Memorandum by the Royal Society for the
Protection of Birds
INTRODUCTION
The RSPB is Europe's largest wildlife charity
with over one million members. We manage one of the largest conservation
estates in the UK with 203 nature reserves, covering more than
140,000 hectares. The RSPB is part of the BirdLife International
partnership, a global alliance of independent national conservation
organisations working in more than 100 countries worldwide.
The RSPB welcomes the Commission's proposals
for revising the EU ETS. They introduce a number of features that
which we have long advocated and that will make the mechanism
more effective; in particular, a centrally set cap, auctioning
and hypothecation of auction revenues. We consider that the Commission
could have been more ambitious and, in this submission, outline
some ways in which the proposals might be improved.
1. Level of emissions reductions
1.1 In the context of the EU's overall aim
to keep average surface temperature rise to less than two degrees
Celsius above pre-industrial levels, which we support, we consider
the level of emission reductions proposed in the climate and energy
package to be unsatisfactory, if not irrational, in two main ways.
1.2 Firstly, the Commission proposes that
a lower target should be adopted if there is no satisfactory global
agreement on climate change mitigation than if there is such an
agreement; yet if there is no agreement then surely there would
be an even greater need for the EU to cut emissions. We appreciate
that there may be a concern that the competitiveness of some industries
may be adversely affected if other industrialised and industrialising
countries do not commit to cut their emissions. However, according
to Stern, the costs of doing nothing are much greater than those
of acting to combat climate change, and so both the economic and
the environmental imperative should be for the EU to cut emissions
more deeply in the absence of a global accord.
1.3 Secondly, if there is to be any chance
of keeping average global temperatures to less than two degrees
then developed countries need to cut their emissions by between
25 and 40% by 2020, from 1990 levels, according to the Intergovermental
Panel on Climate Change (IPCC), with a 40% cut giving the best
chance of achieving the goal (IPCC Fourth Assessment Report, box
13.7 on page 776). Indeed, at the December 2007 Conference of
the Parties to the Climate Change Convention in Bali, the EU rightly
but unsuccessfully tried to insert text to this effect in the
final Bali Action Plan.[36]
As a leader on climate change, we would expect the EU to be advocating
domestic emission reductions towards the top end of the IPCC's
range (ie 40%) rather than below the bottom of it, as in the case
of the 20% target.
SCOPE AND
OPERATION
2. Sectors and gases that the Commission
proposes to include and exclude
2.1 We are in general agreement with the
range of sectors and gases that the Commission proposes to include,
although we differ significantly on some of the detail of the
proposal. For example, we consider that it is essential for aviation
emissions to be given a value of greater than simply that of carbon
dioxide, to allow for the fact that their contribution to radiative
forcing (and hence climate change) is significantly greater than
for carbon dioxide alone; we thus propose a so-called "multiplier".
2.2 In the longer term, we would like to
see emissions and removals of greenhouse gases from land use,
land use change, and forestry (LULUCF) accounted for in the same
way as in any other emissions sector, and perhaps dealt with by
the EU ETS. However, we consider that this could not be done in
the short or medium term. This is in part because emissions from
land use and land use change are hard to estimate reliably. (For
example, nitrous oxide emissions from nitrogen-based fertiliser
are very dependent upon local variations and microclimate.) Also,
the operation of the EU ETS is quite complex, requiring significant,
regular and reliable input of information from participants. Even
large power companies and the iron and steel industry have, at
times, found participation quite difficult, especially when learning
about the scheme. It is unclear to us whether most land owners
are ready to take part in the EU ETS.
2.3 We consider that a means of including
emission reductions from deforestation in developing countries
needs to be found, as we discuss further in paragraphs 5 and 9
below.
3. The practical application and enforceability
of the scheme
3.1 We foresee no significant barriers to
the application or enforceability of the scheme.
4. The key strengths and weaknesses of the
proposal
4.1 Overall, we consider that the Commission
proposals significantly strengthen the EU ETS and will render
it far more effective than the first two phases have been. In
particular, we welcome the introduction of the centrally set (EU-wide)
cap, auctioning of allowances, of (partial) hypothecation of auction
revenues and the inclusion of emissions from aviation (as part
of a separate but linked Directive). We would have preferred the
Commission to go further (for example by auctioning 100% of allowances,
hypothecating 100% of auction revenues) and will be working with
the EU Parliament and Council to try to rectify these deficiencies.
4.2 The Commission's proposals will not
only make the EU ETS more effective but will also make it far
simpler to administer. Largely scrapping National Allocation Plans
(NAPs) will, alone, save large amounts of civil servant's time
as well as avoiding the temptation for Member States to over-allocate
allowances as they did in both the current and previous phases.
4.3 In response to the specific questions posed
by the Committee, we see the level of the emission reduction target
as being the key to both the price signal and the encouragement
of technological innovation. A tight cap will lead to a high carbon
price and will consequently tend to encourage technologies that
are not currently near market. Of course, participants in the
EU ETS would be expected to take least cost options to reduce
their emissions and many of these, especially energy efficiency,
are typically cheap. However, if business sees that they will
have to lower their emissions considerably, by 80% or more by
2050, and if they were capped at 40% of 1990 levels, as opposed
to the proposed 20 or 30%, this should drive technologies that
are significantly more expensive than those currently in use.
