Ex Expe peri rience ence sh shar arin ing g on on br broa oade der r is issu sues es de deal alin ing g wi with th EU EU ET ETS S an and d ov over erla lappin pping g po poli licie cies Michael chael Mei Alsto stom m China ina
Alstom = low-carbon infrastructure Alstom tom Therm rmal al Power er Alstom tom Grid Grid Alstom tom Trans nsport port Alstom tom Renew ewable able Power er
EU 2020 Climate and Energy framework Instrum strumen en Covers vers whic ich Target rget Status atus in t / sector ctors 2020 20 ? Policy licy • EU ETS: 45% of EU emissions: reduce 21% 2005-20 EU ETS Power and Reduce emissions by 21% • Renewables: Directive industry: 45% by 2020 compared to 2005 long list …. of EU emissions BINDING Renewable Power and Renewables to be 20% of s transport energy consumption by Directive 2020 BINDING Energy Whole economy Improve by 20% by 2020 Efficienc vs. business as usual y Up to Member Directive States to NOT BINDING deploy (transposition on going)
…. and there are other policies • Green eenhou house se Gas Gas « Effort ort-Sha Sharing ing » 10% target to reducing for the other 55% of emissions by 2020 on 2005 levels broken down by 27 binding national targets • Fuel el Quality: lity: 6% target for reducing GHG emissions from fuels by 2020 on 2010 levels • Vehicle hicle CO2 2 Standards andards cars: 130g/km by 2015 and 95g/km by 2020 vans: 175g/km by 2017 and 147g/km by 2020. • Eco Eco-Lab Labelling elling rules les • Eco Eco-Des Design ign standards ndards: for energy related products • Energ ergy y Taxes xes: minimum rates for energy taxes in heating electricty and motor fuel
Overall CO2 progress “good” CO2 x,000 tonnes 1990-2011: 6,000,000 EU GDP up 5,500,000 48%, emissions 5,000,000 down 18.5% 4,500,000 Actual GHG emissions 4,000,000 20% target path Close to 20% 3,500,000 30% target path target for 3,000,000 1990 1995 2000 2005 2010 2015 2020 2020
Progress on EU ETS ? Good od State of play: ETS • will ll deliv liver er 21% emiss issions ions reduc ductio tions ns in secto ctors rs cover vered ed 35 Dec-12 EUAs 30 Dec-12 CERs 25 Price in Euro 20 Not t so so good od 15 10 5 • price ice not t drivi iving ng inves vestments tments 0 oct 2008 août 2009 nov 2010 févr 2007 juil 2007 déc 2007 mai 2008 mars 2009 janv 2010 juin 2010 avr 2011 sept 2011 févr 2012 • low w auction tion reven venues ues
Progress on Renewables ? Good od State of play: Renewable energy • good od progr ogress ess towar wards ds targets gets (see ee next xt slide ide) • impor portan tant contribution tribution to emiss ission ion reduc ductio tions ns • techn chnolo ology y costs sts down, wn, espec pecial ially ly in PV and onsho shore re wind nd Not t so so good od • high gh cost st of suppo pport rt schemes emes not polit litica ically lly susta staina inable ble € 23bn 3bn pa in Germa rmany; ny; € 10bn 0bn pa in Italy aly • •
Progress on Renewables ….
Progress on Energy Efficiency ? Good od State of play: Energy Efficiency • vehic hicle le CO2 stand andards ards will ll be met • new w effic iciency iency standa ndards rds and d labelling belling for light ghting ing and d appli plianc ances • recen cent t adopt option ion of Energ ergy y Effic ficiency iency Direc rective tive (Octo ctober ber 2012) 12) Not t so good od • EU unlikely likely to meet et 20% energy ergy effici iciency ency targe rget t for r 2020 0 • more re finan nance ce neede eded, d, especially ecially for r the e •
Interaction of ETS with Renewables and Energy Efficiency • CO2 2 price ce not not high gh enough ough to drive investments in either • Renew newabl ables es have relied more on national support schemes: feed feed-in in tarif riffs fs and green/white certificates • Energ ergy effic ficien iency improvements have relied on regulation ulation, e.g. on cars and appliances • ETS S cap failed to take full account of progress in renewables deployment and energy efficiency: Presentation title - 01/01/2007 - P 10 − this has contributed to current surplus
What’s actually happening out there ….. Phase e Phase 35 1 2 ECX EUA Dec Ahead 30 ECX CER Dec Ahead 25 20 15 10 5 0 janv.-05 janv.-06 janv.-07 janv.-08 janv.-09 janv.-10 janv.-11 janv.-12 janv.-13 Increa creased ed Increa creased ed Fuel el swit itchi hing 1 2 3 intere terest in in interes terest in in from om gas gas to to renewa newable les and d CCS CCS coal al gas gas
EU CO2 price now well below international norm British Colombia Australia (pre-EU linkage) EU (Phase 2 prices) Alberta Quebec California South Africa Shenzhen EU Australia (with linkage) RGGI 0 5 10 15 20 25 30 $/tonne
A weak ETS may encourage additional taxes at Member State level Tax ax on on emissions sions • 150 USD/tonne CO2 • Does not cover electricity generation • Industry pay half of it Tax Tax on on coal coal consump mpti tion • € 12.95 per 1000 kg of coal • Concerns electricity production since 2012 Carbon on price price floor floor in addition ition to the ETS • In place since April 2013 - £4.94/tonne CO2 • Combined ETS and Price Floor value will be £30/tonne CO2 in 2020 and £70/tonne in 2030 Too o earl rly y to say y if dou oubl ble taxati xation n on emitte itters s wor orks ks ETS S is the e most t cost t effic ficient ient and nd envir vironm onmentally entally efficient icient tool ol
… and investments insufficient $140 40 billi llion on 64.4 58. Clean ean energy ergy 6 invest vestmen ents s 45. $bn bn 1 2013 2013- 2010 201 201 2020 2020 1 2 Source: Bloomberg New Energy Finance, UNEP, SEFI
Lessons learned from EU policies • ETS needs scarcity of allowances to give price signal for investments • This will reduce dependence on renewables support schemes • ETS need to be co-ordinated with other policies. • ETS cap needs to factor in expected progress in renewables and EE • ETS cap should be flexible enough to respond to variations in demand
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