Brussels, 27 February – In advance of tomorrow’s meeting of the European Union’s Environment Council, IETA calls on EU Environment Ministers to strengthen the EU’s carbon market while protecting competitiveness of European industry.

“We urge the Ministers to agree to a balanced approach that strengthens the EU’s carbon market while safeguarding the competitive strength of European industries and their workers” said Dirk Forrister, CEO of IETA. 

IETA recommends the EU Parliament and the Council agree to a combination of the following measures:

• an increase of the intake rate of the Market Stability Reserve from 12% to 24% for a maximum period of five years;
  
• a moderate decrease in the share of permits sold at auction, of up to 5 percent, in the event that the cross sectoral correction factor were to be triggered.
  
• adequate compensation for indirect costs through coordinated arrangements at Union level and, if necessary, additional compensation by Member States;
  
• free allocation of allowances only to sectors at risk of carbon leakage;
  
• close monitoring of the functioning of the EU ETS, including interactions with other Union climate and energy policies. 

“Doubling the Market Stability Reserve’s withdrawal rate for a maximum of five years must go hand-in-hand with up to a 5 percentage point increase in free allocation available to sectors at risk of carbon leakage as well as with compensation for indirect costs handled through coordinated arrangements at Union level” said Julia Michalak, IETA’s EU Policy Director.

“The current EU carbon market reform occurs at an important time, when many other jurisdictions – from China to Canada, California, Mexico and Korea – are developing their own market based systems to contribute to progress under the Paris Agreement,” said  Forrister. “The reforms will shape the EU ETS for the next decade, when we expect market mechanisms to become the main pricing tool countries use to deliver their climate objectives. This reform will help improve the EU market’s readiness for the future of globally linked carbon mechanisms.” 

The IETA statement on review of the EU’s carbon market can be found here.

The statement is complementary to IETA’s views on the European Commission’s revision of the EU ETS Directive for the post-2020 period.

STRASBOURG, 15 February – IETA welcomes the European Parliament’s adoption of a position for negotiations over reform of the EU Emissions Trading Scheme, and calls on the Council to adopt its position so the process can move forward promptly.

The assembly today approved its position on the review of Europe’s emissions market for greenhouse gases. It adopted provisions to double the market stability reserve’s (MSR) intake rate to 24% for its first four years of operation and to cancel 800 million allowances from the MSR in 2021.

The Parliament rejected a proposed border adjustment for cement imports, which means that the cement sector will continue to receive free allowances in Phase 4. Furthermore, the Parliament rejected increase of the linear reduction factor governing the cap from 2021, agreeing instead that an increase from 2.2% to 2.4% could be considered by 2024 at the earliest.

It is now vitally important that co-legislators now build on the momentum from the Parliament’s approval and move to the trilogue negotiations as quickly as possible.

“It’s now up to the Council to adopt its position so that the ETS reform can move forward,” Dirk Forrister, CEO of IETA, said today. “Timing is crucial in order to deliver a clear policy signal to market participants.”

“If the EU ETS isn’t strengthened, Europe risks a proliferation of unilateral national measures that can add inefficiency and increase costs,” added Julia Michalak, IETA’s EU Policy Director.

“Market mechanisms are gaining ground worldwide – Ontario launched its carbon market in January, and China will launch the world’s largest ETS later this year,” Forrister said. “Europe needs to retain its place at the forefront of the climate battle by establishing the policy framework for the next phase in the 2020s – using the market to deliver the most cost-effective emissions reductions to meet Europe’s objectives..

NOTE: The European Council meets at the end of this month. If Member States can agree on a common position, the negotiations between the Parliament, Council and Commission (known as “trilogue negotiations”) can proceed to determine the final shape of the legislation.

 

MEXICO CITY, 25 January - IETA and the Mexican Business Council for Sustainable Development (CESPEDES) today signed a Memorandum of Understanding in Mexico City for the purpose of advancing market mechanisms for greenhouse gas reductions in Mexico.

Under the terms of the agreement, the local and global business associations will jointly develop a comparison of core policy elements of existing carbon markets, including private sector views on lessons learned and best practices.

They will further develop a high-level roadmap on the potential scope, framework and operational parameters of a Mexican carbon market, with a view to enabling future linking with other North American markets. 