4.4 Employing far more auctioning will certainly
make the EU ETS more efficient in both economic and environmental
terms. It will, for example, encourage early action and penalise
the continued use of inefficient plant. However, it will not necessarily
do so in an equitable way, depending upon one's definition of
equitable. Within any particular emission sector in the EU, the
treatment of participants will be the same now that there will
be an EU-wide cap, which will make matters more equitable. On
the other hand, some sectors will find it harder to reduce emissions
which have more, cheaper technology options open to them. Energy
intensive users that employ fossil fuels will inevitably be harder
hit, although the degree to which this will damage their businesses
is debatable.
5. The potential application of the new Article
24a
5.1 We would be extremely concerned were
this provision be implemented and would rather it were deleted.
The EU ETS is based upon the Kyoto Protocol with EU emission allowances
being ""backed" by Member States' Assigned Amount
Units (AAUs) from the Protocol. Similarly, the only types of project-based
credit currently recognised by the EU ETS are, in practise, from
the Protocol, in the form of credits from the Clean Development
Mechanism in developing countries and Joint Implementation in
developing ones. We consider that the post-2012 EU ETS should
similarly conform with the international post-2012 UN Climate
Convention regime, once negotiated. We do not think that the EU
should invent its own credits on an ad hoc basis when there is
a globally agreed system of crediting.
5.2 Moreover, we are concerned that all
external credits constitute a leak from the EU cap, thereby reducing
national targets, and that project-based credits may not be additional
to what would have happened anyway, yielding no overall emission
reduction. Our view is that the aim of the EU ETS should be to
reduce emissions in the EU rather than in the World outside the
EU. Whilst we support the limited use of external credits because
they can help developing countries on the path to reducing their
emissions, we would not wish to see their unconstrained use.
ALLOCATION AND
AUCTIONING
6. Decision making about the proportion of
permits to be allocated for free
6.1 We strongly support auctioning of allowances,
for the reasons given earlier, and wish to see 100% auctioning
from the beginning of 2013. We are not convinced by arguments
that some energy intensive sectors (such as aluminium and cement)
need special treatment in order to maintain their international
competitiveness. A number of authoritative studies (which we will
provide on request) have found that although there can be justified
concerns about competitiveness these are invariably offset by
other factors.
6.2 If some allowances were to be given
away, we consider that the decision should be made at the EU level
in order to prevent a race to the bottom by Member States, such
as occurred in setting NAPs in phases I and II of the EU ETS,
where only the direct intervention of the Commission before phase
II saved a massive over-allocation of the type seen in phase I.
Such a decision would need to be made as early as possible after
the current legislation has gone through the co-decision process
in the EU.
7. Emissions permits allocated free of charge
7.1 We believe that no sectors should receive
their emissions permits allocation free of charge.
8. The redistributive element of the Commission's
proposal
8.1 We do not believe that the redistributive
element of the Commission's proposal is appropriate. The purpose
of the EU ETS is to reduce the EU's greenhouse gas emissions.
It is not, and should not be, a mechanism for supporting the economies
of poorer countries; the EU has other, better mechanisms for this.
THE INTERNATIONAL
DIMENSION
9. Meeting obligations under the Clean Development
Mechanism (CDM)
9.1 We consider that the use of external
credits should be limited, both quantitatively and qualitatively.
The quantitative limit should be dependent on the level of the
cap, taking into account the principle that the EU ETS should
primarily reduce emissions at home, rather than abroad. If the
cap is to be 20%, by 2020 from 1990 levels, then few if any external
credits should be allowed because such as target is well below
that called for by the science and so the priority would be to
only reduce EU emissions. Were the cap to be set at 40%, as the
science indicates that it should, then a significant number of
external credits might be allowed (5 or even 10%).
9.2 Qualitatively, we consider that only
credits from the UN climate change convention (including its Kyoto
Protocol and any other future sub-agreements) should be allowed
in the EU ETS. These would include CDM credits but are likely
to also include other types of allowances yet to be agreed as
part of an international post-2012 regime. Of particular interest
to us would be allowances generated under sectoral agreements
in developing countries, such as that proposed by Papua New Guinea
for reducing emissions from deforestation in developing countries.
Under this sort of agreement, a country would undertake to reduce
its emissions from a particular sector, such as forests, and receive
credit for doing so.
9.3 Any decision on quantitative limits
would clearly have to be made after an overall target were set
and a decision on a qualitative limit would have to be made after
an international post-2012 agreement was concluded.
10. Creating links between the ETS and other
similar schemes around the world
10.1 In principle, we favour linking the
ETS with similar schemes. However, the schemes would need to be
very similar in almost all respects and, in particular, would
need to be backed by Kyoto or similar internationally agreed credits.
Certainly, for any other scheme to be compatible with the EU ETS,
it would require similar emission reduction targets, include auctioning
and contain similar compliance provisions.
June 2008
36 The EU did succeed in inserting a footnote reference
to the relevant part of the IPCC Fourth Assessment Report, Chapter
13 of the Working Group III report. Back
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