What is the ETS? . . . Yes, but not like this ! What can we do? • What is the ETS? • ETS? . . . Yes, but not like this! • What we can do
What is the ETS? . . . Yes, but not like this ! What can we do? What would you think if petrol was rationed. . . And only those with the biggest cars, were given permits to buy it.
What is the ETS? . . . Yes, but not like this ! What can we do? • The ETS has given carbon permits worth € 170 billion to the biggest polluters in Europe • But is structurally counterproductive in reducing Europe’s carbon emissions
What is the ETS? . . . Yes, but not like this ! What can we do? The European Emissions Trading System (ETS) • Aims to limit the number of tonnes of carbon dioxide the EU releases each year • by restricting the number of permits that are available • Permits to release CO 2 are only being given to some large energy-users
What is the ETS? . . . Yes, but not like this ! What can we do? Objectives of the ETS: • To reduce EU greenhouse gas emissions • To do so at least cost by trading in carbon emissions
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Only issued to 5, 000 firms • Accounts for only 45% of the EU's total CO 2 emissions • Despite the ETS, most EU countries are having problems with Kyoto targets
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • It distorts competition • Since all firms use energy, those firms which use enough fossil energy to qualify for the free emissions permits gain a big advantage over those which do not
What is the ETS? 1. Inadequate 2. Unfair 3. Uncertain 4. Costly 5. Arbitrary 6. • Ecocem Example What can we do? = 1 Tonne of CO 2 = € 75 Biased 1 Tonne of Ecocem cement = 1/16 th Tonne of CO 2 = € 75 7. Polluting 1 Permit = 1 Tonne of CO 2 = € 25 8. Anti-Renewables 9. Corruptible € 25 Nation v Nation 11. No Cap 1 Tonne of Blast furnace slag (Ecocem raw ingredient) < 10. ETS? . . . Yes, but not like this ! 1 Tonne of ordinary cement 12. No Debate
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • No-one knows exact allocations from 2008 onwards • Total British allocation for the 2005 -2008 period was still uncertain in February 2006 • Firms have no basis to plan
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate “I have an uncomfortable feeling that we might be singled out for a hefty cut in emissions permits when the next allocation plan emerges” David Porter, Chief Executive, Association of Electricity Producers
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Firms can charge their customers for permits used in their production processes • For large firms, permits were given free. . . • enabling them to make profits at the expense of their customers.
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate Emissions permit schemes can be imposed either: • 'upstream‘, where a handful of suppliers sell fossil fuels to the economy • or 'downstream' on millions of final energy users. • The ETS is part-way downstream.
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • The European Commission is taking proceedings against Germany for inadequately preparing for emissions trading • Proceedings are also being brought against; Cyprus, Greece, Luxemburg, Malta, Italy, Spain, Austria & Poland
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • The atmosphere is the common property of us all • The right to its use as a dump for ghgs belongs equally to us all • With no outcry, a firm's emissions allocation will become a legal entitlement • Common property will have been privatised by stealth
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate It encourages polluting plants to stay open: • Almost all member states withdraw permits from companies if they close dirty plants • This creates an incentive, equal to the value of the permits, to keep dirty plants open
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • The permit scheme puts up electricity prices. . . • Benefiting wind farms. . . • New gas-fired power stations also benefit - they are given the permits they require to buy their fuel • This effectively reduces the cost of constructing a new power station
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate "For a new combined cycle gas turbine electricity generator, the subsidy in the period 2005 -2012 could amount to at least 50% of the capital cost of the new plant“ Prof. John Fitz Gerald Quarterly Economic Commentary April 2004
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Each government sets the limits on its own emissions • This allows governments to set lax targets. . . • to avoid penalising their domestic economies • and to minimise the number of permits their country might have to buy from other EU members
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation EUA 2006 prices 11. No Cap 12. No Debate Daily bid-offer close EUA Dec 2006 prices from December 2004 in the OTC market. The data was updated 4 May 2006 and is published daily at www. pointcarbon. com.
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Governments decide how many permits each energy user should get • Civil servants can easily assign more permits than a company is likely to use • Officials could be bribed to underestimate a company's emissions
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Far more will be at stake when it comes to agreeing shares beyond 2012 • There is ultimately no way to resolve comparisons of unlike circumstances • Conflict could be avoided by giving equal permits to all EU citizens • The market could then work things out itself
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate • Under the Kyoto Protocol, a country can import extra permits from JI & CDM • The Protocol says these must be "supplemental to domestic efforts” • Lawyers doubt if the Commission can limit countries using such permits under the EU ETS
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate “We have been unable to trace any newspaper or television coverage of the choices involved in setting up the system during the period in which it would have been possible for the plans to have been changed. ” Feasta
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate The official briefing paper limited itself to discussing: • Which sectors of the economy should be covered by the scheme • How many permits should be given free • What should happen to the revenue from those permits that were sold
What is the ETS? 2. Unfair Uncertain 4. Costly 5. Arbitrary 6. Biased 7. Polluting 8. Anti-Renewables 9. Corruptible 10. What can we do? Inadequate 3. ETS? . . . Yes, but not like this ! 1. Nation v Nation 11. No Cap 12. No Debate The real issues were not discussed: • Who owned the rights for the permits being issued? • Was it sensible to operate “part-way downstream”? • There has been no serious public scrutiny of the development of national allocation plans
What is the ETS? . . . Yes, but not like this ! What can we do? The Objectives of the ETS are sound • To reduce European green house gas emissions • To do so at least cost, facilitated by an emissions trading system But the current design of the ETS fails to deliver on either [X]
What is the ETS? . . . Yes, but not like this ! What can we do? What does FEASTA propose?
What is the ETS? . . . Yes, but not like this ! What can we do? • EU ETS should be reformed • From 2008, permits covering all emissions allowed in a any year under the EU’s Kyoto commitment should be divided up. . . • and distributed equally to all EU citizens • Permits would be tradable • Citizens could sell their permits • Businesses would need to buy permits from citizens • Banks & post offices could mediate
What is the ETS? 2. Is Fair Removes Uncertainty 4. Compensates the public for higher prices 5. Administratively straight forward & cheap to run 6. Confirms rights to use the atmosphere as a common resource 7. Does not subsidise construction of fossil fuel plants 8. Encourages closure of dirty plants 9. What can we do? Is Adequate 3. ETS? . . . Yes, but not like this ! 1. Little scope for corruption 10. Does not pit nation against nation 11. Offers a good prototype for a global emission trading 12. Would have widespread public support
What is the ETS? We Need: ETS? . . . Yes, but not like this ! What can we do? A Real Review of the Emissions Trading Scheme Sign up to ARREST www. euemissions. org .
What is the ETS? . . . Yes, but not like this ! What can we do? THE END