“IETA is delighted about cooperating with CESPEDES to bring our global experiences with carbon markets to Mexico,” Dirk Forrister, CEO of IETA, said today. “We look forward to building a strong relationship with Mexican business to help the country achieve its climate targets through carbon markets”.

Rodolfo Lacy, Undersecretary of Planning and Environmental Policy at SEMARNAT, Mexico’s environment ministry, recognized the initiative and leadership from the private sector represented by CESPEDES and IETA in bringing solutions and proposals for carbon mitigation. “The arrangement sets the table for private sector to take action (on climate change),” he said.

Commenting on the agreement, Patrick Verkooijen, ‎Special Representative for Climate Change at The World Bank, said: “The Carbon Pricing Leadership Coalition aims to build bridges between Governments, civil society, and business to advance carbon pricing solutions to deliver national targets of the Paris Agreement.

“Today's MOU between CESPEDES and IETA is a breakthrough that shows cooperation in action. The strong local business voice of CESPEDES coupled with IETA's global policy and market expertise will ensure the Mexican government will get the most constructive engagement possible from the business community, as the country moves from ideas to action on carbon pricing."

Pictured at the signing ceremony for the Memorandum of Understanding are (L to R): Katie Sullivan, IETA; Dirk Forrister, CEO, IETA; Rodolfo Lacy, Under-Secretary of Planning and Environmental Policy, SEMARNAT; Andres Albo Marquez, President, CESPEDES; Jose Ramon Ardavin Ituarte, Executive Director, CESPEDES.

European Union regulators should avoid overlapping policies as a matter of principle, to protect the market effectiveness of the EU Emissions Trading System, according to a reflection note from IETA.

In recent months, there has been considerable discussion into the impact of unilateral policies, such as carbon floor prices and taxes on coal consumption in EU member states.

National policies often overlap and/or conflict with EU-level regulation. More specifically, these policies have a significant impact on the supply and demand in the EU market, on the functioning of the EU ETS and on efforts on decarbonisation across Europe. They also encourage a fragmented approach to EU climate action that, in turn, creates intra-EU distortions. 

“Emissions trading has the lowest cost per tonne of CO2e abated compared to other types of regulation. As such, it should be the preferred option to decarbonise the economy in the most cost-effective way,” IETA wrote.

Moreover, often the impact of national and unilateral measures on the EU ETS is not adequately taken into account. Therefore, greater transparency is needed on whether such policies contribute to turning the EU ETS into a residual policy instrument as emission reductions in the ETS sectors would be achieved not through a well-functioning ETS, but as a consequence of other national policies and regulations, associated with higher costs per tonne of CO2e abated.

IETA recommends that policy overlap should be avoided wherever possible. To achieve greater transparency, national policies and measures should, as a minimum, be subject to an analysis of their impact on the system, in terms of potential additional emission reductions that they might create, the intra-EU distortions they might cause, and any potential additional costs for achieving such reductions compared to what would have been the case with the EU ETS only.

LONDON, 19 December -- IETA is delighted to announce the appointment of Julia Michalak as EU Policy Director, with effect from 16 January 2017.

Julia joins IETA from the Polish Institute of International Affairs (PISM), where she has been responsible for research on EU climate and energy policy.

“We’re delighted Julia will bring her experience and knowledge of European policy to bear on our mission to develop efficient, robust carbon markets both in the EU and elsewhere,” said Dirk Forrister, chief executive officer.

Previously, Julia worked for several years on EU climate policy, with a special focus on Poland. Before PISM she worked for a Warsaw-based policy think-tank demosEUROPA, Climate Action Network Europe secretariat in Brussels and Greenpeace Poland. She led European NGOs’ advocacy work on the EU Emissions Trading System, focusing on “backloading”, the Market Stability Reserve and free allocation to the power sector in Central and Eastern Europe. In the years 2008-2009, she also followed the UNFCCC negotiations. 

“With the Paris Agreement in place, the EU advancing its carbon market reform and China launching a national system next year, there is a strong momentum for market instruments in delivering meaningful climate action. I look forward to contributing to these positive developments,” Julia said.

Beginning on 16 January 2017, Julia will work in the Brussels office with Stefano De Clara, who was recently promoted to Director of International Policy. Until then, enquiries on the EU ETS should be directed to Stefano De Clara.

