparison of the electricity generation

General background

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

USA EU-27 China India World

Indexed kWh/capita (World=1) Indexed g CO2/kWh (World=1) Indexed (World = 1)

Key messages:

• GHG emissions are globally still rising

• Major contributor is the fossil fuel combustion,especially for electricity production.

• Technological solutions are present, but need time until they will contributelargely to a further GHG reduction

• Europe will be part of the solution mainlyin terms of clean technology development.

• An effective combat against climate changeneeds a global solution. Europe can show the wayand demonstrate efforts, but other important regionsshould move and establish their pathways.

General background

The COP/MOP negotiations

General climate policy

1987 1988 1992 1997 2003 2005 2007 2008 2012

Brundtland Report United nations European Directive

Concept of sustainable framework convention for an emission trading

Development on climate change (UNFCCC) scheme (ETS)

Phase 1 EU-ETS Phase 2 EU-ETS

Toronto conference Kyoto Protocol Kyoto Protocol First commitment

Creation of IPCC Agreement entered into force of the Kyoto Protocol

1987 1988 1992 1997 2003 2005 2007 2008 2012







1987 1988 1992 1997 2003 2005 2007 2008 2012







1987 1988 1992 1997 2003 2005 2007 2008 2012





1987 1988 1992 1997 2003 2005 2007 2008 2012







Date Location Main achievements

COP 1 Berlin (Germany)

Report of the Global Environment Facility to the Conference of the Parties on the development of an operational strategy and on initial activities in the field of climate change (matters relating to arrangements for the financial mechanism)

COP 2 8-19 July 1996

Geneva (Switzerland)

Activities implemented jointly: annual review of progress under the pilot phase Report of the Global Environment Facility to the Conference of the Parties

COP 3 1-10 Dec 1997

Kyoto (Japan) Kyoto Protocol : Adoption of a protocol or another legal instrument: Fulfilment of the Berlin Mandate

COP 4 2-13 Nov.1998

Buenos Aires (Argentina)

Kyoto Protocol : Review of the implementation of commitmentsDevelopment and transfer of technologies

COP 5 25 Oct.–5 Nov. 1999

Bonn (Germany)

Adoption of The Buenos Aires plan of actions on: The financial mechanism; Development and transfer of technologies Implementation of Article 4.8 and 4.9 of the Convention Activities implemented jointly under the pilot phase ; The work programme on mechanisms of the Kyoto Protocol ; Preparatory work for a protocol ;and ensures achievement of the decisions within the mentioned time frame.

COP 6 13-24 Nov. 2000

The Hague (The Netherlands)

The Convention and its Protocol gave the world hope and direction. The challenge facing participants at the 6th Conference of the Parties (COP 6) to decide how to implement the goals agreed by Parties has not been achieved.

COP 7 29 Oct.-9 Nov. 2001

Marrakech (Morocco)

Success with the Marrakech Accords drafting the flexibility mechanisms of the Kyoto Protocol (Clean Development Mechanism and Joint Implementation plus trading of allowances)

COP 8 23 Oct.–1 Nov. 2002

New-Delhi (India)

The Delhi Ministerial Declaration On Climate Change and Sustainable Development

COP 9 1-12 Dec. 2003

Milan (Italy) Round-table discussion 1: Climate change, adaptation, mitigation and sustainable developmentRound-table discussion 2: Technology, including technology use and development and the transfer of technologiesRound-table discussion 3: Assessment of progress at the national, regional and international levels to fulfill the promise and objective enshrined in the climate change agreements, including the scientific, information, policy and financial aspects

COP 10 6-17 Nov. 2004

Buenos Aires (Argentina)

Discussions at COP 10 highlighted a range of climate-related issues including, the impacts of climate change and adaptation measures, mitigation policies and their impacts, and technology. Participants had also taken stock of the entry into force of the Kyoto Protocol

COP 11 28 Nov.– 9 Dec. 2005

Montréal (Canada)

The Kyoto Protocol has been switched on, a dialogue about the future action has begun, parties have moved forward work on adaptation and advanced the implementation of the regular work programme of the Convention and of the Protocol

COP 12 6-17 Nov. 2006

Nairobi (Kenya)

Report of the co-facilitators of the dialogue on long-term cooperative action to address climate change by enhancing implementation of the Convention

COP 13 3-14 Dec. 2007

Bali (Indonesia)

Bali Road Map (four pillars : mitigation, adaptation, finance and technology transfer) Setting up AWG-LCA and AWG-KP

Technological partnerships

- Asia-Pacific Partnership

- EU with India and China

- CCS: CSLF (Carbon Sequestration Leadership Forum), ZEP (European initiative on zero emission platform)

- Nuclear: Generation IV initiative gathering 10 countries over 4 continents and INPRO


ETS around the world


Country Participants Gases Baseline Characteristics Mandatory Voluntary

First review

Japan

CO2 emissions from energy conservation and switching from oil to less carbon intensive fuels.

