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The performance of the European Union (EU) Emissions Trading System (ETS) and other cap-and-trade schemes has been under scrutiny because of their inability to create a stable price for greenhouse gas emissions. This article seeks to inform the often confusing debate about the economic performance of cap-and-trade systems over time, with a focus on the EU ETS. Based on a simple intertemporal framework of emissions trading and a review of the literature, we show that different frameworks and notions of efficiency result in both different assessments of performance and different recommended strategies for improving performance. More specifically, we argue that if cap-and-trade systems have temporal flexibility (i.e., they include banking and borrowing of emissions allowances), it can be highly misleading to base the economic assessment on short-term efficiency. We seek to draw attention to the concept of long-term economic performance, which takes into account the intertemporal nature of emissions trading systems. In particular, we identify market and government distortions (e.g., myopia, lack of policy credibility, excessive discounting) that may depress allowance prices and hamper intertemporal efficiency. We then examine whether the recently adopted Market Stability Reserve and the alternative price collar are likely to address these distortions.
Agreeing on an EU ETS minimum price to foster solidarity, subsidiarity and efficiency in the EU
(2017)
Auf mehreren Ebenen Agieren
(2013)
Bewertung des Klimapakets und nächste Schritte. CO2-Preis, sozialer Ausgleich, Europa, Monitoring
(2019)
Das von der Bundesregierung vorgelegte Klimapaket wird aller Voraussicht nach unzureichend sein, um die Ziele für 2030 zu erreichen. Zwar wird eine sinnvolle Architektur für eine umfassende CO2-Bepreisung sichtbar: Einstieg mit einem Fixpreis, mittelfristig ein nationaler Emissionshandel für Wärme und Verkehr und langfristig Integration in den EU-Emissionshandel mit einem Mindestpreis. Aber der Preispfad ist zu niedrig und reicht nicht weit genug in die Zukunft, um eine ausreichende Lenkungswirkung zu entfalten und die notwendige Sicherheit für Investitionen zu vermitteln. So wie der Preispfad jetzt festgeschrieben worden ist, sind nach 2026 voraussichtlich erhebliche Preissteigerungen zur Zielerreichung nötig. Dadurch wird das Erreichen der 2030er-Ziele unnötig teuer. Weiterhin besteht das Risiko, dass der Preispfad mittelfristig (2022 bis 2025) womöglich schon zu einem Verletzen der EU-Lastenteilungsziele führt.
Auch die Frage des sozialen Ausgleichs in der deutschen Klimapolitik ist noch nicht befriedigend gelöst. Es zeigt sich, dass die Mittelschicht am stärksten belastet wird, während die Belastung für ärmere Haushalte zwar abgefedert wird, der Ausgleich aber noch unzureichend ist: Gerade hier treten besondere Härtefälle auf. Die soziale Schieflage verschärft sich dramatisch bei steigenden CO2-Preisen, die ab 2026 zu erwarten sind.
Es kommt nun darauf an, in den nächsten Schritten nachzusteuern: Der CO2-Preispfad sollte auf ein Ambitionsniveau angehoben werden, mit dem die Klimaziele zuverlässig erreicht werden können. Außerdem müssen die klimapolitischen Instrumente sozialverträglich ausgestaltet werden. Weiterhin ist eine aktivere Rolle Deutschlands in der europäischen Klimapolitik entscheidend. Denn parallel zum nationalen Einstieg sollte Deutschland die Einführung einer integrierten europaweiten CO2-Bepreisung vorantreiben, um eine dauerhafte Zersplitterung und entsprechend hohe Kosten der europäischen Klimapolitik zu verhindern. Die europäische Klimadebatte um eine Erhöhung des Klimaziels für das Jahr 2030, angestoßen durch die neue EU-Kommission, bietet dafür in der kommenden Zeit einen guten Einstiegspunkt.
Zentral ist zudem ein effektiver Monitoringprozess. Dabei sollte der einberufene Expertenrat nicht nur das Ex-post-Monitoring der Emissionen unterstützen, sondern auch ein Vorschlagsrecht für das Nach-steuern von Maßnahmen zur Zielerreichung haben (Ex-ante-Evaluierung alternativer Optionen). Auch eine Berichtspflicht gegenüber dem Bundestag wäre wichtig, um Transparenz über den Fortschritt bei der Zielerreichung herzustellen. Der jetzt aufgesetzte Expertenrat hat dagegen nur ein schwaches Mandat zur bloßen Überprüfung von Daten und Modellannahmen. Doch das Gremium sollte nicht bloß den Fortschritt hinsichtlich der Klimaziele notariell bestätigen, sondern der Schrittmacher für deren Umsetzung sein. Hier wurde es verpasst, eine starke Institution zu schaffen.