BRUSSELS, 12 December -- The International Emissions Trading Association today called on members of the European Parliament’s environment committee (ENVI) to reach a swift agreement on amendments to the proposed EU ETS revision.

The committee delayed a vote on compromise amendments until Thursday December 15 after political groups could not reach agreement ahead of the original December 8 deadline. Shadow rapporteurs from all political groups will meet today, Monday December 8, to continue discussions with a view of reaching a compromise.

“MEPs need to adopt a common position on the revision in a timely manner, so as to avoid any further delays to the legislative process,” said Dirk Forrister, chief executive officer of IETA. 

"We are pleased that a number of improvements are under consideration that could bolster the ETS's role as the centerpiece of European climate policy, and we look forward to seeing a compromise package that helps the EU achieve its Paris goals cost effectively."

About the EU ETS Revision

First tabled by the European Commission in July 2015, the Revision set out changes to the EU ETS for the fourth phase of the market, starting in 2021.

The Commission proposed to increase the rate at which the market cap is reduced to 2.2% per annum; to retain the share of permits to be auctioned at 57% of the total; and to revise the system of allocating free permits to energy-intensive trade-exposed industrial sectors.

The proposed legislation must be reviewed, amended and approved separately by the Parliament and the member states in Council, before they join the Commission in a trilogue process to agree a common text.

The revision is expected to be finalised in the second half of 2017.

IETA welcomes the European Commission’s Winter Package as a further step toward harmonising the bloc’s climate and energy strategy.

The Winter Package includes legislative proposals to implement the remaining building blocks of the EU’s 2030 Climate and Energy Framework; in particular, it includes a proposed Renewable Energy Directive and Energy Efficiency Directive.

While we are pleased that the Commission has introduced these proposals to update existing regulations for the next decade, we believe great attention should be paid to ensuring that the new proposals work well in coordination with each other and with the EU ETS. 

Policy overlap should be avoided as a matter of principle. Overlapping policies inhibit the market effectiveness of the EU ETS which is, as the Commission has emphasised, the central pillar of the bloc’s strategy to reduce GHG emissions cost-effectively.

Several studies estimated that emissions trading has the lowest cost per tonne of CO₂ abated compared to other types of regulation. As such, it should be the preferred option to decarbonise the economy in the most cost-effective way. The ETS avoids the unnecessary economic burden to society associated with other types of regulation.

Moreover, an analysis carried out by IETA last year showed that the combined impact of the Energy Efficiency Directive and Renewable Energy Directive would lead to an additional reduction in demand for ETS allowances of more than 700 million tonnes of CO2 by 2020. 

Without additional measures to ensure this reduced demand is reflected in the EU ETS cap, this would have a significant impact on the supply and demand of allowances and on the carbon price.

IETA would therefore welcome clear and transparent estimates of delivery of emission reductions and their timing through these non-market regulations, as well as the CO2 abatement costs associated with these measures, as a way to inform the policy making discussion.

If despite these considerations, there is evidence that some elements of the Winter Package would cause a material impact on the ETS, then an ex-ante discussion is required to assess whether the baseline of the ETS should be adjusted going forward.

The ongoing revision of the EU ETS for Phase 4 is a good opportunity to ensure that the functioning of the carbon market will not be affected by the impact of other policies. 

As outlined in our position paper, IETA recommends that the ETS Directive itself spell out the process by which such assessments and reviews will take place to address transparently the question of policy interaction. 

In summary, to ensure the market is equipped to take on the challenge of functioning for its fourth and longest Phase, IETA encourages greater policy coordination and harmonisation amongst the various energy and climate policies before 2020.

MARRAKECH, November 17 -- The International Emissions Trading Association (IETA) and the Climate Markets and Investment Association (CMIA) are delighted to recognise the Government of Canada as their second Carbon Pricing Champion of 2016.

The award, sponsored by Ecosphere+, was presented to Federal Environment Minister Catherine McKenna at a ceremony in Marrakech.

“This award recognises the remarkable steps Canada has taken in the last year, after it emerged as a significant player in the Article 6 discussions in Paris,” said Dirk Forrister, President and CEO of IETA. 

At the historic COP 21 meeting in Paris last December, Canada emerged as a signatory to the Ministerial Declaration on Carbon Markets, and a member of the Carbon Pricing Leadership Coalition, lending its support to efforts to build effective market mechanisms through the Paris Agreement.