Average emissions for a reference period (3 years) minus companies’ expected emissions reductions

Started in April 2005

No penalties but companies must return the

subsidies if the targets are not met.

No price cap

Next trading period: April 2008 – March 2009

CDM/JI authorized

Voluntary

The emissions reductions expected were not met as Japan emissions are 14% higher compared to 1990 level (Kyoto target: minus 6% compared to 1990 level) Average CO2 price: YEN 1212 (approx. € 7.2)

New South Wales (Australia)

Electricity generators, sellers and retail license holders

CO2, CH4, N2O, HFC, PFC and SF6

An annual GHG benchmark for the electricity sector is set. To be compliant, participants must surrender abatement certificates from project-based emissions reduction activities.

Started in 2003

The government has committed the benchmark

to extend the target to 2020 unless a federal system

is implemented.

Penalty: 7.2€/tCO2 eq. 10% shortfall allowed

without penalty, but has to be provided the

following year.

Mandatory (Large consumers >100GWh/ymay voluntarily participate)

206 abatement projects have been accredited. No new development in the scheme’s design have been made since 2006. The spot market is in line with the penalty price (~7€) The federal system may be implemented in 2010

Country Participants Gases Baseline Characteristics Mandatory/Voluntary

Australia

Direct emissions from facilities emitting more than 25 ktCO2eq/y Upstream fuel suppliers for other energy-related emissions Agriculture and land use will be initially excluded 55% of the Australian emissions covered


Long term cap: -60% by 2050 compared to 2000 level. Short term cap for 2020 but not defined yet

Starts in 2010, annual compliance

Price cap and penalty not yet defined

CDM/JI allowed, limit not defined

Mix of free allocations and auctioning

Mandatory

Canada Electricity produced by combustion, oil and gas, forest products, smelting, refining, iron and steel, cement, lime and chemicals production


Objectives in term of energy intensity: -10% by 2010 from 2006 level and -2%/yr until 2015

Starts in 2010 Allowances received through market or technology fund (10€/t from 2010) Domestic projects or CDM limited at 10% of the total allowances, JI not authorized.

Mandatory but possibility to suppress its reduction obligation by 70% with a payment to a technology fund in 2010, only 10% in 2016 and 2017 and no possibility after 2017.

Key messages

- Long negotiation process

- Apart from the EU-27 other national and regional initiatives are present:Linking of the markets essential

- Technology partnerships asfirst step to techology distribution


Climate friendly technologies

- Identify technologies

- Abatement costs

- Abatement volumes

- Try to explore “unusual” solutions


Demand side


Supply side


Key messages

- There is a huge portfolio of technologies at demand and supply side that have the potential to reach deep cuts in GHG emissions;

- Technology must be accompanied by life style changes;

- All these technologies must be accessible without exclusion;

- Electricity is the only energy vector that can be further decarbonised in the foreseeable future through a range of technologies and offers the prospect of low carbon road transport through the hybrid and electric vehicle and of contributing to low carbon heating through heat pump systems.

- Technology diffusion will not come by itself, there is a need for a whole range of policy measures including education and information, providing a long term price signal for GHG emissions, efficiency standards, R&D, incentives and support schemes;


Pathway to a climate friendly Europe

- needed investments

- attractivity/risk of investments,

- energy mix,

- connected emissions,

- costs for the public (Stern report),


Mainly electricity sector and transport

considered


Conclusions and recommendations

- We need a global price on CO2 emissions

- We need more support for climate friendly technologies

- Investments are key – longer horizons needed

- Re-balancing necessary: Security of supply and Affordable energy

Conclusions & Recommendations

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Danish Energy Industries Federation Annual Conference 30 th April 2009 European climate change policy beyond 2012