Climate Policies for road transport revisited (II): Closing the policy gap with cap-and-trade
(2011)
Even without internationally concerted action on climate change mitigation, there are important incentives for countries to put a price on their domestic emissions, including public finance considerations, internalizing the climate impacts of their own emissions, and co-benefits, such as clean air or energy security. Whereas these arguments have been mostly discussed in separate strands of literature, this article carries out a synthesis that exemplifies how policies to put a price on emissions can be conceptualized in a multi-objective framework. Despite considerable uncertainty, empirical evidence suggests that different countries may face quite different incentives for emission pricing. For instance, avoided climate damages and co-benefits of reduced air pollution appear to be the main motivation for emission pricing in China, while for the US generating public revenue dominates and for the EU all three motivations are of intermediate importance. We finally argue that such unilateral incentives could form the basis for incremental progress in international climate negotiations toward a realistic climate treaty based on national interest and differentiated emission pricing and describe how such an agreement could be put into practice.
The EU ETS is in a crisis. There is a fundamental concern that persistently low allowance prices will fail to incentivize the investments in low-carbon capital stock and technology research and development (R&D) required to achieve long-term European decarbonization targets in the context of the Paris Agreement. Attainment of these targets is at risk. Introducing a carbon price floor can re-affirm the role of the EU ETS as the central pillar in the European effort towards decarbonization. Such a price floor should start at an economically significant level and rise over time. Many observers argue that it is misguided to focus on the EU ETS allowance (EUA) price, since the emissions cap determines environmental effectiveness and the allowance market works well in technical terms. Four interrelated considerations underpin our concern over the persistently low EUA price: First, the EU ETS cap is not cast in stone. It might be relaxed in the future if the costs of maintaining it become politically unacceptable. This could be the case if allowance prices escalate, which can be expected to result from a high-carbon capital stock building up in presence of persistently low allowance prices. Second, there is emerging scientific evidence that the EUA price is distorted as the carbon market does not operate cost-efficiently in a long-term perspective due to private sector short-sightedness and regulatory uncertainty. Third, the EU ETS has so far not allowed the effective expression of different climate policy preferences across EU member states. Without compensatory measures, voluntary unilateral emission reductions within member states (e.g. UK carbon price support, potential German coal power exit) dampen short-term allowance prices and shift emissions in space and time. Finally, all ambitious short-term climate policy measures required for embarking on long-term decarbonization pathways face significant political opposition. This opposition can be expected to come not only from reluctant EU member states, but also industry constituencies concerned about impacts on competitiveness, businessmodels and jobs. These distributional challenges need to be tackled more effectively by strategically allocating allowance value, providing limited compensation to adversely affected constituencies, promoting low carbon R&D to reduce future costs of decarbonization, and fostering public support for ambitious climate policy. The recent EU ETS reform effort offers an entry point to tackle these concerns, but does not sufficiently address the underlying problems. The magnitude and direction of its impact on the EUA price is highly uncertain. More fundamental change will be required to reaffirm the role of the EU ETS as the central pillar of European decarbonization efforts. In particular, a carbon price floor that rises over time can provide a clearer policy signal for guiding short-and mid-term capital stock and technology R&D investment decisions towards low-carbon options, and can thus enable cost-efficient achievement of long-term decarbonization targets. If designed accordingly, it allows member states with a higher preference for ambitious climate policy to effectively achieve additional emission reductions. In addition, targeted and transitory compensation models for particularly affected constituencies, and public investments into the development of new technologies and related business models will be required to ensure short-and long-term political support and reinforce policy credibility. Companion policies can play an important role in fostering low-carbon investment, but are
inadequate substitutes to effective long-term carbon pricing. Ideally, a carbon price floor will be implemented at the EU-level. An alternative is to start with a coalition of countries including Germany (also in view of attaining its 2020 climate targets), France and others, and to expand it over time
Die Nutzung globaler Gemeinschaftsgüter: Politökonomische Heraus forderungen an die Klimapolitik
(2012)
Die Nutzung globaler Gemeinschaftsgüter: Politökonomische Herausforderungen an die Klimapolitik.
