Tuesday, March 15, 2011

Jill Duggan: Lessons from the EU emissions trading scheme

Jill Duggan is an expert in carbon pricing, having been involved in the UK and European Union (EU) emissions trading schemes (ETS) as well as advising regional schemes in the USA. She has been visiting Australia and yesterday she gave a talk at UQ on the EU emissions trading scheme, how it's been going and lessons they have learned. There was plenty of jargon on offer but also some take home messages.

  • The EU is on track to meet is carbon pollution reduction targets of a 20% cut from 1990 levels. (The cuts required of different countries vary and some like Germany have an individual targets of ~40%, which is pretty impressive).
  • Before a carbon price was introduced, there was a lot of nervousness about the effects of carbon pricing on the EU economies. However as the scheme has been implemented and improved this was subsided and many now view the various EU climate change policies as positive measures to move the EU countries to a low carbon economy.

As the for the scheme itself Jill emphasized the importance of:

  • Keeping the carbon pricing scheme simple and transparent
  • Strong regulation of carbon pricing
  • Not allowing too many overseas offsets (although these had initially seemed attractive because of the perceived low cost of emissions cuts, they don't help move your economy to a low carbon future and both business and government in the EU were seeking to limit their use)
  • The effect of having a carbon pricing scheme and enforcing strict compliance with the emissions caps can cause a larger decrease in emissions than you would expect just from the carbon price alone. Ie: You can get more emission reductions than expected based solely on how much a ton of carbon costs the polluter.
  • Carbon pricing is not a magic bullet, other complementary policies are very useful but carbon pricing underpins the multiple policies used to reduce emissions of greenhouse gasses. (Ie: Complementary policies are useful at a more local level to target specifically areas, an example of this is improved building standards in the UK to increase the current poor energy efficiency of buildings).

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