"Since Paris, Canada followed through by proposing a national carbon pricing program, where all parts of the country will see an explicit price on carbon by 2018,” said Katie Sullivan, Managing Director at IETA. 

“In cooperation with sub-national leaders, Canada’s innovative approach will recognise existing provincial systems – including the Quebec-Ontario cap-and-trade system or the Alberta and British Columbia hybrid levy systems. It will also  encourage the other provinces to choose between cap-and-trade or direct pricing systems, starting at C$10/t in 2018 and scaling to C$50/t by 2022,” said Sullivan.

"We’re delighted to see such a progressive stance on market mechanisms, and congratulate Canada on its climate leadership and championing of carbon pricing,” Forrister added.

MARRAKECH, November 15 — At its Annual General Meeting yesterday in Marrakech, IETA named two new board members and announced the appointment of its first China Representative. Joining the board is Sung-Woo Kim, Regional Head of Climate Change and Sustainability in Asia Pacific at KPMG. Mr. Kim is a leader in the region on carbon markets and climate finance. He is also the first South Korean member of IETA’s board. “The appointment of Sung-Woo is an important signal for the South Korean carbon market,” Dirk Forrister, IETA’s CEO said today. “He has been an active member of our South Korean Working Group and is also active with the Green Climate Fund.” Also joining the board is Jeanne Ng, Director of Group Sustainability at China Light & Power. She is a former member of IETA’s council, and presently works with the association’s China Working Group. “China Light & Power is represented in a number of Asia Pacific nations,” Forrister said. “Jeanne will help us build Chinese carbon markets leadership in the future.” Meanwhile, IETA has appointed Li Min as its first China Representative from December 1. Li Min joins IETA from Blue World Carbon Capital, where she developed a strong understanding of China’s developing carbon market. Li Min also has extensive business development experience working in the Kyoto Protocol’s Clean Development Mechanism. Min Li also has valuable experience of working with China’s NDRC on the country’s Agenda 21. More recently, she worked with GTZ on capacity-building in China. “We’re very pleased to have Li Min joining us at such an important time for China’s emissions market,” Dirk Forrister, IETA’s CEO, said today. “A new system will need time to grow and develop, and we’re confident she will help IETA to be a robust advocate for the Chinese market going forward.” The meeting also reappointed the following Council members: Scott Weaver – AEP Paul Dawson – RWE Christine Faure-Fedigan – Engie David Hone – Shell Abyd Karmali – Bank of America / Merrill Lynch Rick Saines – Baker McKenzie Jonathan Shopley, Natural Capital Partners Ed Ma – Suncor Energy IETA will also announce the appointment of a new EU Policy Director in the near future. The Association’s Council also decided to honour three new IETA fellows for their contribution to the organisation and its mission. John Kilani, the former Head of Sustainable Development Mechanisms at the UNFCCC; Bruce Braine, former vice-president of American Electric Power and a former chairman of the board of IETA; and Ken Newcombe, formerly of the World Bank, Climate Change Capital and Goldman Sachs.

MARRAKECH, November 10 -- The International Emissions Trading Association (IETA) and the Climate Markets and Investment Association (CMIA) are delighted to recognise the International Civil Aviation Organisation as their first Carbon Pricing Champion of 2016.

The award, sponsored by Ecosphere+, was presented at a ceremony in Marrakech.

Last month, ICAO member nations agreed to create the Carbon Offsetting and Reduction System for International Aviation (CORSIA), the first global, sectoral carbon pricing system.

The agreement in Montreal in October was the culmination of years of work, and sets a goal for the aviation industry worldwide of carbon-neutral growth from 2020 onwards.

“This new market will provide a real source of demand for offsets at a time when the markets need to see strong signals from buyers,” Jeff Swartz, international policy director at IETA, said today.

“CORSIA involved hard work from governments, the private sector and with civil society to provide an outcome that’s good for the planet and good for market-based approaches to reduce emissions. We look forward to working with ICAO on implementing the CORSIA.”

Margaret-Ann Splawn, executive director of CMIA, said: “CORSIA is proof of the ability to establish a global sectoral mechanism rather than a purely national market. This new market creates demand for high-integrity offset standards above and beyond those recognised by other cap-and-trade systems such as the CDM. This creates the pathway to expanding the reach of where emissions reductions can come from.”