Right before our flight out on Wednesday we were able to squeeze in a meeting with Jos Cozijnsen, a consulting attorney and emissions trader from Utrecht in The Netherlands. Jos primarily consults on emissions trading for various companies and NGO’s who are currently dealing with trying to understand the ETS process and how they can use their credits as efficiently as possible. Like many of the other people we met with, he understood the problems with the pilot program and was optimistic about the EU’s execution of the second phase. He also attempted to dispel the rumors that the reason companies were moving out of Europe is because of the ETS by pointing to similar trends in other developed countries. He did have some criticism for the power companies, however, who he believes are not being innovative in dealing with the carbon cap but are simply passing on the extra costs to the consumer. He also criticized the US for pulling out of the Kyoto Treaty, saying that it greatly limited the West’s ability to pressure developing countries to reduce their own emissions. He concluded the discussion by saying that although there have been a few signs suggesting that the ETS is promoting companies to be more efficient, the real test will be in phase two where the increased price of the carbon credits will begin to force companies to become more efficient.
Archive for May, 2007
This past Tuesday we met with Dr. Simon Maar, a lawyer for the European Commission. Mr.Maar explained to us the role of the commission in the emission trading scheme as a regulator of allocations. The comission receieves national allocation plans (NAPs) from the national governments in the scheme (the 27 nations of the EU) and decides whether each government’s plan is sufficient. In the first phase of the scheme (2005-2007) the commission was very generous in allocation allowances. Dr. Maar explained this as being the natural result of a pilot phase — the comission simply wanted to collect data on each firms emissions and did not know how much to allocate beyond what was submitted by each government and the operators of individual firms. The comission has receieved the majority of the NAPs the second phase (2008-2012) and has been much more stringent in its allocation, rejecting and modifying the bulk of the applications it receieved (the UK’s was the only one to pass). Dr. Maar noted that futures prices for allowances are over 20 euro while current prices are below a euro! This demonstrates the fact that the second phase of the ETS will be much more succesful, due to the tests of the first phase and subsequent tight allocations.
The future of the ETS is unclear. Dr. Maar commented briefly on the possible inclusion of the aviation sector in a future scheme. If passed, a current bill in Parliament would include all in-Europe flights in the ETS in 2011 and all flights to and from Europe in 2012. Of course, countries such as the United States are not thrilled with such a possibility as it would hurt there aviation sectors without input. Dr. Maar also noted that linking the ETS to potential carbon schemes in Japan, Australia, and the US in the future is a possibility, if the schemes are robust, transparent and uniform, and not subject to price caps. In all, Dr. Maar was unsurprisingly rosy about the ETS’s future and for its potential as the beginnings of a global carbon market.
Hi all – Sorry for the long delay of posts, but we did not have easy access to the internet for the past few days. We returned home safely yesterday evening. Check back later this afternoon – we still have two more meetings to cover! – Jayson
Today we met with Sanjeev Kumar, a political and legal analyst for the World Wildlife Fund. Mr. Kumar was very helpful in explaining to us the basics of the European Union’s emission trading scheme and elaborating the WWF’s attitude towards the project. He explained the fundamentals of the ETS — a carbon credit-trading scheme that covers all 27 European Union countries. An important theme in the discussions was that of a common standard — instead of making deals for one country or one industry over another. This makes for easy transactions and a liquid market. Mr. Kumar noted two specific programs: a lack of data preventing the European Commission from appropriately deciding the amount of allocations and a problematic cap, meaning an inappropriate amount of TOTAL allowances that were allocated across the board. This problem arose due to the different requests of different nations, which lead in turn to a large aggregate supply of credits. If the EU were to impose a finite cap on total emissions across the board, this would lead to the scarcity that the market needs.
Mr. Kumar doubted the efficacy of price caps and floors, noting the desires of industries to have prics caps that would avoid a spiralling price of carbon and subsequent rising price of business. Instead, he argued, the EU should allow the price to fluctuate and allow the market to operate.
Yo,
This is Daniel, Alex, Jayson and Jared reporting from Brussels. After our exciting tour of the hydrogen bus station, we traveled with Steve Rouvroy of Shell Hydrogen to the Hague. The International Headquaters of Shell consist of a complex of several buildings, including the original Shell building that dates back to 1899. While there we met with several high profile executives. Vice President of Shell CO2, Bill Spence spent a good deal of time telling us about the basics of climate change which was nothing new, but we were able to ask him some questions about Shell’s role in the ETS. We also spoke with Oliver Tabbert from Shell Renewables, Keith Lewis from Shell Global Solutions and Gijs Van Brenda Vriesman, General Manager for Business Development in Europe. If you haven’t guessed it, these were some pretty high-up people in Shell! Among the important tidbits that we discovered was that the ETS does not include carbon capture and storage as an offset to emitting CO2, something that Shell is lobbying hard to get it included in the future, since they have an expertise in this area.
More to come about our wild meeting with the World Wildlife Fund.
JJAD out.
Hey all,
This is Alex, Jared, Dan, and Jayson writing our first entry from Europe. We spent the first two days of our trip in Amsterdam and now have relocated to Brussels, capital of the European Union and Belgium. On Tuesday, we went to a hydrogen bus station in Amsterdam and met with Mr. de Leeuw, a technical advisor to the engineering bureau of GVB, the metro system of Amsterdam and Stephen Rouvroy, a project manager for the shell hydrogen department. CUTE, a join hydrogen bus program developed by Shell, the EU and several other companies including Ballard, Mercedes Benz, is runnning in 22 cities around Europe. The program, set to end in 2008 with no plans as of yet for continuation, has been a success in Amsterdam. The next step that Shell will take is to create mini-networks of hydrogen fueling stations and vehicles in these cities. A the Shell facility we saw the hydrogen production unit which utilizes electrolysis, a process of splitting water into hydrogen and oxygen. This creates a gaseous hydrogen capable of powering automobiles with fuel cells.
More to come tomorrow on our trip to the Shell headquaters at the Hague.
At the beginning of 2005, the European Union (EU) implemented a comprehensive carbon-trading scheme that covers over 12,000 installations with 20 MW or more of energy capacity. The scheme is the result of the Kyoto Protocol, which dictates that all Annex I nations (which covered the EU) have to reduce their emissions by 8% below 1990 levels by the year 2012. Because of a provision within the Protocol which allows nations to “bubble” together to maintain a collective cap, the European Union is able to form a bubble for all of its 27 nations with a total amount of emissions that cannot be exceeded. To ensure that emissions are sufficiently reduced, the commission allocates a certain number of allowances – or credits to pollute – to national government based on information that those governments submit to the EU regarding their relevant industries. Continue reading ‘Our Proposal’
The Tufts Energy Security Initiative will be traveling to Belgium and The Netherlands between May 13th and May 23rd, 2007. We will be looking into the European Union’s carbon credit trading program and its implications on industry and the government. Check back soon for more details!