(2012)
Dieses Papier beschreibt Empfehlungen zur Weiterentwicklung des nationalen Brennstoff-Emissionshandelsgesetzes (BEHG) – und wie ein reibungsfreier Übergang zur europäischen Ebene gestaltet werden kann.
Bei der Einführung und Ausgestaltung eines EU-Emissionshandelssystem für Gebäude und Straßenverkehr (EU ETS-II) bestehen derzeit noch diverse Unsicherheiten. Unabhängig von den Entscheidungen auf europäischer Ebene identifizieren wir jedoch vier No-Regret Maßnahmen zur Weiterentwicklung des BEHG, die in allen Fällen förderlich sind:
1. Zeitliches Vorziehen und Anhebung des Preiskorridors plus Versteigerung: Die Einführung eines Preiskorridors und die Versteigerung von Zertifikaten sollte auf das Jahr 2023 vorgezogen werden. Zudem sollte der Preiskorridor angehoben und verbreitert werden, um den neuen nationalen Klimazielen Rechnung zu tragen.
2. BEHG Emissionsmengen analog zu Sektorzielen: Die EU-Kommission hat im Fit-for-55 Paket eine Erhöhung des deutschen ESR-Ziels auf 50% vorgeschlagen, was auch ungefähr den nationalen Zielen im Rahmen des Klimaschutzgesetzes (KSG) von 2021 entspricht. Um zu einem früheren Zeitpunkt Verbindlichkeit zu schaffen, sollten daher die BEHG-Emissionsmengen aus den KSG Sektorzielen abgeleitet werden.
3. Direkte Pro-Kopf-Rückerstattung: Für den zu erwartenden Fall deutlich steigender CO2-Preise sollte die Bundesregierung schon vor 2023 die institutionellen Voraussetzungen für die Umsetzung des Klimagelds wie im Koalitionsvertrag beschrieben schaffen.
4. Nationaler CO2-Mindestpreis: Bis spätestens 2025 sollte ein Mindestpreis zur eventuellen Ergänzung eines EU ETS-II vorbereitet und ggf. implementiert werden. Dadurch kann im Fall anfänglich niedriger Preise im EU ETS-II garantiert werden, dass der CO2-Preis in Deutschland weiterhin kontinuierlich ansteigt.
Neben diesen Maßnahmen auf nationaler Ebene, sollte sich die Bundesregierung in den Fit-for-55 Verhandlungen einsetzen (1) für die Flexibilität zwischen EU ETS und ESR sowie (2) für ein graduelles Linking zwischen ETS-I und ETS-II. Mit beiden Maßnahmen können die sehr hohen Preisunterscheide reduziert und die Effizienz der Klimapolitik erhöht werden.
Economic Growth, Human Development, and Welfare" of the 2018 Report of the International Panel on Social Progress (IPSP). Mission of the IPSP: The International Panel on Social Progress (IPSP) will harness the competence of hundreds of experts about social issues and will deliver a report addressed to all social actors, movements, organizations, politicians and decision-makers, in order to provide them with the best expertise on questions that bear on social change. The Panel will seek consensus whenever possible but will not hide controversies and will honestly present up-to-date arguments and analyses, and debates about them, in an accessible way. The Panel will have no partisan political agenda, but will aim at restoring hope in social progress and stimulating intellectual and public debates. Different political and philosophical views may conceive of social progress in different ways, emphasizing values such as freedom, dignity, or equality. The Panel will retain full independence from political parties, governments, and organizations with a partisan agenda. While the Panel will primarily work for the dissemination of knowledge to all relevant actors in society, it will also foster research on the topics it will study and help to revive interest for research in social long-term prospective analysis
This policy briefbuilds on theworkshop EU ETS Reform: Taking Stock and Examining Carbon Price Floor Options,held at the Centrefor European Policy Studies (CEPS) in Brussels on July 3, 2018. The workshop was cosponsored by CEPS and the AHEAD and Mistra CarbonExit projects. While the brief draws on insights from workshop discussions, its views are solely those of the authors. The brief outlinesdifferent perspectives on thepast performanceof the EU Emissions Trading System (ETS)in terms of its allowance price (Section 1), analyzes how the recent reform respondedto related challenges(Section 2), and considers the case for introducinga carbon pricefloor in the EU ETS(Section 3). The main part of the brief (Section 4) identifies five myths in the debate of an EU ETSpricefloorand criticallyconfrontsthem. Section 5 concludes by discussing potential entry points for introducing a carbon price floor in the context of the upcoming EU climate policy process
Decarbonizing the global energy system requires large-scale investment flows, with a central role for international climate finance to mobilize private funds. The willingness to provide international finance in accordance with common but differentiated responsibilities was acknowledged by the broad endorsement of the Paris Agreement, and the Green Climate Funds in particular. The international community aims to mobilize at least USD 100 billion per year for mitigation and adaption in developing countries. In this article, we argue that too little attention has been paid on the spending side of climate finance, both in the political as well as the academic debate. To this end, we review the challenges encountered in project-based approaches of allocating climate finance in the past. In contrast to project-based finance, we find many advantages to spending climate finance in support of price-based national policies. First, the support for international climate cooperation is improved when efforts of successively rising domestic carbon pricing levels are compensated. Second, carbon pricing sets incentives for least-cost mitigation. Third, investing domestic revenues from emission pricing schemes could advance a country's individual development goals and ensure the recipient's ‘ownership’ of climate policies. We conclude that by reconciling the global goal of cost-efficient mitigation with national policy priorities, climate finance for carbon pricing could become a central pillar of sustainable development and promote international cooperation to achieve the climate targets laid down in the Paris Agreement.
Several years of very low allowance prices in the EU emissions trading scheme (ETS) have motivated calls to introduce a price floor to correct potential underlying distortions and design flaws, including (i) the political nature of allowance supply and related credibility issues, (ii) potential myopia of market participants and firms, and (iii) waterbed and rebound effects resulting from policy interactions. In the wake of the recent EU ETS reform, allowance prices have sharply increased. This raises the question of whether the case for introducing a price floor in the EU ETS remains valid. We argue that such a price floor, also adopted in several other greenhouse gas cap-and-trade systems worldwide, remains an important improvement in the design of the system, as long as the above-mentioned distortions and design flaws persist. An EU ETS price floor can safeguard against these issues and provides more explicit guidance on the minimum allowance price policymakers consider acceptable. Either as a complement or substitute to the current Market Stability Reserve (MSR), a price floor would thus make the EU ETS less prone to future revision in case of unexpectedly low prices. We identify and confront four prominent arguments against the introduction of an EU ETS price floor.
Key policy insights:
- An EU ETS price floor would be an important institutional innovation enhancing political and economic stability, and predictability of the EUA price
- The recent Market Stability Reserve (MSR) reform has not removed the need for a carbon price floor.
- Introducing an element of price responsiveness into the so far purely quantitative design of the EU ETS would help to preserve its integrity
- In contrast to conventional wisdom, legal analysis reveals that an EU ETS price floor can be legally feasible
- Political support for a carbon price floor is gaining traction across Europe
The integration of wind and solar generators into power systems causes “integration costs” – for grids, balancing services, more flexible operation of thermal plants, and reduced utilization of the capital stock embodied in infrastructure, among other things. This paper proposes a framework to analyze and quantify these costs. We propose a definition of integration costs based on the marginal economic value of electricity, or market value – as such a definition can be more easily used in economic cost-benefit assessment than previous approaches. We suggest decomposing integration costs intro three components, according to the principal characteristics of wind and solar power: temporal variability, uncertainty, and location-constraints. Quantitative estimates of these components are extracted from a review of 100 + published studies. At high penetration rates, say a wind market share of 30–40%, integration costs are found to be 25–35 €/MWh, i.e. up to 50% of generation costs. While these estimates are system-specific and subject to significant uncertainty, integration costs are certainly too large to be ignored in high-penetration assessments (but might be ignored at low penetration). The largest single factor is reduced utilization of capital embodied in thermal plants, a cost component that has not been accounted for in most previous integration studies.
Im Dezember 2015 wurde in Paris Geschichte geschrieben: Die Weltklimakonferenz einigte sich auf das erste Klimaschutzabkommen, das alle Länder in die Pflicht nimmt. Damit bekennt sich die Weltgemeinschaft völkerrechtlich verbindlich zum Ziel, die Erderwärmung auf unter zwei Grad zu begrenzen. Doch was ist dieses Paris-Abkommen wert? Wo liegen seine Stärken, welche Herausforderungen kommen auf die Weltgemeinschaft zu? Welche Risiken birgt es? Was muss jetzt politisch folgen? Expertinnen und Experten aus Wissenschaft, Politik, Medien und NGOs analysieren in diesem Buch Hintergründe, Inhalte und Konsequenzen des neuen Weltklimavertrages.